A recent Financial Times article explores how a version of the “Amazon effect” is relevant for financial advisors in addition to its more common applicability to brick-and-mortar retailers. The article suggests that as investors have become savvier—and more information and services are available to them online—their sensitivity to price has increased. The result is fee pressure that, along with increased regulatory requirements, can squeeze out profits from serving smaller clients.

How do advisors grapple with their version of the Amazon effect? One approach is simply to stop fishing for smaller investors. That is suboptimal, however, because in reality there are far more small fish than whales out there. A more strategic answer is to embrace the Amazon effect and the technological efficiencies that are at its heart. In short, don’t fear Amazon—become more like Amazon.*

Optimizing Advisors’ Time

Today’s advisors have more computational firepower in their laptops than the Apollo astronauts had on their way to the moon—firepower that can drive economic and operational efficiency into their practices. Whether it’s automated investing using a robo-type platform, specialized financial and estate planning software, or tools like Envision Financial Systems’ FundKeeper that, like Amazon, potentially can fundamentally change the way a good is purchased, the goal is to drive down the cost of delivery.

The industry has developed technologies to improve the delivery of investment management and customer support, but some aspects of the financial advice industry are still surprisingly archaic. Mutual fund processing is one such area. This area represents a prime opportunity to create operational efficiency and reduce cost. For example, nobody wants to spend more time on administrative and operational services than they have to.  Yet, many independent broker dealers and registered investment advisors still mail paper applications and checks directly to mutual fund families when opening client mutual fund accounts. And opening the accounts is just the start.

Advisors then have to deal with manual compliance reviews and suitability checks, manage multiple data feeds to access client account information and a navigate a slew of other operational hurdles. Services like FundKeeper can help advisory firms streamline their back-office services so they can focus on their core competency of managing money.

By leveraging operational efficiencies, advisors can still offer tailored, professional financial advice to smaller clients and help them meet their desired financial outcomes through appropriate mutual fund investments. Envision Financial Systems and U.S. Bancorp Fund Services launched FundKeeper to streamline mutual fund processing and ultimately optimize advisors’ time for this key aspect of their business. The result is a much smoother and timely experience for clients, advisors and the back office. It also opens the opportunity for the advisory firm to tap into an already available fund payment source.

The fact is mutual funds can be an appropriate and cost-efficient investment vehicle for many investors—including investors with limited investable assets. We feel there is now an operationally efficient  way to process them, so advisors may not have to turn away smaller clients—and, in fact, may be in a position to offer more choices than they presently can.

For most advisors, the strongest competitive positioning to combating the “Amazon effect” is to face it head on.  Advisory firms should continually review their business offerings and find effective solutions for delivering services profitably.


* That’s not as far-fetched as it might sound. Consider that many brick and mortar merchants were running scared a few years ago as Amazon squeezed their margins. They finally responded by taking advantage of new fulfillment and payment processing technologies (not to mention cheap, cloud-based server capacity from … wait for it … Amazon Web Services!) to build thriving e-commerce businesses to complement their high-touch stores.

Kelly Lynch is Senior Vice President at Envision Financial Systems (, which in collaboration with U.S. Bancorp Fund Services operates the FundKeeper ( investor account management platform.