According to the Bureau of Labor Statistics October data, with inflation running at 7.7% annually in the United States, individuals and businesses are feeling the pinch of higher costs. As a result, wealth management firms are looking hard at the drivers of spending to help improve the bottom line.
As financial advisors think about how to cut costs, an August article published by NetSuite suggests business owners start by asking these three questions:
- What do I need to do to keep the lights on?
- Where am I spending that will make a difference over time in terms of winning in the market?
- How do I keep the rest as lean as possible? 
Cost-benefit analysis can help advisors pinpoint which areas of their business have a strong return on their investment as they look to eliminate unnecessary costs. Often, investments in technology produce short-term cost reductions by immediately improving efficiency and creating long-term savings.
Maximize spending for long-term needs
Businesses can offset inflation by boosting productivity, finding new growth sources, and cutting costs. Of course, cutting costs to non-strategic parts of the business can quickly reap rewards, but reviewing longer-term strategic spending is a way to battle inflation.
In a March analysis, research firm Gartner noted that as inflation rises, investments in technology can reduce the cost of doing business. The analysts explain that streamlining processes through automation is vital to digital deflation efforts and allows the team to focus on high-value work and increased productivity.
Moving to an enterprise technology system reduces physical paper use for advisors who have yet to upgrade their systems. In addition, an end-to-end system eliminates the need for advisors to cobble together various software packages to achieve specific results. By streamlining back-office functions, automation allows advisors to focus more on higher-value, high-touch services and increases the number of clients they serve.
The Harvard Business Review report also highlighted how automation promotes organizational stability, noting that companies that had invested more in automation before the pandemic weathered the crisis better than others.
Thinking Differently, Thinking Ahead
Business owners previously took a piecemeal approach to address cost pressures, but a March article from McKinsey & Company finds these “old tools” have their limits due to the current economic climate.
Instead, advisors need to think differently in the new environment. They should “take a more holistic approach that addresses opportunities to control costs and reduces the impact of volatility across the organization’s full spectrum of activities.”
Some advisors may question whether the current inflationary environment is short-term and that costs may eventually moderate, reducing the need to react to rising cost pressures. Of course, no one knows what the future holds; however, McKinsey notes that an operations-focused approach gives advisors tools to gauge when prices fall, reiterating the importance of digital tools and skills for the workplace, stating these investments are a “win either way.”
Advanced digital operations provide a platform for the continuous improvement of cost, quality, and flexibility regardless of changes in the price and availability of labor, energy, or other inputs,” the management consultancy adds.
This makes getting the right tech stack in place imperative if financial advisors want to reduce inflation and keep it under control.
A How-to Guide
Gartner’s report explains that planning is the key to benefitting from digital deflation over the long term. Gartner also suggested that advisors use automation to streamline processes. In addition, advisors should review what work can shift to business process outsourcing to reduce labor costs and research which vendors support their business models to help advisors scale products and meet customer expectations.
Advisors looking to fight inflation long-term by reducing labor costs, increasing efficiency, and growing their client base can look at the services offered by SS&C’s Black Diamond® Wealth Platform. The platform provides advanced data management solutions for wealth managers, broker-dealers, and others on the back end. It gives clients an elegant portal to holistically review their wealth in an easy-to-read dashboard and options to communicate digitally with their advisor. In addition, proactive, personalized attention from a dedicated service team ensures advisors receive access to an elite combination of technology and service.
To learn how the SS&C Black Diamond Wealth Platform can support your advisory firm, request your personal demo, call 1-800-727-0605, or email firstname.lastname@example.org.
 Consumer Price Index, Bureau of Labor Statistics, November 10, 2022
8 Strategies to Deal With Inflation in Business, NetSuite, August 18, 2022
 CFOs, Use Technology in Your Inflation Fight, Gartner, March 09. 2022
 How Business Operations Can Respond to Price Increases: A CEO Guide, McKinsey & Co, March 11, 2022