The Forty Percent Problem

There is a number that should bother every person running an RIA, and it is forty.

Not forty basis points of fee compression, though that one should bother you too. Not forty clients per advisor, the capacity ceiling that quietly sets the ceiling on your entire firm’s growth. The forty I’m talking about is the percentage of a working advisor’s week that disappears into administrative tasks. Forty percent. According to EY’s 2024 research, that is simply where the time goes. You don’t decide to spend it there. You just look up on a Thursday afternoon and realize that between the report requests, the system-hopping, the back-office clarification emails, and the manual pulls from platforms that don’t talk to each other, nearly half the week is gone.

There’s something almost elegant about how invisible this cost is. It doesn’t show up on a P&L. It doesn’t trigger a compliance flag. It just accumulates, hour by hour, in the form of a very good advisor doing work that has nothing to do with why they became an advisor.

Think about what forty percent of a week actually means in practice. If you are billing forty hours, sixteen of them are administrative. If your firm has twenty advisors, you are paying for the equivalent of eight full-time employees to run reports, answer data questions, and switch between screens. Not to grow AUM. Not to deepen client relationships. To locate information that, theoretically, already exists somewhere in your systems.

The strangest part is that the information is right there. It’s in your portfolio management platform. It’s in your CRM. It’s in the reporting tools your firm has been paying for since 2019. The problem isn’t that you don’t have the data. The problem is that getting the data requires a process, and the process takes time, and the time adds up to forty percent of a week, and no one has ever written it down on a whiteboard and stared at it until it felt sufficiently insane.

So here is the question worth sitting with: what would your firm look like if that number were twenty? Or fifteen?

EY’s research suggests technology can cut this administrative burden in half. McKinsey estimates the industry is already looking at a shortage of roughly 100,000 advisors by 2034. Those two data points, sitting next to each other, describe a math problem with a fairly urgent solution horizon. You cannot hire your way out of a 100,000-person supply gap. You can’t train advisors fast enough. What you can do is make the advisors you have dramatically more effective — not by working them harder, but by removing the forty percent.

The answers clients need already live in your systems of record. The question is whether your advisors can get to them in ten seconds or three days.

Sources

EY, “Next-Gen Wealth Management,” 2024.

McKinsey & Company, “The State of North American Wealth Management,” 2025.