ADVISOR FORUM

Waddell & Associates Overhauls Set Management for Efficiency and Precise Data

Founded in 1985, Waddell & Associates was a pioneer in the fee-only investment management industry. The firm has grown almost entirely by referrals. We spoke with Kathy Williams, senior vice president, who has a unique perspective on the firm's operations. With her deep experience in operations, she has guided the evolution of their processes and technology implementation. When Williams learned of the new features introduced in PortfolioCenter 4.3, she recognized many opportunities to increase the efficiency, accuracy and scalability of their business.

When we talked with Williams, she was updating account details for approximately 700 clients. Excited by the new PortfolioCenter 4.3 features from the start, Williams was looking forward to handing over the Smart Sets to the operations team when she was finished creating them. She will then see her efforts pay off in terms of time the team will save and the precise data they will be able to generate in a matter of minutes.

Managing Static Sets

Williams explains the firm's proven, yet time-consuming, set management process.

SPT: You're senior vice president, but you've also played a big part in your firm's operations and use of technology. You've been there for a long time, right?

Kathy Williams: Yes, I've been with the firm since 1992—nearly 15 years—and I've used PortfolioCenter and before that Centerpiece since 1994. So I understand the system and a great deal about how our business runs. When I started there were only four people, the shareholders and me.

SPT: Tell us about the way you have been using sets over the years.

Kathy Williams: We have 118 static sets. The problem with static sets, of course, is that they require you to go in and check and uncheck as things go, as clients move in and out. Let's start with the basic way we use sets.

One of our primary uses is to assign a client account underneath a particular rep. Our firm has about 700 clients and eight or nine reps that handle the accounts. Let's say I have 300 accounts. We'll create a set that says "Kathy's accounts."

As we grow, I'll need to shift some accounts to an incoming person. I'll remove them from my set and put them into the new advisor's set. Unfortunately, if we make a mistake, we'll end up with an account in two sets.

The problem with that system is that we have to print out all of the sets along with a list of every client. Then we go through and check them all off to make sure that they're included in one set, but not two. That has always been a big manual process. In a similar way, we created static sets according to client investment objectives, such as equity, fixed income or balanced.

SPT: You must be excited about automating some of these processes using the new Smart Sets.

Kathy Williams: Yes, we love the idea of quickly pulling out useful sets of data, such as all of Kathy's taxable and non-taxable accounts. Or accounts that have been opened in the last year. But we have never had the time or desire to maintain that level of detailed set management with the static sets.

SPT: How many people in your firm maintain sets?

Kathy Williams: Operations has four people including the manager.

SPT: How much time do they typically spend updating static sets?

Kathy Williams: It's a daily process. For every new account, they have to put it into the rep set and the objective set. They do the same for every request to move a client from one rep to another or change an objective for a client account. I'd estimate 30 minutes each day, but when we do comparisons to check for accuracy, such as checking a list of all accounts versus the objectives and the reps, that's a good five- or six-hour job.

SPT: How are you checking all your accounts for objectives and reps?

Kathy Williams: Our system involves a code that goes in the account type section that appears on the portfolio statement next to the name. We put a rep code in parentheses, our initials usually, and an objective code, which is a number. For example, seven is equity, six is fixed income, five is balanced.

We're going to continue to use the codes because we've been trained to. That's how we have been checking for rep accounts and objectives to make sure that each account is in one rep and also one objective. We have always created any other lists we want on the fly. For instance, with taxable accounts, we sometimes print them and throw away the ones that are nontaxable, which is a waste of paper.

Using Rules To Define Smart Sets

Williams finds that using the Rules Manager is a great way to create Smart Sets, especially for copying sets with similar criteria.

SPT: Let's hear about your use of Smart Sets so far. What kinds of Smart Sets are you creating?

Kathy Williams: What I'm doing now is filling in the advisor and objective in the Account Details screen. I've never done that before, because there wasn't anything I could do with it. It didn't appear anywhere and therefore it seemed like a waste of time. That's why we kept codes, such as KW7 for “Kathy Equity Account.” Now, once I've filled in an objective and advisor, I can set up Smart Sets.

I've already set up Smart Sets for Kathy's accounts, Kathy's taxable accounts and Kathy's non-taxable accounts. Because we're trying to track when people come and go and things like that. We have performance and section dates, but no close dates. That's part of the details, and one area where I plan to use a custom field.

SPT: What other features have you used from the latest release?

Kathy Williams: One feature I've used to create Smart Sets that I've had a lot of fun with is the Rules Manager. The Rules Manager is perfect because I can go in and specify criteria, hit save, then look at the results instantaneously. And I can tell whether I did it right or need to add another criterion to it. That's fabulous.

The ability to take that and turn it into a Smart Set is great, too. Because then I don't have to recopy or recapture this information going over into a new set. I have some sets that have 10 or 11 criteria.

SPT: What's an example of that?

Kathy Williams: When I set up rules and review the results pane, it tells me which accounts don't have a rep—such as Kathy, John, Bill and Tom—and don't include “closed” as a criterion. That will tell me if there are accounts that do not fall into any of the other sets.

SPT: You're using that to identify anomalies. 

Kathy Williams: Right. And it takes the six or eight hours I spend going through and highlighting names right now and does it in two seconds. Then I know how many accounts don't have a rep assigned to them.

SPT: That sounds like a best practice for someone going through this process.

Kathy Williams: It's a huge best practice for me, as far as I'm concerned. Because the integrity of the sets is the integrity of the workload. The key best practice I've found is to use the Rules Manager when you build your set.

SPT: Why do you recommend that?

Kathy Williams: It seems like the smartest approach. Use the Rules Manager to set up your rule and see what kind of data it gives you. Once you get the results you're looking for, then make it a Smart Set and even copy it. For example, if I've got 10 reps, I'll use Display Results to set it up as a Smart Set and save it as 10 different reps. All I have to do at that point is go into each set and change the rep name. All the other attributes stay the same. That's a huge improvement. It saves a lot of time when you can go into sets that pertain to multiple people and change one or two criteria rather than set it up from scratch.

Looking Ahead—Extending The Benefits Across The Firm

Williams' strategy for implementing Smart Sets will pay off as soon as she hands over the process of updating the new Smart Sets. Then the operations team will be able to handle requests for data on the fly that they couldn't possibly have delivered on before.

SPT: Have you been able to accomplish anything that was a surprise using Smart Sets and Custom Portfolio Fields?

Kathy Williams: A surprise. Everything that I figure out that I can do is a surprise! [Laughter]

Seriously, the fact that you can go in and pull any attribute on the account and put it into a set—the whole thing is a pleasant surprise. I think we're just scratching the surface of using the Smart Sets. There are many things we can do now that we haven't even thought about yet. I think we'll be inundated with requests from our reps. The more information you tell them they can have, the more they'll demand, and they'll be better able to do their jobs.

SPT: What is your thought process about deciding which sets to create to get the best use out of these new features?

Kathy Williams: After we set up all of the Smart Sets that reflect the static sets, we're going to put out a message to people saying, “If you could have the ability to do something with data, what would it be?” We're going get feedback from the reps to see if there are other Smart Sets we can set up, so that they can go in and pull them up anytime they want to. We'll figure out how can cull information we want on a regular basis into a Smart Set to make life easier on everybody.

SPT: Great. And your operations team—what are their impressions of these new features?

Kathy Williams: Basically what I heard was, “Yippee.” [Laughter]

There's no doubt about it. I've been telling the operations manager what I've been doing with the new features. Because of my experience with PortfolioCenter, I offered to set all this up. And then the questions can start going to the operations manager, and she can run with it. I know she and the rest of the team are really excited.