Norm Boone builds software company around investment policy statements
Veteran RIA uses financial logic to sway his fellow advisors
2 min read- Boone's IPS Advisor Pro automates investment policy statement creation for advisors.
- Software reduces errors and allows delegation to lower-paid employees, saving RIAs money.
- Investment policy statements provide legal protection for advisors who adhere to them.
Norman Boone released a white paper yesterday in an attempt to counter the effects of the economic downturn on his other business.
Boone heads Mosaic Financial Partners Inc., which manages $300 million from San Francisco but he also is a principal with a software company he founded in 2006 called IPS Advisor Pro. This company charges advisors $495 for a web-based service that automates the creation and maintenance of investment policy statements.
The company has 1,000 advisors who use IPS Advisor Pro and they have combined to complete more than 17,000 of these statements.
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The economic downturn has slowed adoption of IPS Advisor Pro and Boone found this ludicrous.The alternative is to use standard word processing software and he insists that errors creep in that you don’t get with the questionnaire-based system he uses.
More to the point is that It’s also much more expensive to operate that way. Standard word documents require the principal RIA’s attention to keep changes straight. His software allows the task to be delegated to an employee on a lower pay scale — often $150 less per hour, according to Boone.
“At 50 clients, that’s 50 hours at $150,” he says. “It’s $7,500” that an advisors can save.”
Story Timeline
The white paper has a series of charts that show other savings from the various aspects of keeping and creating investment policy statements.
Stopping bullets
Heads of foundations, endowments, pension funds and assets in trust are required to write investment policy statements. An advisor uses them to declare how they will manage a client’s assets and a clients signs off on them the way a homebuilder signs off on blueprints with an architect.
Boone says that this contractual understanding may be the ultimate money saver for RIAs.
“You’re virtually bulletproof [legally] if you do what you say you’re going to do,” he says. “How is the client going to sue you?”
And then as if to answer his own question, he adds: “The caveat: don’t write it down and do something else. If we want to do something else, we go to the client to sign off on an amendment to the investment policy statement.”
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