3 qualities all advisers’ outsourcing partners should share

I recently participated in a panel on the subject of outsourcing at the Women Adviser Summit hosted by InvestmentNews. Since the event, I’ve had time to think further about the topic and to discuss it with our panel moderator, Marion Asnes, and co-panelist Heather Hooper, who is the vice president of retirement strategies for my trusted outsource partner, Loring Ward.

We all realized that the topic we were addressing went far beyond a decision to outsource certain functions or processes. Rather, it went to the core of how we want to live our lives, professionally as well as personally. If that seems like a stretch, let me explain.

Outsourcing is really about partnership. Business owners know that trust is at the heart of any decision to relinquish tasks to someone else, even when it’s just delegating to an internal team member. When considering outside partners, you must be clear on what makes a good partner, as well as have the self-knowledge to recognize what you do well versus the things that you’re either not so good at, or that you don’t enjoy. In other words, we’re smart to outsource our weaknesses, freeing us to spend more time on the things we truly enjoy doing—and that we do well.

(Related read: When outsourcing can help, and when it can’t)

Marion Asnes offered a perspective that probably resonates with many advisers, especially female ones. “We suck down this huge glass of perfectionism, thinking we have to do everything ourselves, and do it perfectly. In reality, what we have to perfect is our ability to recognize our strengths, acknowledge our weaknesses, and identify partners whom we can trust to relieve us of the latter so we can focus on the former,” she said.

In the real estate industry, there is a concept known as “highest and best use”, or HABU, which is the use that would produce the highest value for a property, regardless of its actual current use. The use must be legally allowable, physically possible, financially feasible and maximally productive.

Let’s borrow that concept and apply it to the element of time in our work as financial advisers. How do we ensure that we are working at our “highest and best use”? Our HABU as advisers involves putting our clients first and ensuring that they have the best possible experience and results. Finding outsourcing partners who have the necessary expertise, who are trustworthy, and who can help us be better advisers is a great way to accomplish this worthy HABU goal.

(More insight: Female advisers’ secrets to outsourcing success)

Here are three qualities the panelists agreed were “must haves” when it comes to selecting and working with an outsourced solutions provider.

Leverage

I have been an adviser for more than 36 years. In that time, I have learned that I feel fatigued when I spend time on details, but I feel extremely energized by working directly with clients. So I looked for an outsourcing partner who would handle the back-office details of my practice while I focused on my clients. It was not because I was unable to do the job myself; rather, I preferred to leverage my time to focus on my HABU.

After careful vetting in my due diligence process, I chose to partner with Loring Ward for portfolio design and back-office support for several reasons. I determined that they:

1) Are experts in my preferred approach to asset management, which is asset class investing using Dimensional Fund Advisors institutional mutual funds
2) Have an Investment Committee with three CFAs and Nobel Prize winner Harry Markowitz, which develops diversified, risk-adjusted portfolios of DFA mutual funds
3) Provide robust client performance reports
4) Effect best execution for securities trades
5) Provide an extremely professional suite of client-approved educational materials
6) Empower me to build my independent brand as a fee-only CFP, and better serve my clients

My two most important assets are time and health. A partner who can help me use my time more efficiently and effectively, in ways that support my health and enhanced joy in my life is invaluable. The increase in joy and decrease in stress has to be great for my health, right?
(Watch: Rita Robbins and Nicole Newlin on the untapped potential of outsourcing)

Relationship

Like all good advisers, I seek to build and nurture relationships with both my clients and my outsource partner. My team and I face challenges every day and we appreciate the fact that we can turn to our trusted partner to help solve problems – even problems that go beyond the specific function(s) for which we’ve contracted with them. Since Loring Ward works with so many different advisers and firms, they bring a broader perspective and have first-hand knowledge of best practices.

While trust is foundational for the relationship, the reality is that working with a partner means constantly trying to find the right balance between responsible oversight and micromanaging. Even when one has carefully vetted the partner, it is essential to make sure that the partner continues to nurture the relationship and execute on their promises.

Experience

A good trusted partner, regardless of the service or product they offer, recognizes that the client experience is of paramount importance. They must provide you the adviser with an experience that will help you function at your HABU. That is key to you being able to provide your clients with an experience that supports them and reassures them that you are the right adviser for them.

My experience working with Loring Ward – and the experience I would want with any outsource partner – is best described by Heather Hooper: “As a company, we do not see ourselves as being in a vendor relationship with advisers, but rather a strategic partner and, in a way, part of a family. We are constantly asking ourselves what we can do to best help our advisers so that they can provide a richer, healthier experience for their clients. We are deeply committed to this approach and always keep the experience we collectively create top of mind.”

Outsourcing gives advisers access to resources, expertise and technology they may not be able to afford on their own. That rationale satisfies the first three conditions of “highest and best use” – legal, possible and financially feasible. But don’t stop there. The best partners will also satisfy the fourth condition – maximally productive – and thus enable you to reach your HABU. That is a huge step in being able to live the life we want and deserve, both personally and professionally.

Debra L. Morrison, CFP is a published author and fee-only wealth manager with more than 36 years of experience. You can email her here.