Most independent advisers spend almost half of their working hours on non-client-facing projects, such as office administration and management, investment research and asset management, and professional development.
In other words, advisers dedicate barely half of their time to serving clients!
Why? It's simple: business complexity. For advisers, the most significant cost of this complexity is the time lost that could be spent with current and prospective clients. Other than adding more hours to the day, the best solution to this problem can be to leverage strategic partners who can provide both scale and expertise.
(Related read: Helping advisers unlock their true value)
DEFINING YOUR VALUE PROPOSITION
Beyond the time constraint, few advisers excel at all of functions required to run a successful advisory practice. From sales and marketing,
portfolio management, operations, client service to HR, the complexity of running a wealth management business takes time and expertise. Advisers must ask themselves where they should spend their time to best serve clients and grow their business.
Outsourcing some functions is a great way to find more time. A good framework for assessing what to outsource is for the adviser to define their value proposition (where to spend time) and then look for outsource partners that bring scale and expertise in areas where the adviser isn't delivering unique value.
For each role or capability (sales and marketing,
portfolio management, operations, client service, HR, etc.), advisers should ask themselves:
• Does the function create a unique client experience? In other words, is “it” what the client is paying me to do?
• If I do it myself (or my team does it), will the client benefits outweigh the costs?
• Can I partner to bring a better experience to my clients?
• Does partnering create more time for me to find new clients and/or work with existing clients?
Figuring out what you need to do, and what you can get others to do, is the key to productivity.
Capabilities in which strategic partners often add value include: proposal generation; financial plan development; manager selection and portfolio construction; account processing and rebalancing; and account aggregation and
portfolio reporting.
SUPPORTING THE TRUSTED ADVISER ROLE
In the old days, investors hired advisers to pick stocks and bonds. Given that, many advisers believe that their value proposition is tied to investment management expertise. They feel that being the primary portfolio architect keeps them at the center of the client relationship.
But today, investors are looking for help in navigating a complex world. That navigation means helping clients plan for the future, manage taxes and especially, staying the course during volatile markets.
(See also: For (almost) every rule there are exceptions)
That's why finding the time to help clients reach their goals, both financial and non-financial, is the best value proposition for advisers.
We all know that making that time is difficult. One way to get there is to outsource some or all elements of manager selection and portfolio construction. That partner will take on, at a minimum, manager due diligence monitoring. This type of partnership can offer economies of scale, while significantly reducing business risk for the adviser.
The right partner can also do much more including customized investment proposals, comprehensive account administration, quarterly reporting and fee billing; integration with major custodians; practice management and branded marketing support.
ENHANCING CLIENT ENGAGEMENT
The right strategic partner should offer advisers innovative solutions that drive greater efficiency and reduced costs. Additionally, access to skilled specialists should reduce the adviser's total operating costs by limiting the need for expensive new technology and increased staffing.
As attractive as all these benefits are, the most important result of outsourcing is time. The ultimate payoff of strategic outsourcing is the adviser's ability to spend more time providing personalized service to existing clients and having the time to reach out to new ones. And when advisers have the time to better engage their clients, they can more effectively build strong and rewarding businesses.
Charles Goldman is president and CEO of AssetMark, Inc., an independent strategic provider of innovative investment and consulting solutions serving financial advisers. Read more about his plans for AssetMark.
