Advisers today have many tools to help them increase their efficiency, and technology, in particular, allows for unparalleled opportunities to be productive. When advisers are able to accomplish more without adding additional staff, they see better business metrics and greater profitability.
In addition to efficiency improvements within an office or team, wise advisers are exploring options to offload tasks that aren’t a high-value activity for them or duties that they don’t particularly enjoy. Outsourcing has become an increasingly popular solution, and many offerings have been created with financial advisory practices specifically in mind.
Here are four examples of outsourcing options advisers are leveraging that can improve firm operations and potentially yield great results.
Most practices have highly trained teams to support them, and they develop their talent carefully. But even the best firms experience unexpected events or curveballs; advisers may need additional assistance with onboarding an acquisition, or staff members could become ill or need extended time off. Virtual administration specialists serve as part-time team members, eliminating the need for advisers to spend time and money on basic operational training, technology, and employee setup. Costs are usually a fixed price per hour, and time frames offer flexibility, ranging from a week to several months. Savvy advisers are also using virtual admin services to assess whether or not the workload and responsibilities would warrant adding another permanent staff member before committing to the hire.
Even large firms struggle with the ongoing need for experienced support on human resources, as rules and laws can change quickly, and remaining compliant is paramount. Many HR functions can be easily outsourced, such as payroll and administration, health insurance and employee benefits, and HR management. This shift enables solo advisers and smaller firms to save time and energy, freeing them up for more important client-facing activities.
Many advisers struggle with functions like bookkeeping, bank reconciliations and reviewing financial statements (unless the firm is fortunate enough to have a CPA as a founder). These responsibilities may not be natural strengths for advisers who are already managing a large client network and busy schedule. By choosing to outsource core services, such as budgeting and forecasting, financial statements, controller services and bill payments, advisers can spend more time on the growth aspects of their practice.
Most firms offer the efficiency and ease of model portfolios, taking the stress and worry out of many of the investment decisions. While some advisers choose to completely outsource the investment sleeve to third parties, the majority of advisers prefer to participate in model portfolios offered by their firms. These models allow the adviser to maintain close ties with the portfolio and offer easily available communication when a position or manager changes. Standard portfolios are offered as well, which allows advisers to create their own model and custom portfolios. A new development, however, is that advisers are reconsidering their use of custom portfolios. While many used to believe they added value to the investment process, custom portfolios haven’t performed as well as the model portfolios, which are professionally managed in-house.
Advisers are now rethinking the work, performance, and compliance issues related to custom portfolios from a fiduciary lens. There’s also the difficulty of selling a practice made up of custom portfolios; many potential buyers don’t have the time, expertise or inclination to maintain them, and they would have to deal with any adverse tax considerations for clients. As consolidation increases across the industry, it wouldn’t be surprising to see model-based practices receive a higher valuation multiple than custom-portfolio practices.
So how can you scale your practice to achieve the growth you need with the profitability you want? Working smarter and leveraging technology are sensible solutions, but if you’re an adviser in need of operational support or just a time-saving boost, it’s important to remember the different outsourcing options available. By taking advantage of these practical strategies, you’re empowering your business to thrive and succeed.
Kristine McManus serves as chief advisor growth officer at Commonwealth Financial Network.
Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.
Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.
It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.
Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.
Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
