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Can Outsourcing Help Future-Proof Your Practice for The (Next) New Normal?

By Kevin McCrossin, Senior Director, Business Development

Blog Hero 9 21 20

The nature of market volatility this year is unprecedented, having been caused by a pandemic the likes of which has not been seen in over 100 years. You might think that being asked to excel at managing bespoke portfolios (performing research, selecting investment vehicles, hands-on portfolio management, rebalancing, and tax optimization) in times like these—all while cultivating client relationships and growing your practice—would require superhuman ability. And you’d be right.

This COVID-induced disruption has wreaked havoc on every aspect of our lives, and financial advisors are certainly not immune. It has also accelerated the need for RIAs to re-think their business and operating models as we enter a new era with new norms. Can outsourcing the portfolio and practice management burden provide an antidote for The New Normal?

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What Is The Value Of Outsourcing In This New Era?

There’s no doubt that outsourcing to third-party managed account providers has gained momentum in recent years. Spurred on by advisors looking for additional ways to deliver value and find more time to focus on clients instead of portfolios, the proposed upsides of outsourcing include increased attention to building the business (marketing, promotion, thought leadership, partnerships, asset gathering, monitoring KPIs), mitigating tech costs (reduction in tech spend, tech operators, and improved operating margins) and potentially better investment outcomes through bear and bull markets.

So, what is the value of outsourcing in a once-in-a-generation correction year like 2020? Pundits—and everyone else—have now officially run out of superlatives in trying to describe the havoc this year has wrought: Unprecedented. Unhinged. Surreal. Bonkers. Call it what you want, but it’s all been enough to motivate advisors to move client accounts, especially high net-worth accounts, to outsourced managed account platforms this year.1

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Finding the Right Outsourcing Partner

It’s incredibly challenging to tailor portfolios for today’s investors while trying to build and maintain all other aspects of an advisory business. One wonders how advisors find the time to construct, monitor, and rebalance truly customized portfolios at scale (and optimize tax considerations for each one) while nurturing all client relationships. It was that way before COVID accelerated this correction year. It’s even more so as we navigate through the pandemic. Many advisors are now wondering, what’s the best way to future-proof their practice beyond 2020?

A proven, qualified outsourcing provider is worth consideration. The provider that suits your business best should be able to help alleviate the burden—and cost—of keeping the portfolio management technology in-house, including:

  • The expense of implementing a state-of-the-art, single rebalancer
  • Seamless, a la carte integration of tech tools based on advisor need
  • Maintaining the platform by conducting updates and constantly improving it
  • Supplying tech support personnel to troubleshoot any questions
  • Training and retraining operators
  • Backup, file retention, audit history, etc.

And the right outsourcing provider should also be able to provide broader effects, including:

  • Business scalability
  • Ability to leverage investment manager expertise
  • Greater focus on client acquisition and retention efforts
  • Improved ability to address regulatory compliance regulations
  • More stringent manager due diligence
  • Ultimate driver of increased client satisfaction
  • Potentially enhanced profit margin

For over 20 years, we’ve seen our technology enable wealth managers to excel in turbulent markets by helping them easily integrate between platform and managers to scale their business as needs change. We expect to provide that same kind of guidance through tough markets ahead. To see more of our thoughts on this topic, please read Beyond 2020: Future-Proofing Your RIA.


1 Cerulli Associates. The Cerulli Edge. “U.S. Managed Accounts Edition.” 2Q 2020, Issue #76.

By Kevin McCrossin, Senior Director, Business Development