Outsourcing may be Key to Your Growth as an Advisor

Advice to the Advisors

Sheaff Brock Investment Advisors | compliance, operations, financial planning, portfolio management & trading, sales & marketing and more

Outsourcing may be Key to Your Growth as an Advisor

Since, in the volatile market environment of this decade, it’s much more difficult to add value in the investment management area than it was during the previous 20 years, as thewealthadvisor.com points out, it may make sense for advisors who are pressed for time and want to focus on their core competencies to consider outsourcing options.

At Sheaff Brock, we’ve found that very truth to be self-evident. Advisors with an orientation towards practice growth must keep time free for community outreach and practice development, in particular when it comes to the many different aspects of managing clients’ retirement income portfolios, including investment selection, modeling, trading, and performance reporting.
Portfolio management actually represents only one of the seven different tasks on which advisors need to “have their finger,” Sheaff Brock Director Jim Murphy concludes, every one of which is crucial to professional success:

  1. compliance
  2. operations
  3. employee management
  4. financial planning
  5. customer relations/service
  6. sales & marketing
  7. portfolio management and trading

Retirement portfolios of today are, by necessity, very different from those of earlier generations, Murphy emphasizes, and just as thewealthadvisor comments, it is much more difficult to add value in the investment management area. Product selection and management need to reach beyond the standard ETF/mutual fund mix.

A Barron’s blog in December of 2016 provides numbers showing that advisors are increasingly outsourcing portfolio management, A study by Fidelity puts the number of RIAs outsourcing at least a portion of the investment management process at 27%; Northern Trust and Investment News say 32% and TD Ameritrade indicates 58%.

InvestmentNews reported in September of 2017 that more than half of financial planners rely on outsourcing to handle their portfolio management. Wade Brittingham of Voya Financial Advisors, indicates “CFPs should not management client portfolios… (and should instead be) adding value … with my financial planning expertise.”

Acknowledging that many RIAs do enjoy involvement in investment selection, Jim Murphy notes that Sheaff Brock’s role is to provide additional support, strategies, and experience in wealth management. The more a practice grows, he has noticed, the greater the likelihood that special client situations will arise, calling for more specialized portfolio constructs and techniques.

Could outsourcing be the key to your growth as an advisor?

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