Smart Outsourcing Can Be a Game-Changer for RIAs

Working with qualified technology or compliance consultants can help you offload non-core business functions while also tapping into expert insights on how to improve automation, scale and efficiency.

Even an ad hoc tech consultation can help you assess how well the new solutions you're considering will integrate with your existing systems before you make any commitment — saving you time, money and headaches down the road.

Artificial intelligence (AI) can also help you run your business more efficiently. For example, AI can detect data anomalies that could derail transactions. But remember, while AI can potentially enhance and protect key business processes, it requires a knowledgeable person to oversee it and act on any patterns or problems it uncovers.

Supporting Your People

Finally, consider how outsourcing can help support your staff. The pandemic has shown that remote talent solutions can be effective for certain functions, which may broaden the pool of talent you can tap into.

The McKinsey Global Institute estimates that more than 20% of the global workforce (mostly in high-skilled sectors such as finance) could work away from the office most of the time and be just as effective — thanks to progress in automation and digitization.

Remote work can offer your current staff more flexibility, as well as give you more flexibility to take advantage of outsourced staffing solutions.

Choosing the right provider is another way to support the hard work your people do every day, with solutions that help improve scalability, automate back-office tasks, deliver a consistent investment process and streamline client service. Many times your custodian can offer these, so connect with them about solutions for automation, scale and aggregation — and any other support they can offer.

Choosing Your Own Way

As you think through outsourcing opportunities, don't forget to count the cost. For example, outsourced management typically costs between 20 and 50 basis points of the assets being managed, and you may have to either reduce your revenue or pass the cost along to your clients.

Oversight and due diligence are key, and you may need to carve out additional time or create new processes to make sure everything runs smoothly. Also consider how outsourcing could affect your ability to customize client portfolios, manage communications, collaborate with colleagues and set business goals.

The good news: 96% of advisors who outsourced said they were satisfied with their solution. It's worth exploring whether outsourcing could free up your firm to focus on more strategic work, unlock your creativity, explore new centers of influence and collaborate with a wider range of industry professionals.

Gabriel Garcia is the head of business management and strategy for E-Trade Advisor Services. He joined the firm in October 2019. Previously, he served as managing director for BNY Mellon's Pershing Advisor Solutions where he led its Relationship Management & Consulting group and served on the Executive Committee.

Prior to his role at BNY Mellon | Pershing, Garcia spent 15 years with Charles Schwab & Co., where he held several leadership positions in sales, training and consulting.