Managing operations is one of the most time-consuming aspects of running an independent advisory firm. Developing workflows and automating systems can help you streamline important tasks, but as you continue to grow, you might decide that the time has come to seek outside help. Third-party providers can assist with RIA operations outsourcing, allowing you to devote more time to serving your clients.
Ready to grow your client base? SmartAsset AMP can help you connect with qualified leads.
Benefits of Outsourcing RIA Operations
Outsourcing can offer numerous benefits to advisors, whether they’re just getting started or already have an established business. You might consider outsourcing some or all of your RIA operations if you:
- Are ready to transition to an independent RIA model and need help building the foundations of your business
- Would like to redirect your focus toward growth activities such as recruiting and hiring new talent, attracting new clients, or strengthening relationships with your existing client base
- Want to increase your firm’s productivity and efficiency, while also controlling costs
- Are interested in upgrading your firm’s tech capabilities to better meet the needs of your clients
- Would like to dedicate more time to expanding your services
The company that you outsource RIA operations to may offer other benefits, as well. For instance, you may have opportunities to expand your network, which can help build community. Once you’re ready to exit the business, your provider may assist you with creating a workable succession plan.
Outsourcing allows for flexibility since you can choose which provider or providers to work with, based on your needs. If you find that a business relationship is no longer serving those needs or the level of service you’re receiving falls short of expectations, you have the freedom to choose a different company to work with.
Which RIA Operations Can You Outsource?
RIA operations outsourcing is designed to make your life as an advisor easier, not more challenging. With that in mind, it helps to consider which pain points you most need help with when deciding what to outsource.
For instance, you may choose to outsource tasks in areas that you’re less knowledgeable about or ones you find to be the most time-consuming. Here are some of the operational tasks RIAs most commonly outsourced.
Client Services
Your clients are central to your success, and offering superior service is a proven way to retain them. Activities you might allow a third-party provider to help with include:
- New client onboarding
- Creation of secure client dashboards or portals
- Customer relationship management
- Know your client (KYC) compliance
- Client communications and support
- Scheduling and appointment management
Outsourcing support could make sense if you’d like to be able to spend more time on portfolio management and less time on paperwork.
IT Services
The most successful advisors recognize the importance of a comprehensive tech stack, but they may be unsure how to build it themselves. Outsourcing IT services may be a logical step if you’re not tech-savvy or don’t want to put the burden on a member of your staff.
IT operations outsourcing can help you create the tech infrastructure your firm needs to grow. That can include:
- Website development
- System monitoring and management
- Application management
- Cybersecurity services
That last one is particularly important for ensuring compliance. In 2023, the SEC adopted final rules introducing new cybersecurity requirements that registered investment advisors must adhere to. The rules are designed to help RIAs manage cybersecurity risks while increasing transparency surrounding cybersecurity incidents in the financial services industry.
Compliance
Registered advisors are subject to a multitude of compliance rules, both at the federal and state level. Failure to maintain compliance can result in penalties and potentially damage your firm’s brand reputation and value.
Responsibility for ensuring compliance falls on the chief compliance officer (CCO), but outsourcing means you don’t have to manage it alone. You can work with a dedicated team to handle compliance functions, such as:
- SEC or state registration filings
- Form ADV updates
- Conducting marketing reviews
- Establishing written procedures for business operations
- Developing a compliance program
- Choosing and implementing compliance software solutions
- Responding to document requests
Your provider can also assist you with meeting requirements for compliance audits if you’re required to complete one.
Back Office Tasks
The back office encompasses many of the primary tasks that go into keeping your business running. Some of the things you may outsource on the back end include:
- Employee payroll and benefits administration
- Accounting
- Background checks for new hires
- Client billing
- Performance reporting
You may work with a service provider that bundles client and employee back office support into a single package or contract them separately.
Portfolio Management
Outsourcing asset and portfolio management might appeal to you if you’d like to spend more time on financial planning. Turnkey asset management programs (TAMPs) can handle:
- Trade execution
- Portfolio construction
- Modeling and simulations
- Investment research and analysis
- Rebalancing
- Tax-loss harvesting
In addition to saving time, outsourcing portfolio and asset management can help you deliver better solutions to clients as you grow your book of business.
Marketing
A well-rounded marketing plan can help drive new clients to your business. Your marketing plan may include:
- Promoting your firm on social media
- Building authority with a professional website or advisor blog
- Conducting PR outreach
- Collaborating with financial influencers
- Email marketing
- Direct mail marketing
- Digital ads, including Facebook ads and Google search ads
- Local advertising
The challenge is deciding which avenues to pursue to drive results. If you have limited knowledge about marketing, you may outsource this aspect of your business operations to a professional marketing company. A digital agency can create a marketing plan that’s tailored to your firm’s needs and the clients you’re trying to reach.
You may also opt to partner with an advisor marketing platform like SmartAsset AMP to generate leads. You can build an ideal client profile and get connected with right-fit leads. The best advisor marketing platforms offer tools to help you nurture leads automatically.
Choosing an RIA Operations Outsourcing Provider
When you’re ready to outsource RIA operations, you have lots of providers to choose from. It’s important to take your time to find the right match, since your provider will play an integral part in helping you manage operations.
Some of the things to consider when selecting a provider include:
- Range of services offered (and which ones you’ll actually use)
- Contract structure, as some providers may require a specific time commitment while others may allow you to contract services month-to-month
- Support and response times if you need help or have an issue
- Alignment and integration with existing systems, workflows and/or software tools
- Pricing, particularly as it relates to the added value you stand to gain
Don’t be afraid to ask questions and consider how transparent a provider is when answering them. If you need recommendations for outsourcing platforms, you may consider tapping members of your network to ask who they use.
Bottom Line
Outsourcing some or all of your RIA operations is an adjustment that may take some time to get used to if you’re accustomed to being more hands-on in the running of your business. But once you see how outsourcing can benefit your firm, you may wonder why you didn’t consider it sooner.
Tips for Growing Your Advisory Business
- Marketing is an essential part of your business, but if you don’t have a lot of time to spend on creating promotional campaigns or tracking analytics, you might be interested in a streamlined solution. SmartAsset AMP is an advisor marketing platform that helps you match with qualified leads while giving you the tools you need to follow up quickly and nurture leads as efficiently as possible. Get started today.
- If you’re on the fence about outsourcing, consider your goals. Do you primarily want to attract high-net-worth clients, increase revenues, or are there secondary factors at work, like a need to improve work-life balance? Evaluating what you hope to get from outsourcing RIA operations can help you determine if it’s the right move for your firm.
Photo credit: ©iStock.com/shapecharge, ©iStock.com/PeopleImages, ©iStock.com/AndreyPopov