Start a Conversation

    Deciding to outsource investment management can be transformative to your business—which is a pretty intimidating prospect. There are a lot of unknowns associated with outsourcing, like the kind of impact that outsourcing will have on your business, the nature of your relationship with the third-party managing your clients’ investments, and the day-to-day realities of running your practice after outsourcing.

    To help clarify this uncertainty, we’ve collected the top 5 benefits that advisors commonly realize after they make the decision to outsource their investment management.

    1. More Time

    The number one benefit to outsourcing—and the one that enables many of the others on this list—is that it gives back more time in your day. In fact, a study on the impact of outsourcing investment management found that advisors who outsourced all or nearly all of their investment management gained a full eight hours back in their week.

    Advisors that outsource use this extra time in any number of ways. Some choose to build stronger relationships with their clients, some seek out new business opportunities, and others choose to spend more time with their families. Without the burden of conducting research, due diligence, personalizing portfolios, and more, advisors find they have the time to pursue these goals.

    2. Added Focus on What Clients Appreciate Most

    There are dozens of self-service financial management tools out there today—Robin Hood, TD Ameritrade, Ally Invest, and more. But your clients aren’t using mobile apps and software tools to manage their finances; they’re using you.

    The reason why?

    You provide expert guidance on wealth management, support their individual goals, and help them navigate uncertainty. This one-on-one, tailored attention isn’t something they can get from a self-service finance tool.

    Many advisors balk at what outsourcing investment management might mean to their clients, or that outsourcing investment management means outsourcing the very reason why their clients came to them in the first place. However, the reality is the opposite: Outsourcing allows advisors to focus more directly on the personalized service that clients want. Conducting investment research and due diligence, building portfolios, on-going monitoring, trading, and rebalancing—advisors who decide to perform these tasks for each and every one of their clients ironically lose the time needed to provide their clients with a tailored approach.

    3. More to Offer

    Depending on the nature of your practice and your outsourcing provider, you’ll likely be able to expand your service offering through outsourced investment management. In particular, high-net-worth clients often require portfolio solutions designed to meet their unique needs. As an independent advisor, applying that level of focus on a single client may not be feasible. A third-party specializing in investment management, however, will have the necessary resources available.

    When researching potential outsourcing providers, it’s important to keep in mind that many offer additional services beyond straightforward investment management that your clients may appreciate. You might find a potential provider, for example, that offers:

    • Estate planning
    • Retirement planning
    • Environmental, social, and governance (ESG) investing
    • Guidance on charitable giving
    • Practice management services

    These additional services can be key to attracting new clients and expanding your practice.

    Download The Power of Outsourcing Investment Management to learn how  outsourcing can help your firm grow.

    4. A Stronger Brand

    When you have more time to spend with clients and offer more services to different types of clients—whether they’re interested in retirement or high net worth—you differentiate yourself from other financial advisors. Rather than being an investment manager to your clients, you can be a holistic wealth manager. Again, this will help you branch out into new markets and attract clients that want more than just investment management.

    5. Lower Costs

    There’s a misconception out there that outsourced investment management is expensive. The upfront costs can contribute to this impression. But the data shows that, in the long run, outsourcing is less expensive. In fact, two-thirds of advisors who outsource experience 17% lower operating costs on average.

    Outsourcing can be thought of as an alternative method of growing your business: Rather than hiring individuals to provide support, you “hire” your outsourcer to act as an extension of your firm. Because your outsourcer specializes in investment management services for its various customers, you benefit from economies of scale. As a result, the you'll realize the same benefit you would have gained by hiring additional staff—and you won't have to pay for training and administration.

    The Most Important Factor to Consider When Outsourcing?

    Suppose you do decide to outsource your investment management. In that case, keep in mind that the degree to which you experience the benefits described in this article will depend upon who you choose to work with.

    Like your clients, independent advisors have different needs and goals, and some third parties will be a better fit than others. For example, due diligence may be the most important service to you, or it may be something you prefer to conduct yourself. You might prefer a very hands-on approach from your outsourcer, or it could be that you need just a bit of support and nothing more. It might even be the case that you’re uncertain about where your biggest needs lie, and you need help identifying those gaps.

    Thus, researching whether outsourced investment management can benefit you, what kinds of services you need to see from an outsourcer, and how you want your relationship with your outsourcer to unfold is key.

    This can feel like a lot of extra work. (Especially if gaining more time is the reason you’re curious about outsourcing!) Fortunately, we’ve got a great place to start. Read our study on outsourcing, called the Power of Outsourcing Investment Management, to learn some of the reasons advisors seek outsourced investment management and the outcomes they see.

    investment outsourcing study

    Tag(s): Outsourcing


    AssetMark is a leading provider of extensive wealth management and technology solutions that help financial advisors meet the ever-changing needs of their clients and businesses.

    September 21, 2022

    What You Need to Know About Fee-Based and Commission-Based Financial Advisor Compensation Models

    Financial advisory practices have changed over the years and are increasingly shifting away from commission-based models toward fee-based models. To understand this trend and...
    September 16, 2022

    7 Tips to Prepare Your Clients for a Market Downturn

    “May you live in interesting times” is usually taken as a good-natured sentiment. That is until things start to get interesting in a bad way. Economic volatility and market...
    September 9, 2022

    Securities-Backed Lines of Credit: 3 Ways Clients and Advisors Are Benefitting

    As the role of financial advisors evolves beyond pure investment management to increasingly holistic financial planning, solutions like SBLOCs have grown in popularity by...

    Sign Up For Our Blog

    Subscribe to get updates on new content.