Morristown, New Jersey-based Private Advisor Group has more than 750 independent advisors nationwide, more than 50 employees and approximately $25 billion in advisory assets under management (AUM).
Verne Marble, Director of Business Development at the firm, leads the development and implementation of its national strategy for new advisor business growth. He has more than 25 years of experience in financial services.
We spoke to Marble about how outsourcing can help advisors achieve growth through scale and conduct investment management, with minimal client disruption.
WSR: How can an advisor leverage outsourcing of services to boost growth? What are the key types of outsourcing for these needs?
Marble: Outsourcing can help advisors create scale and capacity, so they have more time to focus on growth—engaging with clients, cross-selling and upselling additional services to clients, or prospecting and networking for new client opportunities. Ideally, advisors can outsource tasks that do not drive revenue.
Certain administrative duties can be easily outsourced, so that staff can dedicate more focus to client service. Financial planning doesn’t have to fall completely on the advisor. Paraplanning services can implement plans from a mechanical standpoint, which the advisor then weighs in on and delivers to the client.
Investment management is interesting to consider. The goal of our WealthSuite platform is to give advisors a platform that’s low-cost and multi-custody enabled, with custom indexing solutions, bespoke model solutions from industry leading investment strategists including sophisticated tax managed solutions, and separately managed account structures. Advisors use it to manage client portfolios with greater efficiency and scale.
WSR: What kinds of customized outsourcing solutions are available for investment management and how can these be applied to specific client segments, account sizes and investor demographics?
Marble: Investment management is something advisors tend to feel strongly about in terms of adding value to clients’ lives, but the labor of it, within the construct of a wealth management plan, can be outsourced. For example, some broker-dealers or RIAs can provide the ability to take on the actual trading of advisor-developed model portfolios.
To obtain more scale and capacity, some advisors may even want to outsource the entire investment management process. This can be done with either turnkey asset management programs (TAMPs) or home office platforms. Not all clients have to receive the same type or level of outsourcing, either.
For example, advisors may choose to outsource the management of small accounts to a third party, while handling the management of larger ones on their own. High net worth, taxable investors interested in direct or custom indexing may be best served by advisors outsourcing tax management functions.
WSR: What are the key factors in determining whether an outsourcing solution will be popular among advisors?
Marble: Two main factors are cost and scale. An outsourcing solution will be popular among advisors if it allows them to outsource processes at a reasonable price. It doesn’t have to be super low-cost, though, as advisors aren’t only looking to save money and time.
They want to create value for their practices and for their current and future clients. If the benefits are worth the expense, advisors will embrace it. Regarding scale, advisors want to recapture time for themselves and their team, but they also want to create additional return on the time they get back.
That return doesn’t only need to go toward the business. Time they save could help advisors better balance their personal and professional lives. Advisors also could be resistant to an outsourcing solution if it doesn’t align with investment strategies that are most appropriate for their clients or the custodians they use.
WSR: How do outsourcing solutions providers minimize client disruption during implementation?
Marble: It all boils down to communication. An outsourcing provider needs to communicate with the advisor to map out how the latter should educate clients about why they are doing what they’re doing.
If an advisor is choosing to outsource investment management to a third party, the outsourcing provider should meet with the advisor and coach them, using role playing, on what to say to clients. The advisor must be able to explain, “I’m doing this to make sure I can spend more time serving you and keeping you on track with your financial plan. My investment philosophy has not changed.”
If an advisor is outsourcing paraplanning or administrative services, which tend to be behind-the-scenes functions and not visible to clients, then they don’t have to worry as much about disruption to clients. The bottom line—when using a good outsourcing provider, the client experience won’t be significantly disrupted during implementation.
Chris Latham, Managing Editor at Wealth Solutions Report, can be reached at clatham@wealthsolutionsreport.com
