Consistent growth is crucial to the success of any business. However, most financial advisory firms lack the time and resources necessary to execute strategic growth. There is one growth strategy that completely changes the game: outsourcing.Whether it’s contracting workers or partnering with an external company, outsourcing work can be the solution to your internal workflow problems. Many benefits come with outsourcing tasks that are outside of an advisory firm’s core competencies. It allots more time to work on client relationships, larger projects and can provide the margin needed to increase revenue exponentially. If you’re considering how to add more value to your clients or how to break through to the next level of your business, keep reading. Here, we’re diving into everything you need to know to embrace outsourcing so you can watch your advisory firm grow and succeed.
Who Is Outsourcing?
In a 2019 study from Fidelity, 43% of financial advisors were working with some kind of outsourced vendor. Half of them are outsourcing marketing, legal and compliance or investment management. There may always be division around the idea of whether or not investments are a part of the core competency of financial advisors. However, even those who would include investment management in their value proposition often partner with outside sources for research or quarterly market reviews.
Why Should You Outsource Work?
Before deciding what work you want to outsource and who you want to outsource it to, you should consider what your core competencies are and how those competencies add value to your clients. Ask yourself what you hope to accomplish by outsourcing work? Are there gaps in your current value proposition that could easily be corrected if other activities were taken care of by outsourcing work?
For the advisors who chose to outsource, eighty-one percent reported an increase in the number of clients in the past year, compared with 71% who kept everything in-house and did not outsource.
Similarly, 95% of outsourcers experienced growth in assets under management, compared to 89% of non-outsourcers.
Reduces Operating Costs
In most cases, outsourcing work is less expensive than hiring a new employee to complete the work. It can also help with budgeting for various projects as the operating costs of outsourced work can be decided upon prior to beginning the project. This means business leadership can propose an accurate budget for each project.
Expands Potential Talent Pool
When you’re trying to hire someone internally, you’re faced with the challenge of finding good talent in a single location. By outsourcing work, you’re granted the opportunity to find talent anywhere. It greatly broadens the pool of candidates with whom you can collaborate. Most resources for outsourcing work are also specialists in their field, allowing you to rest assured that you’re working with someone who knows how to do their work well and will provide top-notch work.
Increases Internal Company Focus
By removing tasks from the plates of internal employees, you free up time for them to focus on greater projects or problems at the company. They can get creative, trying new ideas and devising solutions that could reap enormous benefits for the company. It could also lend to greater employee satisfaction. When employees have more time to work on tasks that interest and excite them, they are more likely to feel content with their jobs.
Standards Might Differ
When collaborating with anyone else, you also run the risk of operating under a different set of standards. This impacts the quality of work done, how long it takes, and the process to complete the work. The best way to prevent finishing work under different standards is to have a detailed discovery call prior to beginning every project. Be clear with the expectations for the task and make sure that everyone involved is on the same page in terms of how the project is to be completed.
Miscommunication Is Possible
Miscommunication is always possible in a project where several teams are involved. The risk is even higher when outsourcing work without clear communication. When work is outsourced, the external resource only has the information provided to them to complete the task. It’s important that the needs for each project are clearly communicated for successful project completion. It’s also a good idea to have regular check-in meetings to keep work in line with expectations.
Increases Security Threat
The more people who have access to your company’s internal systems, the greater the security risk. However, this is less of a concern if you carefully choose who you work with and what you share with them. Do your research and have in-depth conversations with your outsourcing partners. Make sure they only have the resources they need to complete their work.
How to Outsource Successfully?
We know that outsourcing work can lead to successful company growth. The next question is how to outsource work effectively? The first step when developing any professional plan is to conduct a brainstorming or discovery meeting with internal employees. You must determine what tasks are worth your time and what tasks can be outsourced to external partners. Take into consideration how employees are spending their time. Time is money, especially for RIAs. If an employee is spending a large portion of their day doing work that can be completed externally, it’s time to reevaluate and redistribute their workload.
Once you’ve evaluated the need of outsourcing work in your company, the next step is to find the right partner to work with. Make sure you garner a broad understanding of what is available in the outsourcing market for your tasks and the legal requirements when outsourcing that work. Don’t be afraid to explore your options. Many businesses outsourcing work for the first time make the mistake of working with the first external resource they find. It is always a good idea to consider several partnerships to ensure you’re working with the person that is right for you.
When outsourcing any kind of work, keep in mind that you get what you pay for. Outsourcing will most likely lower your overall project costs, but that doesn’t mean you should skimp on paying a quality resource for quality work. Take reputation, scope of service, speed, experience, and alignment with your business goals into consideration when selecting your provider.
At tru Independence, we take the time to align ourselves with your business goals. We understand your efforts and where our services can help support your business growth strategy. Outsourcing work can be the solution to your business workflow.