How Outsourcing is Changing Advisor Value for the Better


Advisor success is beginning to look very different. This is a natural change driven by the emergence of more sophisticated technologies, increasing fee consciousness, and changing investor wants.

All that really means is that advisors must look for new differentiators. In 2018, advisor value no longer pivots on investment management, but rather, the ability to solve financial problems in a broader sense.

Advisors are finding the flexibility to do that through outsourcing – allowing more time to focus on the client relationship.

Investment outsourcing is trending upward, as seen in Wealth Advisor’s 2018 America’s Best TAMPs report. Tangible growth can also be seen in our growing attendance at the 2018 ftj | FundChoice Advisor Summit.

But how do you outsource effectively? Like any business practice, investment outsourcing can be approached in many ways.

One strategy is to look toward outsourcing as an opportunity for greater portfolio diversification. Diversification has taken a back seat in our recent bull market, but looking at historical trends, you could see that we are just as likely to enter a bear market as we are to experience continued growth.

By using outsourcing to integrate multiple strategies in one portfolio, you can segment opportunities in three ways:

Strategic – Assets that roll with the market.

Tactical – Actively managed assets that seek select opportunities amid change.

Diversifier – Alpha-only assets, achieved through disassociation from the market.

We employ this method in our Market Movement Strategies program of over 30 third-party strategists – responsible for a large portion of our recent surge in growth (AUA growth from $6.6 billion to $9.9 billion in under 12 months).

Beyond allowing advisors the ability to better diversify portfolios, it reduces administrative workflow associated with day-to-day investment management – leaning on dedicated third-party strategists. That flexibility helps advisors focus on client relationships, their business, and broader market trends affecting investors.

One hurdle to be aware of is fee-consciousness. In the indexing era, it can be hard to sell higher-cost assets, such as tactical and diversifier strategies. However, fee-consciousness alone isn’t ideal for preparing portfolios for market change – which can happen at any given time.

Learn more about our Strategist Outsourcing Program and Market Movement Strategies, today, and better prepare clients for long-term investment in the market.