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Research Shows More Advisors Outsourcing Compliance

Post on: October 14, 2016 | Todd Schweber | 0


Last month, WealthManagment.com released the 2016 Advisor Benchmarking RIA Trend Report, which outlined several points of analysis including: trends in functions being outsourced (and where time is being focused), advisors' top initiatives for their business and activities that drive growth and performance.

We found this report particularly interesting as it reflects a lot of the feedback we've been hearing from discussions with our Network members. Here are some highlights from the report:

1) Trends in Functions Outsourced by Advisors

Modern times call for modern business practices and processes that allow for more to be accomplished in the limited 24 hours a day that we are all confined to. In order to scale operations, advisors, like any other business, have choices to make including whether to expend resources and grow in-house teams or outsource responsibilities and operate lean. Overall, trends point towards an increase in outsourcing business components in general, but, WealthManagement.com has shed light on the top functions most likely to be outsourced.


Out of the nine functions covered in the report, No. 2 on the list is Compliance. The percentage of advisors outsourcing this business operation has close to doubled since 2014. Compliance is something that can make or break an advisor’s business—in more than one way. Compliance is also a time and resource expense that many small businesses cannot afford to take on. Additionally, non-compliance could possibly be the end of business for many.


WealthForge sees the same trend, as RIAs and issuers alike are looking for the most efficient way to stay within regulatory lines without burning up time and money better spent elsewhere in their business.

2) Advisors’ Top Initiatives for Their Business

As it’s been said many times and many ways, “If you ain’t growing your business, you're killing it.” According to WealthManagment.com’s report, advisors' No. 1 focus of their business has consistently been to grow profit via higher AUM and revenues. Marketing/Business Development and Improving Client Satisifaction follow as No. 2 and No. 3.


From where I sit, these are all good initiatives, but the remaining question is, “How do you build more value-added relationships?" In a time where advisors have DOL rulings to contend with and robo competitors around every corner, it's more important now to provide solutions to clients that not only open new doors but maintain long-lasting relationships.

WealthForge works with both high-net-worth clients as well as the advisor community. What we continue to see as ways to develop and grow client relationships can be defined through the need for fully compliant investment opportunities, increased product offerings for clients and standardized processes that make the task of marketing, transaction processing and account management less burdensome.

3) Activities That Drive Growth and Performance

WealthManagement.com reports that the most time consuming activities advisors undertake to drive growth and performance are as follows:

  1. Client Services and Meetings
  2. Portfolio Management
  3. Client Acquisition


These activities barely scratch the surface of the laundry list of activities advisors need to follow in operating a growing, compliant and long-lasting business. 

The feedback we've received from our Network members points to similar trends and supports the need for advisors to pay attention to client and portfolio interaction, not the back-office components of business.

The overarching theme of this report is that there seems to be more for advisors to do and less time for them to do it. Focusing on clients and growing their businesses should be top of mind and where they spend most time and resources. And with compliance being a time-consuming task, many advisors are turning to trusted third-party providers to handle this important part of their business.


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Disclaimer: WealthForge provides this information to our clients and other friends for educational purposes only. It should not be construed or relied upon as legal advice.

Disclaimer: Altigo provides this information for educational purposes only. It should not be construed or relied upon as legal or tax advice.

About author

Todd Schweber

Todd leads business development and sales efforts at WealthForge. Prior to joining the team, Todd ran his own startup and worked hand-in-hand with other organizations looking to raise capital and connect with investors. A passion for technology as well as seeing young businesses succeed has led Todd to work within the new world of online private placements and investing.
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