The Power of Outsourcing and Scalability for Financial Advisors

The Advantages of Outsourcing

Financial advisors can benefit significantly from outsourcing by streamlining operations, reducing costs, and freeing up time for client-focused activities. Advisors who outsource are seeing more asset growth, higher revenue, and more new clients.¹ Using a reliable and experienced third party for functions like administrative tasks, investment management, and marketing allows advisors to focus on their strengths: building client relationships and providing strategic financial advice.

Outsourcing can also be a more cost-effective solution than hiring in-house staff, particularly for specialized tasks or when dealing with fluctuating workloads. Third-party providers often have access to economies of scale and can offer services at a lower cost per unit than internal teams. This flexibility is crucial in a dynamic market where client needs and business demands can change rapidly.

Prioritize Tasks Only You Can Execute

Devoting time to business growth activities might seem like a luxury you can’t afford, but the reality is, you can’t afford not to. There are only so many hours in a day, so how do you make them count? A good place to start is evaluating and prioritizing how you spend your time to maximize your impact.

For example, offering personalized, independent advice is one of the most valuable services you provide your clients. There’s no substitute for the relationship and trust you’ve built over time. As you guide them toward financial success, they need your expertise and attention to accomplish their goals. And few aspects of your role are as fulfilling as helping your clients pursue their dreams and celebrating life’s milestones together. By outsourcing less-essential tasks, you can create the breathing room you need to deepen existing client relationships and build new ones.

Outsource Tasks to Streamline Operations

To fully realize the benefits of outsourcing, you need a partner that understands your business and can help with your high-volume operational tasks, financial planning, payroll, and other business needs. You’ll want to leverage technology to automate time-consuming, essential processes, such as account opening and management, client correspondence, bookkeeping, and transaction execution to improve efficiency and accuracy as your business expands.

Other areas where outsourcing can have a significant impact include:

Optimizing Portfolio Management for Scalability

According to Cerulli, advisors spend 30% of their time on investments, so outsourcing the investment management function to a third party has the potential to free up about an entire workweek every month.¹ Without the time-consuming task of portfolio management, trading, and rebalancing, advisors can manage more clients while offering more diverse investment options.²

Top advisors take advantage of these key outsourcing opportunities:

• Models: Embracing a models-based approach to investment management can be a significant timesaver, especially during volatile markets. The majority of successful advisors have a models-based practice, which reduces time spent customizing investments. They are also three times more likely to outsource model development/management.
• Rebalancing: 70% use a rebalancing tool to help save time in the routine rebalancing of those models.⁴

In addition to trading and associated tasks, a third-party resource may take on policy oversight, ongoing investment research, and setting the Investment Policy Statement to uphold an advisor’s fiduciary responsibility – all of which are essential to an advisor’s value proposition. Advisors can then rely on an objective resource to create clear guidelines and adhere to them in managing investments aligned with the client’s risk score and goals.

Right-Sizing Your Book of Business

In a survey of practice management professionals, Cerulli found that serving too many clients ranked at the top of advisors’ productivity challenges, and a whopping 91% believed serving too many non-ideal clients was a moderate or major challenge.³ So what’s the solution?

• New Clients: To attract ideal clients, top advisors have a publicly stated AUM or revenue threshold for new clients. In fact, they’re 60% more likely than other advisors to establish these minimums and consistently keep them.⁴
• Legacy Clients: A common solution at national broker-dealers, wirehouses, and banks is to transfer these clients to a digital advice solution. LPL’s Partial Book Sales enables advisors to transfer accounts that no longer fit their growth strategy to LPL, where they receive an upfront payout and clients receive a warm welcome and ongoing financial advice and services from an experienced wealth management team.

Outsource Marketing to Boost Your Brand

In today’s fast-paced world, clients expect instant access to information and proactive communication. As a financial professional, you’re juggling many business priorities while focusing on the needs of your clients. Spending time on marketing isn’t your #1 priority — and it shouldn’t have to be.

In an era dominated by digital marketing, crafting a compelling online presence is crucial for independent financial advisors. Outsourcing marketing services can help you establish and maintain a strong brand image, develop effective online campaigns, and navigate the ever-evolving landscape of social media. Specialized marketing agencies can provide expertise in content creation, search engine optimization (SEO), and digital advertising, ensuring you stay ahead in the competitive financial industry.

How LPL Can Help You Achieve More

Outsourcing has become a strategic tool for independent financial advisors looking to optimize their business operations and enhance client services. By wisely choosing which functions to delegate, you can unlock new levels of efficiency and focus on building lasting relationships with your clients. As the financial landscape continues to evolve, embracing outsourcing as part of a comprehensive business strategy can position you for long-term success in a competitive market.

If you’re ready to explore how LPL can help you unlock the full potential of your business, reach out to us today.