For independent financial advisors, allocating their time is one of their most critical decisions. Running a small business can be overwhelming. Advisors often balance many responsibilities, from meeting with clients to developing investment strategies to managing day-to-day operations such as marketing, compliance, and accounting.
Advisors can’t do it all on their own. Independent financial advisors can build back time in their day by outsourcing the transactional aspects of investment management. In fact, it can be a strategic move that benefits their practices in more ways than just time savings.
According to an AssetMark Study, advisors outsourcing investment management reported benefiting from asset growth, lower costs, and reduced stress. In addition, 98% stated that outsourcing allows them to deliver better investment solutions to clients, associated with having access to a broader range of products and a larger team dedicated to managing their investments.
Below are three distinct ways outsourcing investment management can enhance your practice and client satisfaction while driving growth.
Emphasis on Financial Planning: Outsourcing investment management can save advisors several hours each week that can be reapplied to revenue-generating activities in their businesses. With investment management becoming increasingly commoditized, the planning process is where advisors can differentiate their practices. The planning process emphasizes the 1:1 relationships advisors have with their clients and their needs. Outsourcing the transactional functions associated with investment management enables advisors to broaden their support and focus on client relationship management, financial goal setting, and comprehensive planning. Advisors and Certified Financial Planners (CFPs) leveraging the Good Life Investment team’s Wealth Allocation Models generate more capacity to focus on tax planning, education planning, retirement planning, insurance planning, risk management, and other aspects of financial planning. At the same time, the investment team implements those investment plans.
Expertise and Customization: Working with a team dedicated to investment management provides an advisor the ability to leverage capabilities they may not otherwise have as a small practice. Advisors can benefit from advanced tools, risk management, and different methodologies. They can also access a broader set of products, investment research, and the capacity to constantly monitor, update, refine, re-balance, and adjust the mix of funds and investments as market or client needs change. This alignment and focus can result in more efficient and effective portfolio management.
Scalability: Outsourcing enables advisors to scale their businesses more efficiently. Without the time-consuming task of portfolio management, advisors can manage more clients while offering more diverse investment options. Centralizing portfolio management can help individual advisors and small advisory firms achieve economies of scale, potentially lowering costs and fees.
Beyond trading and associated tasks, an outsourced resource assumes policy oversight and ongoing investment research, vital to the advisors’ value proposition. That includes setting the Investment Policy Statement to uphold an advisor’s fiduciary responsibility. With that, advisors can rely on an objective, third-party resource to create clear guidelines and adhere to them in managing investments aligned with the client’s risk score and goals.
Additionally, advisors can access the investment team’s ongoing research reports and insights to support advisors in communicating with clients. As client service and support grow, advisors have a robust bench of talent and resources behind them while operating a streamlined practice that creates more capacity.
The Good Life Investments team has nearly ten years of experience providing investment management services focused on helping advisors achieve the above goals while serving nearly $2 billion in assets for over 10,000 clients. They focus on providing Wealth Allocation Models (WAM) that are flexible, scalable, and cost-effective investment solutions to serve a wide range of investor risk profiles, from basic to complex. In an increasingly crowded space, they differentiate themselves by providing dynamic rebalancing, investment policy statements, and custom mandates for their various financial models to ensure they best serve clients and uphold their fiduciary responsibilities.
To learn more about the power of outsourcing investment management at Good Life or the Wealth Allocation Models, email WAM@goodlifeFA.com.
Frequently Asked Questions:
Does outsourcing investment management result in static strategies?
Outsourcing doesn’t mean static strategies; these investment teams constantly monitor, update, refine, re-balance, and adjust their mix of funds and investments as market or client needs change. Further, this specialized investment oversight can attract clients by emphasizing the dedicated team’s role in maintaining a dynamic portfolio.
How does outsourced investment management align with the independent financial advisor’s fiduciary responsibility?
This is why all of Good Life’s Wealth Allocation Models follow firm Investment Policy Statements. It ensures investments are managed based on client needs by employing an objective third party to implement the planning strategy. This third party can give investment management focused attention that individual advisors cannot.
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