Should I Be Outsourcing My Investment Management? – ValueWalk Premium
Investment Management

Should I Be Outsourcing My Investment Management?

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Investment Management

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As I click the button to pay my annual dues to the CFA Institute, I wonder if being a CFA ® charterholder has made any difference in my career. I actually think that holding this designation held me back as an advisor because I was pigeonholed as a “mathematics person” who should be managing the money, not as someone who can help clients with all aspects of their financial lives.

Reasons not to outsource – The Half-truth and whole-truth

It’s very common for advisors to put sales and marketing last after all investment and operational aspects of the practice are met. I’m going to suggest something radically shocking.

An advisor is a salesperson.

Now before you all beat me up on APViewpoint, my statement is provably true by the nature of the business. All client relationships will eventually face one of these outcomes:

  • The client dies and hands down assets to heir who chooses to stay with you;
  • The client dies and hands down assets to heir who chooses to leave you;
  • The client leaves you for another advisor or to DIY; or
  • The client runs down his or her portfolio in retirement and has no assets left to manage.

The only favorable outcome for your business is #1.

Everyone hates to sell, but without the ability to fill your pipeline your business will always be vulnerable. No matter how big your practice, you are at risk of a financially devastating lawsuit, massive client exodus in a bear market, decline of AUM in a bear market, rogue employee leaving and taking half your clients, etc. The risks are endless.

This is true no matter how big your AUM or AUA. A bigger book of clients means more resources are required. I’ve seen the income statements; the margins don’t get richer the more assets you manage.

The only thing that can allow you to improve the profitability of your business and protect it from risk is your ability to consistently get in front of new affluent prospects.

But here are the things that advisors tell themselves to rationalize staying behind the desk glued to CNBC:

  • I’m a “math person”
  • I have analytical designations
  • I need to justify my fees to my clients
  • I need to distinguish my brand
  • Outsourcing won’t offer as much customization as I can
  • Outsourcing won’t offer as much flexibility as I can offer in terms of product offerings
  • A third party won’t be available to my clients like I can be
  • Actively calling on people is so desperate
  • I’m great once I get in front of the person, I always close the deal. I’m a closer, not a prospector. (which I highly doubt. I’ve never seen an advisor business who closes 100% of prospects. We all have highly selective memories).

There is obviously a grain of truth in these beliefs; they’re what I call “half truths.” Here’s the whole truth: The real reason advisor are saying this is even bigger than any of these.

Ready? This one is also a shocker.

Sales is no fun.

If you do it right, the sales process hurts. This is coming from someone who creates clients out of thin air for a living. The rejection, the pressure, the disrespect, the blown off meetings and phone calls, the waste of time and money you suffer through. At points it’s outright humiliating.

But I’ll tell you what is fun…

Investment management is fun!

Read the full article here by Sara Grillo, Advisor Perspectives


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