TruClarity’s CEO on Why Breakaway Advisors Need Outsourced Support

Featured on Advisor News and written by Pamela Stross on August 19, 2019

The Importance of a Transition Assistance Team

Some type of turmoil always seems to be occurring within the financial investment industry. Bank of America is dropping the Merrill Lynch brand name from some of its businesses, while BB&T has announced their plan to purchase Sun Trust Banks and rebrand as Trust Financial Corp. in the largest bank merger since the financial crisis.

This and other turmoil in the industry are creating a heightened environment where financial advisors may be considering a breakaway to start their own firms. However, transitioning to independence can bring about uncertainties regarding administrative tasks and costs that were previously handled by their brokerage or wirehouse.

To manage these additional responsibilities, breakaway financial advisors starting their business should consolidate outsourced support such as back-office support, marketing and technology services so they can better serve their clients and build a profitable business.

The Benefits Of Outsourcing Services

Financial advisors might initially be apprehensive about outsourcing to third-party vendors, especially if the advisors came from large brokerages that provided support structures. Often, advisors have an unfounded fear that outsourcing will result in higher costs and a loss of control over their practice.

Despite these fears, in reality, the outsourcing of non-client-facing responsibilities is typically cost effective while leaving the advisor in total control of their practice. Fidelity performed an outsourcing study that found 43% of advisors currently leverage external providers for select business functions.

Of those in favor of outsourcing, 77% found outsourcing saved time while 66% found outsourcing increased productivity. An additional 57% believed outsourcing optimized efficiencies for their practice.

According to a report by the Financial Planning Association, 33% of advisors believed administrative burden was the greatest obstacle in increasing productivity. In addition to being more productive business owners, smaller registered investment advisories can save money by outsourcing professional support.

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