According to a new study by
In the report, "Investment Management Outsourcing: Impact on Clients," 92 percent of advisors say that clients responded positively when they initially heard of the firm's decision to outsource; 80 percent reported no clients were lost in the transition to outsourcing; and seven out of 10 advisors say their business grew as a result of their decision to use external providers for at least a portion of their investment management activities.
The new research reaffirms the positive views of outsourcing found in earlier
"Advisors tell us that the best use of their time is working with clients," said
The study is
-Just over half (53 percent) of advisors outsource via turnkey asset management programs (TAMPs), and more than two-thirds (68 percent) say they partner with or outsource to multiple firms.
-29 percent of respondents outsource all investment management activities, and 57 percent say they outsource just specific asset classes and strategies. Back-office operations, investment manager research, product selection and portfolio monitoring all are among activities that are being outsourced.
-Half of the respondents (48 percent) outsource more than half of their clients' assets.
-Four out of 10 advisors say they outsource investment activities on all client accounts. Those who selectively outsource are likelier to outsource large accounts, new accounts and accounts employing alternative strategies or complex portfolios.
-The primary decision drivers for outsourcing have changed, with "access to alternative investment expertise," "portfolio construction" and "portfolio monitoring" at the top of the 2014 list. In 2012, the top three reasons were: "access to asset allocation models," "access to managers we could not access on our own," and "potential to generate alpha through best investment ideas."
Among survey respondents who do not outsource investment management, 56 percent say in-house management is central to their firm's value proposition to clients. Non-outsourcing advisors report spending a significant amount of time on investment manager research, portfolio construction and monitoring, working with technology and related activities. The toll is greatest on advisors from larger firms, half of whom spend 20 hours a week on key investment management tasks.
While 31 percent of those who do not outsource say solutions would need to be more affordable for them to consider the option, one-third say their position on outsourcing will not change.
Over a three-week period in November and
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