Advisors intent on increasing their appeal to wealthy clients might consider entrusting portfolio construction to outside partners.
So suggest the findings of the research firm Cerulli Associates’ latest report U.S. asset and wealth management. Cerulli found that advisors who use model portfolios built by outside firms or other partners spend only 10.6% of their work hours on investment management, whereas those who build portfolios on their own spend roughly a quarter of their time on that task. Outsourcing investments frees up enough for advisors to spend just under two-thirds of their work day on average dealing directly with clients.
Young advisors in particular can benefit from outsourcing investment management, according to Cerulli. Many newcomers to the industry haven’t got the support staff that would allow them to handle portfolio construction within their own firm without a great expenditure of time and effort.
Broker-dealer training programs generally do “a good job educating up-and-coming junior advisors on the benefits of leveraging model portfolios,” said Kevin Lyons, a Cerulli senior analyst, in a statement.
“As a result, they are more likely to feel comfortable and confident relying on financial planning and, increasingly, tax management as the primary pillars of their competitive positioning,” he said.
Young or not, advisors are increasingly finding that possibly their most valuable use of time is in dealing directly with clients. Scroll down to learn a little bit more about ways to make this happen.
How AI can save time
One of the big promises of artificial intelligence is that it will spare advisors from those tedious but necessary tasks that must be completed so they can then do what really drew them to the industry. Advisors have already found numerous uses for AI, most of them meant to allow for more face time with clients.
One tech executive recently estimated AI is already saving advisors 10 hours a week.
READ MORE: How much time is AI saving advisors?
When the promise falls short
But as with all new technologies, AI can all disappoint.
There are even occasions when AI ends up costing advisors more time than if they had not turned to it for help in the first place. A lot of trouble can be avoided if advisors simply take the trouble to train an AI system on what its role is and what the advisor’s expectations for it are.
READ MORE: When AI shortcuts backfire on advisors
Outsourcing often key for solo advisors
With consolidation rampant, a big question centers on whether solo advisors and small shops will continue to have a place in wealth management..
Fortunately for advisors looking to go it alone, the industry now offers a bounty of third-party firms seeking to lighten the load of tasks unrelated to financial planning. The services on offer include help not only with portfolio construction but also responsibilities related to regulatory compliance, cybersecurity and technology.
READ MORE: Solo advisors can thrive in a consolidating industry
How about outsourcing estate planning?
Along with portfolio construction, advisors are increasingly looking for outside help with the complicated considerations often involved in estate planning.
That’s especially true as clients approach retirement age in ever-greater numbers. Attorneys caution that advisors may get more than they bargain for if they try to add estate planning to their service offerings.
That’s all the more reason for good third-party firms to step in and provide a little help.
READ MORE: Advisors clamor for estate planning tools
Time to find new clients
Of course before advisors can spend time with clients, they have to have clients.
As it turns out, building that book of business can be one of the most time-intensive tasks advisors take on in their career. That’s particularly true if they’re new to the industry and are starting more or less from scratch.
Various RIAs have developed some well-honed methods for not only finding people likely in need of financial planning but of converting them into clients.
READ MORE: How can new RIAs grow — organically?
