Practice Management: Processes, Guidelines and Procedures Create Alignment in Independent Advisory Practices

By Steve Kulesza, CFP®, Dynamic Chief Business Development Officer

Independent advisors and their clients can benefit from the increased scale, resources and services associated with a larger firm. The key to achieving that goal is to do so without sacrificing the high-quality relationships between advisors and the clients they work with.

The good news is that there are process-driven strategies that help advisors maintain high-quality relationships with their clients while also prospecting for new ones, all while minimizing time spent on non-core relationship activities. Before leveraging these strategies to benefit current and future clients, advisors must first identify which activities provide high value and which do not.

For independent advisors, this is often easier said than done. Many find themselves distracted from spending valuable time with client and prospects due to tasks like compliance, trading, managing employees, and technology troubleshooting to name a few.

In this post, advisors will learn how to reduce their involvement in non-revenue generating or non-client facing activities, allowing them to focus on serving current clients and building relationships with prospects. The key to optimizing this process lies in leveraging a proven set of processes, guidelines, and procedures, while also engaging with a community of subject matter experts.

Outsource non-core functions to free up time for high-value activities

Independent advisors are often fully occupied with building relationships with their current clients and potential future ones, which is already a full-time commitment. Moreover, these advisors typically lack expertise in non-core activities, such as compliance, technology, and back-office operations. Outsourcing these tasks to a team of experienced professionals can help advisors enhance their focus on developing a more robust suite of offerings, services, and investment options to better serve their clients.¹

Asset management can be a major challenge for many advisors, who may feel confident in their ability to offer expertise to investors. However, the asset management landscape has grown significantly more complex since the turn of the century. For instance, there are now over 140,000 regulated mutual funds and 13,200 exchange-traded funds available in the market today.² That doesn’t include the thousands of stocks, bonds and other investment products available.

The vast array of investment products and strategies makes it challenging for advisors to stay updated in a way that allows them to significantly add value to clients’ asset allocation and overall investment decisions. As a result, both advisors and clients can benefit from outsourcing some or all of the investment management functions to third-party investment management service provider.

Outsourced investment management or TAMPs can offer advisors and clients a broader range of strategies, including value-added services capital gains management, alternative investments, separately managed accounts, customized investment strategies and more. Outsourcing investment management can strengthen the relationships between advisors and their clients. In fact, research shows that 83% of advisors who outsourced asset management reported stronger client relationships afterward.³

Embrace a community of experienced professionals to leverage scale and best practices

When it comes to outsourcing, the key question is not whether to outsource, but how and where to do so. Independent advisors cannot foster high-quality relationships with clients if they are overwhelmed by non-core tasks. Once advisors recognize the value of outsourcing, they must then focus on identifying the right outsourcing partner to help them optimize their relationships with clients.

Although technology has advanced, advisor productivity—an essential factor in relationships with clients—has not kept pace.⁴ This is largely because advisors are stretched thin by non-core tasks. Advisors can best serve themselves and their clients by focusing on developing their expertise growing the business, strengthening client relationships, and driving top line revenue.

Identifying the right outsourcing partner that enables advisors to scale and strengthen client relationships is a true value-add. This partner should provide a comprehensive range of integrated technology solutions, robust back-office support, and overall practice management support. Ultimately benefiting both advisors and the clients they serve.

Rely on an already-established ecosystem of processes, guidelines and procedures

Advisors and their clients can gain significant value from an outsourcing partner that provides a suite of time-tested processes, guidelines, and procedures…along with the tools to support them. Just as the technology supporting an advisory practice should be plug-and-play, these processes should be adaptable to specific situations in a similarly seamless way. Also allow for the advisor to customize the ideal client experience.

For example, both advisors and clients benefit from a process-driven onboarding system. Advisors don’t have to reinvent the wheel each time they begin working with a new client, and clients enjoy a streamlined process that ensures all their needs are addressed as they transition into this new relationship.

Workflows can enhance processes beyond client onboarding as well. Workflow software can automatically schedule and assign tasks to specific members of an outsourced or internal team trained to handle them. These tasks can include updating beneficiary designations, scheduling investor meetings, and managing follow-up actions after meetings.⁵

How to Thrive

Ultimately, independent advisors and the investors they work with can thrive by embracing outsourcing and leveraging proven, process-driven strategies to free up valuable time for what truly matters—building and nurturing high-quality relationships with clients. By outsourcing non-core functions, advisors can gain access to expertise, scale, and resources that will enhance their ability to serve clients, prospect for new ones, and grow their businesses. Whether it’s managing complex asset allocations, improving back-office efficiency, or tapping into a community of experienced professionals, the right outsourcing partner can make all the difference. By embracing this approach, advisors can focus on delivering the best possible client experience while achieving sustainable growth and success in a complex and evolving financial landscape.

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Sources:

1. “Unlocking Efficiency: The Power of Outsourcing for Financial Advisors,” Independent Advisors’ Alliance, Feb. 22, 2024
2. “2024 Investment Company Fact Book,” Investment Company Institute, 2024
3. “Financial Advisors’ Front-, Middle-, and Back-Office Outsourcing,” AssetMark, Feb. 16, 2024
4. “Scaling Financial Advice: What Actually Drives Efficiency and Advisor Productivity,” Kitces.com, July 26, 2021
5. “Smart Financial Advisors Use Workflows and Processes… Why Don’t You?,” Advisorpedia, Jan. 28, 2018

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Disclosures

This commentary is provided for informational and educational purposes only. The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. This is not intended to be used as a general guide to investing, or as a source of any specific recommendation, and it makes no implied or expressed recommendations concerning the manner in which clients’ accounts should or would be handled, as appropriate strategies depend on the client’s specific objectives.

This commentary is not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation. Investors should not assume that investments in any security, asset class, sector, market, or strategy discussed herein will be profitable and no representations are made that clients will be able to achieve a certain level of performance, or avoid loss.

All investments carry a certain risk and there is no assurance that an investment will provide positive performance over any period of time. Information obtained from third party resources are believed to be reliable but not guaranteed as to its accuracy or reliability. These materials do not purport to contain all the relevant information that investors may wish to consider in making investment decisions and is not intended to be a substitute for exercising independent judgment. Any statements regarding future events constitute only subjective views or beliefs, are not guarantees or projections of performance, should not be relied on, are subject to change due to a variety of factors, including fluctuating market conditions, and involve inherent risks and uncertainties, both general and specific, many of which cannot be predicted or quantified and are beyond our control. Future results could differ materially and no assurance is given that these statements or assumptions are now or will prove to be accurate or complete in any way.

Past performance is not a guarantee or a reliable indicator of future results. Investing in the markets is subject to certain risks including market, interest rate, issuer, credit and inflation risk; investments may be worth more or less than the original cost when redeemed.

Investment advisory services are offered through Dynamic Advisor Solutions, LLC, dba Dynamic Wealth Advisors, an SEC registered investment advisor.

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