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

As a Registered Investment Advisor (RIA), achieving significant growth in assets under management (AUM) is a coveted business milestone. However, as your practice grows beyond $100 million, this can be an inflection point. You may find you’ve reached a stage in your practice where you’re trapped by scalability — and you’ve realized you can no longer do this alone.

You’re feeling as though you’ve crossed the bridge from the role of a trusted advisor to that of a business owner. Balancing your advisory responsibilities (building client relationships, managing investments, developing financial plans) with the operational complexities of running a business (payroll, overhead, IT, etc.) can become overwhelming, particularly in a highly regulated industry.

Here’s 5 ways outsourcing could be the key to successfully scaling your practice:

1. Focus on Client Engagement and Growth

Your experience lies in building personalized financial strategies, holistic planning and guiding clients toward their financial goals, not navigating the intricacies of HR and IT systems, cyber security preparedness, custodian relationship management or keeping your firm in line with regulatory requirements.

According to the “2023 RIA Benchmarking Study” by Charles Schwab, a significant number of RIA firms increased their reliance on third-party providers to enhance operational efficiency and scalability[1]. The trend toward outsourcing is evident in that firms are recognizing the benefits of partnering with specialized service providers to navigate the complexities of the financial advisory landscape.

Outsourcing allows you to delegate time-consuming, non-client-facing tasks so you can stay focused on what you do best — delivering exceptional client experiences and cultivating prospects to grow your practice.

2. Tap into Cost-Effective, Specialized Expertise

Building in-house teams to handle compliance, IT and essential front, middle and back-office functions can be prohibitively expensive. Outsourcing gives you an opportunity to partner with experienced professionals who specialize in these areas without the overhead of hiring, training and managing full-time employees. This is particularly beneficial as you scale and require additional or more sophisticated services.

The Schwab benchmarking study also points to a broader industry movement where RIAs are leveraging external professionals to manage ever-increasing complex functions. In today’s world, there’s been an acceleration from technology integration and CRM to automation, data and Artificial Intelligence. By outsourcing these advanced functions, wealth advisors can focus on core advisory roles and holistic planning to drive growth and improve the client experience.

In addition, scalable outsourcing partners grow alongside your business, offering the latest service advancements and access to industry partners that align with your evolving needs.

3. Remain Compliant Now and in the Future

The Securities and Exchange Commission (SEC) regularly updates compliance requirements, necessitating continuous vigilance from RIAs. Staying current with shifting regulatory requirements is both time-consuming and a stressful part of running an advisory practice. Countless industry surveys have consistently pointed to compliance oversight among top concerns for RIAs. The SEC’s recent data report offers an overview of the industry’s growth and the regulatory landscape, highlighting the increasing complexity RIAs must navigate.[2]

How do RIAs strike the balance between mitigating risk and advancing sustainable growth in an ever-evolving, highly regulated industry? Outsourcing regulatory compliance administration and cybersecurity preparedness allows specialized professionals to serve as your chief compliance officer, staying apprised of evolving regulations, ensuring adherence and mitigating risk.

4. Harness the Latest Tech Stack and Accelerate Growth

Outsourcing isn’t just about delegating compliance, administrative and operational burdens; it’s also a growth accelerator. By outsourcing your firm’s tech stack, you can harness a sophisticated, integrated platform with best-in-class fintech solutions, helping to build a model wealth advisory practice for the 21^st century. This can position your firm for not only operational efficiencies, but also for sustainable growth.

A modern tech stack will serve to streamline your practice across CRM, financial planning, portfolio management, client portal and mobile apps, as well as cyber security; RIAs must implement robust cyber security measures to safeguard data and maintain client trust.

5. Achieve Peace of Mind and Work-Life Balance

Transitioning from an advisor to a business owner is a significant shift, but it doesn’t have to mean sacrificing your core focus, your well-being, time for your family or yourself. Managing a growing practice without specialized support can lead to burnout, compromising both your health and the quality of service you provide to clients. Outsourcing creates breathing room, allowing you to focus on high-value activities while having the peace of mind that comes from knowing your operations are in capable hands.

By outsourcing operational, administrative, compliance and technological functions, you can reclaim your time, reduce stress and spend time doing what you enjoy—inside and outside of your practice. Partnering with the right outsource partner allows you to cross the scalability bridge with confidence and emerge on the other side as a thriving, future-ready RIA.

Watch a short video on the Dynamic core services that provide freedom and success to a growing number of wealth advisors across the U.S.

For a complimentary, objective consultation, contact Dynamic at (888) 997-4212 or joinus@dynamicadvisorsolutions.com.

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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[1] “Insights from the 2023 RIA Benchmarking Study, Advisor Services,” Charles Schwab https://content.schwab.com/web/retail/public/about-schwab/schwab_ria_benchmarking_study_2023_deck.pdf

[2] “SEC Releases a Ton of Data on Financial Advice Firms. Here are 4 Remarkable Stats.” Barrons, May 20, 2024 https://www.barrons.com/advisor/articles/sec-financial-advisor-ria-data-industry-growth-48d0af3a?utm_source=chatgpt.com