The Case for Outsourcing
By outsourcing, investment firms allow for more time for their current clients and more time to find prospective clients. By being “client-centric” they can develop enhanced client acquisition opportunities and increase client retention. If they spend the required amount of time to research investment ideas, advisors will not have as much time and resources to service their existing clients or find new ones.
Researching investment options in-house is expensive. It requires investment personnel, research programs and tools and a considerable amount of time. Outsourcing this functionality saves investment advisors financial resources – with a fee-based outsourced provider, advisors can leverage investment expertise without research subscriptions.
Additionally, outsourcing investment management avoids maintaining trading platforms, portfolio accounting systems, performance reporting and billing programs. These back office systems are expensive and take considerable staff resources to manage. By outsourcing back office functionality, investment advisors further enhance and leverage their in-house skills (client service, retention and prospecting) while capitalizing on those performance reporting, accounting and billing systems provided by the outsourced back office provider at a fraction of the cost.
Before you choose to outsource – understand what systems and capabilities will be provided to your firm and to your firm’s clients. What are the fees associated with the outsourced investment manager? If they provide model portfolios – what are the expected expense ratios? Are there transaction costs, or any other expenses?
The Case for Netherby
Netherby Advisors, LLC provides outsourced investment management and Outsourced CIO capabilities to bank and trust companies, RIAs and family offices under a competitively priced, fee-based structure. By curating a number of investment systems including portfolio accounting, billing, performance reporting and research platforms to support our outsource program, Netherby leverages these diverse programs across numerous institutional clients through our AdvisorWorks platform. Additionally, Netherby has partnered with efficient investment managers like Dimensional Fund Advisors (DFA) to keep portfolio expenses low while accessing well-diversified investment solutions.