At some point in an advisor’s career, as his book of business continues to grow, an important question will arise: Do I want to be an asset manager or an asset gatherer?
According to a new study conducted by SEI Advisor Network and FP Transitions, the answer is an easy one because advisors who outsource their investment management business make more money than advisors who don’t. And the numbers aren’t close.
The study examined 8,000 advisors over a ten-year period and revealed an eye-opening statistic: Advisors who outsourced their investment management brought home roughly $1 million more in revenue over a decade than their counterparts who managed clients’ assets in-house.
For many advisors, the question is not only about the money. With a booming business, they simply cannot do both functions well. If they are doing both, then much of the time they could spend cultivating client relationships and new business gets lost on the management side. Instead of client consultations, they’re stuck behind a desk, buried in research and putting technology systems in place.
The benefits of outsourcing
By outsourcing the management side, advisors open up new possibilities for their advisory business such as:
Relationships. Without the time-consuming aspect of managing portfolios, now an advisor can deepen the relationships they have with existing clients. They can spend more time with each client, broaden the relationship they already have, and develop stronger bonds with the client’s heirs and other family members.
New Ideas. Advisors can find unique ways to connect with clients. One advisor who outsourced his management business used that time to connect with clients in new ways such as following them on Facebook. He now will know when someone is planning a trip or when they get a new dog, and he can communicate with them on a very personal level. For instance, if a client says they are planning a trip to London, the advisor could send them a guide book to help plan the vacation. Maybe the book costs $10, but think of the good will it created.
New Business. With the deeper relationships being formed, now there’s more opportunity to get additional leads and to further grow the business. One way is by referrals from existing clients. Another is by developing successful lead networks. Some of our advisors are already having great success by putting together ad hoc teams that include a CPA, an attorney, and a property casualty expert, and they’ll meeting monthly to share ideas and leads. Partnering with these centers of influence, allows the advisor to grow and expand their business in new and exciting ways.
Community. For some advisors, outsourcing their investment business has been transformational, allowing them additional free time to become leaders within their communities. Finally, they can focus their time and energy to serve on boards that they are passionate about or to cultivate nonprofit programs that can serve others.
Family. One of the most rewarding outcomes of outsourcing the investment business is the time an advisor can now spend with their own family. There’s more time to spend at kids’ athletic or school events. There’s more time to go on that family vacation that they’ve been putting off for years.
At Beacon, we are committed to helping advisors reach their potential. One clear way to do that is by taking on their investment management business so they can focus on what they do best—bringing in new business and cultivating the relationships they already have. For further assistance on how to outsource your business or how to implement any of the tips or ideas above, contact your wholesaler today!
Source: SEI Advisor Network