Some RIA operations managers have questions when it comes to fund administration outsourcing. How about you?
- What have you heard about outsourcing?
- Have you researched the pros and cons?
- Has your firm previously outsourced any of its functions?
How someone feels cannot be denied, but if feelings are not backed up with experience and proper research, is the skepticism justified?
Investment management firms will face many challenges in the future. How does outsourcing fit into the equation?
Investment Management Fund Administration Outsourcing: What You Should Know
Outsourcing Trends in the Financial Services Industry
Despite a growing demand for financial services, rising costs and lower profit margins are an industry-wide threat.
Deloitte’s 2018 Investment Management Outlook explains in detail the threats facing advisory firms, including shrinking margins and fees. One way to combat the financial pressure, the report suggests, is outsourcing.
Outsourcing “has gathered momentum in the IM industry as firms gained confidence in the outsourced delivery model,” and the Deloitte report says outsourcing back-office functions has been one of the main starting points for these firms.
Further highlighting the trend is a November 2016 BackBay Communications survey that revealed nearly one-third of asset managers have placed outsourcing of technology operations as a top priority over the next 12 months.
Security and Accountability
As business process outsourcing enters the mainstream, the idea of hiring third-party billing, reconciliation and performance reporting services specialists is neither strange nor mysterious. Fund
administration outsourcing as an industry has become more competitive and sophisticated, better catering to the needs of money managers.
The free market determines winners and losers, and the middle- and back-office outsourcing providers who honor their clients’ demands for data security and timely, accurate reporting will reap the benefits.
Benefits of Outsourcing Your Middle- and Back-Office Operations
The benefits of outsourcing to a reputable investment management service provider include:
- Cost savings
- Greater efficiency in operations
- Lowered operational risk
Many firms that have jumped on the bandwagon have reaped the benefits. Here is one firm that enjoys cost savings and improved operations thanks to fund accounting and administration outsourcing.
Talking with an Outsourcing Services Provider
If you’re still a skeptic, just make a phone call. Don’t wait for an email response.
A back-office outsourcing services specialist will answer your questions, and a phone call will allow you to establish a human connection more quickly. You’ll realize you’re talking with real people with a real interest in delivering world-class operations for investment managers.
Time and location permitting, you could meet in-person. If you’re based in Southern California, you could have a face-to-face meeting with a wealth and asset management operations outsourcing provider in Los Angeles.
If you’re located outside the area of the outsourcing firm, that’s no issue. The best middle- and back-office operations providers serve investment managers globally. Their specialists might even come out to see you!
Access Empaxis’ White Paper on Making Outsourcing Work for Investment Managers.
An Informed Opinion on Outsourcing
Whatever you’ve thought about outsourcing for fund administration, you should compare it with recent trends and the benefits for wealth and asset managers, hedge funds and family offices.
Hopefully your call with a leading provider in middle- and back-office outsourcing will give you the information needed to have an informed perspective.
And at this point, you deserve credit for making a sincere effort in searching for solutions to improve your operations.