RIA Trend Report 2016: Functions Outsources by Advisors

RIA Trend Report 2016: Functions Outsources by Advisors

Practice Management & Operations

Of those functions which are outsourced to third parties, it is tax filing that is most commonly utilized on a consistent basis by advisors. While we noted above that more RIAs are beginning to offer tax services, given the high educational and professional requirements for tax preparation and filing, it is no surprise that approximately two-thirds of advisors still outsource this function at least some of the time. Functions such as compliance and research are also outsourced by a meaningful percentage of RIAs, but on a less frequent basis. Marketing, human resources and bookkeeping are outsourced at least part of the time by only onethird of advisors. Portfolio management, trading, and asset allocation are outsourced by only a small percentage of firms, and those that do, generally do so only occasionally. It is likely that these types of activities are generally viewed as core components that support the overall service offering, making them somewhat risky to outsource entirely. Overall, we observe that RIAs are most likely to outsource those activities that are not as critical to the client relationship or the long-term risk-adjusted performance of client portfolios. 

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