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Almost 40 percent of firms polled do not outsource any portion of their business Those highperforming firms that do concentrated their outsourcing on areas like data reconciliation and financial reporting that wouldnt affect client relationships That gave inhouse advisers more time to focus on client strategy

How Advisory Firms Leveraged Outsourcing to Survive the Pandemic

By outsourcing costly and time-intensive processes, advisory firms have been able to re-devote their attention to the valuable services they’ve been hired to provide for their clients.

From an investment standpoint, this past year has been a rollercoaster, and its impacts on both our society and our economy are far from over. Consider that 16 trading days into the pandemic, the Dow Jones was pushed into bear market territory with a staggering 20% decline. Moreover, on an aggregate basis, the S&P 500 lost a peak of 24% in only 33 calendar days—a decline that, even in a bear market correction, would normally have taken 11 months to reach. Faced with the most volatile year in nearly a decade, financial advisors around the world have been presented with a “perfect storm” of market pressures and incredible volatility, leaving some to ask, “What now?”

Particularly as it relates to investment firms, which can manage up to 50-100 advisors at once, the need to think quickly and creatively during uncertain times can not be overstated. If firm leaders hoped to survive back in March 2020, they needed to be able to address two fundamental pain points: scalability and service, in order to accurately advise their clients through this period of volatility. In the face of seemingly insurmountable obstacles, the financial advisory community has persevered. Now 12 months later, investment firms are not only surviving, but thriving.

Over the past year, many financial advisory firms have risen to the occasion, leveraging breakthrough practices—particularly outsourcing—to adapt and evolve to the new normal. 



While this past year has, arguably, been the most uncertain in decades, it has also been one of the most active. As many as 80% of investors stated that they have made some changes to their portfolio since the early days of the pandemic, with 35% stating that they’ve made higher risk investment deals. For many financial advisory firms, “scalability” has become much more than an objective; it’s become a requirement. In an effort to keep up with the rapid pace of change, investment bodies have needed to scale their operations to action every request with the same degree of efficiency and effectiveness. Many have turned to outsourcing in order to do so.

By leveraging cutting-edge models-based platforms, many financial advisory firms have found early success offboarding some of their more minimal-value business practices in order to adapt to the realities of the new normal. By outsourcing costly and time-intensive trading processes, for example, advisory firms have been able to re-devote their attention to the valuable services they’ve been hired to provide for their clients. As 41% of advisors state that they have communicated more with their clients throughout the pandemic, it’s clear that scalability is an issue that isn’t going away anytime soon. For advisors, it’d be wise to adapt quickly if they hope to remain ahead of the curve.



After a year of unprecedented unemployment rates, record-breaking financial instability and rampant market volatility, investors have (understandably) been wary about their involvement in high-risk portfolios. With this in mind, it should come as no surprise that at least four in five respondents to a recent F&G survey stated that they are more risk averse due to the COVID-19 pandemic and, as a result, are increasingly looking for expert guidance as they navigate the road ahead.

Truthfully, it’s in times like these when advisors are needed and valued most. And yet, ironically, because of this growing need, many advisors are forced to focus more on operational processes that, while important, do not differentiate or add value in the same way that high-level strategic guidance does. This isn’t a successful paradigm, which only perpetuates a frenetic cycle of stress and uncertainty that can leave advisors at a loss. Risk averse clients get more nervous and require more attention, while advisors spend more time tweaking models that meet the demand. To break this vicious cycle, advisors must be willing to think beyond their short term needs in order to consider long-term opportunities in the years to come, leveraging new service offerings that can elevate their strategic work-streams to new heights.

Using new models-based products, advisors may have found an answer. By applying pre-set investment models to investors at scale, advisors have been able to delegate less differentiated services, such as trading processes, to trusted third parties, allowing them to instead focus more directly on client service. In doing so, not only can they save time and energy, but they can also limit vulnerability and reduce strain on the process.

Final Thoughts

When society looks back to the COVID-19 pandemic, many things will come to mind. However, from a financial advisory perspective, one story will reign supreme: perseverance in the face of uncertainty. Over the past year, financial advisory firms have truly been able to adapt to seemingly impossible circumstances—evolving legacy processes to meet the needs of investors in the new normal. Admittedly, no one can see the future. However, if the pandemic is any indication, financial advisors will be well-positioned for whatever unexpected challenges may lie ahead.

Rob Pettman is the executive vice president, wealth management solutions, at LPL Financial.

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