(Dynamic Advisor Solutions) In the middle of complicated, multi-step client situations did you ever wish you could make the day longer? Imagine the difference that a productivity boost of 10 hours a week could make in growing your financial advisory practice. This is exactly what advisors who have outsourced investment management report, according to a Fidelity survey.
Not only that, but 84% of advisors who outsourced investment management surveyed by AssetMark reported higher business valuations, while 91% reported growth in total assets under management and 83% reported higher personal income.
There’s no doubt that more advisors than ever are taking advantage of third-party asset management platforms (TAMPs) to outsource investment management of client assets. In fact, TAMPs represent a $2 trillion market with independent advisors—including RIAs and IBDs—contributing $117.48 billion dollars in AUM, according to America’s Best TAMPs 2024.
If you’re considering outsourcing investment management, TAMPs—including Dynamic’s Asset Management—are increasingly demonstrating they are more than ready for prime time. Not only have costs come down, but efficiency is increasing as the types of assets offered via outsourcing is rising. In this blog post, you’ll learn about the benefits of TAMPs in scaling and building value for your practice.
Free Up Your Schedule to Prospect, Convert and Maintain Relationships
While advisors possess the ambition to grow their practices, most lack the time to do so. In fact, while 93% of advisors described themselves as motivated to grow in a Financial Planning Association survey. However, only 12% were comfortable with their actual growth rates.
TAMPs provide the opportunity to manage your time more efficiently than handling investment management on your own or with your own team. A 2023 Cerulli Associates survey noted that advisors who leverage TAMPs for practice management tasks spend less time on investment management and related activities such as research, due diligence and trading. This frees them up to spend more time on client-facing and revenue-generating activities. Contrast this with advisors who don’t outsource to TAMPs, who report spending less than half of their time working directly with clients.
Time is the most precious resource you have. The more time you spend on activities such as investment management, the less time you have to develop meaningful relationships. By outsourcing at least part of your investment management activities, you put time back in your schedule for prospecting, converting and maintaining the relationships you need to grow your practice.
Customize Investment Solutions to Client Situations and Preferences
As TAMPs increase the variety of investment managers and asset classes they offer, you and your clients can benefit from this growth. The most flexible TAMPs offer a variety of models that allow you to customize far more than you could on your own. Among the structures TAMPs offer include:
- Model Portfolio Accounts
- Separately Managed Accounts
- Unified Managed Accounts
- Unified Managed Households
Virtually any asset class is available within a TAMP, which can also manage assets such as qualified and non-qualified accounts, alternative investments, real estate and more.
Many TAMPs provide the assistance of overlay managers with model portfolio implementation, investment customization and tax optimization. Typically, TAMP fees range from 0.75 to 2.50% of AUM, depending on the services provided—and fees are falling over time. Within the relationships you already have with your existing service providers, you may be able to leverage preferred pricing that could produce additional costs savings. TAMPs also offer the potential to provide a consistent client experience for your clients, which is important in client retention.
Position Your Practice for a Potentially Lucrative Transition
In an increasingly competitive environment, you need every advantage you can get to grow your practice, satisfy your clients and add value to your life. Let’s face it—your administrative challenges aren’t likely to subside anytime soon. Regulatory burdens are increasing, fee pressure is rising and you’re not getting any younger.
Affiliating with a TAMP that reflects your values, offers the services you and your clients need and allows you to spend more time in client facing activities is not only a smart action, but a necessary one. If you’re like most advisors, your practice is an important component of funding your retirement. Bringing in the right TAMP partner can help ensure that you maximize that value and create a positive transition experience for your clients when the time comes to exit.
For more on this topic, check out the latest podcast from our CIO Kostya Etus, Weighing Machine, Episode 245.
