How outsourcing can help improve client service

Key Points

    • Many advisors are turning to outsourcing to free up time to work with clients on long-term goals, address complex challenges, and strengthen relationships.
    • Advisors increasingly outsource routine tasks such as back-office duties, IT support, and investment management.

    • Hiring a managed services provider, such as a reporting and billing provider, is like adding a new team member.

You only have so much time in a day. The more of it you can spend winning new clients and serving existing clients, the more opportunity you have to grow your revenue and strengthen relationships. This is why nearly one-third of registered investment advisor (RIA) firms increased their usage of third-party providers in 2022, according to a recent FlexShares survey.1

Outsourcing routine tasks is getting easier thanks to improved technology, vendors that are working closely with custodians to integrate their solutions, and trend toward increased efficiency through bundled services. Let's look at potential opportunities to outsource and why they might make sense for some firms.

Potential tasks to outsource

Any task that takes a lot of time or is not an area of expertise can be a good candidate for outsourcing. Here are some of the most common ways advisors outsource:

  • Billing and performance reporting: Generating these statements can be tedious, time consuming, and easy to automate.
  • Legal and compliance: Not having access to a high level of competence and expertise in this area is risky and could end up being costly.
  • IT management: Fast, effective technology is essential for any RIA firm. Hiring permanent staff with IT expertise can be challenging, especially if your needs don't add up to a full-time position, but doing all the tech yourself can be risky and could hold back your firm.
  • Marketing: It takes consistency and a long-term strategy to market effectively, which is why many firms struggle to run a marketing program.

Investment management isn't typically seen as an area to outsource, but it's becoming commodified thanks to the sophistication of wealth management technology.  Now, it's more common for platforms to be able to crunch numbers at scale to build and maintain portfolios that meet a range of client needs.

Many outsourced investment management solutions call themselves turnkey asset management programs (TAMPs). TAMPs can typically handle investment research, portfolio construction, trading, rebalancing, and tax-loss harvesting.

The top benefits of outsourcing

Handing off selected tasks to specialized managed services providers (MSPs) can reduce overhead, expand your firm's suite of services, and save you a lot of time.

Outsourcing can also make your firm more agile. When you outsource, you're a customer, not an employer. If your provider isn't working out, you don't have to fire anyone. You can simply take your business elsewhere. And if you need more expertise or services, your provider can likely accommodate you.

Most importantly, outsourcing can give you time to focus on the most important parts of your job: meeting with clients, networking, and other activities that can differentiate your firm and increase its value.

Having more time to meet with clients benefits them as much as it helps you. For example, you can be more available to help them refine their financial goals, balance family stressors, or lay the foundation of a multigenerational legacy.

By helping clients work on the most difficult and most meaningful parts of their financial lives, you can deepen relationships and improve retention. You also have more to offer higher tiers of clients who can significantly boost your assets under management.

How to choose a provider

Select MSPs with the same care and thought you would give to recruiting a new team member. MSPs can play an important role in the day-to-day operation of your firm, and you need to be able to trust them as much as an in-house employee.

Here are a few things to consider when evaluating an MSP:

  • Scope of services provided. For outsourcing to be efficient, you need a provider who can cover everything in a particular area of the business, but does not charge you for services you won't use.
  • Length of contract. Many MSPs offer month-to-month rolling contracts, but lengths vary. Consider whether you'd prefer the agility of a short-term contract or the potentially lower rate of a longer agreement.
  • Response time. When you have issues, can your provider address them immediately? Poor communication with your MSP creates headaches for you and can ultimately diminish the service you provide your clients.
  • Integration of services. If outsourcing a task creates more back-office problems than it solves, it isn't worth it. Before you sign with an MSP, be sure you understand how any outsourced work will integrate with tasks performed in-house or by other MSPs.

And keep an eye out for MSPs who offer multiple services bundled together. By bundling you may be able to further reduce your costs while also making working with an MSP more efficient.

Change the equation

It's easy for a firm to lose time, especially smaller firms where advisors wear a lot of hats. Taking on paperwork or specialized tasks that don't require a human touch has opportunity costs. Many advisors find that when they're stuck doing too many routine tasks, they're not spending enough time nurturing client relationships.

Many firms turn to outsourcing to help them refocus their energy on strategic decisions that can grow the firm. Outsourcing wisely can help you change the equation around costs and the financial strength of your firm, while giving advisors more opportunities to provide value to clients.

What you can do next

  • If you're already working with Schwab, take advantage of our RIA industry connections:
    • Browse Provider Listings for third-party integrations and explore Schwab Affinity Servicesfor outsourcing business solutions from marketing to compliance.
    • Consider a custodian that is invested in your success. If you're thinking about becoming an independent RIA, contact us to learn more about the potential benefits of a custodial relationship with Schwab.


1 "6 Financial Advising Trends for 2023," US News and World Report, December 23, 2022,