Outsource it or keep it in-house?

Outsource it or keep it in-house? When you become an independent advisor, the responsibilities of running a business and meeting your clients’ needs are now on your shoulders. With so many different areas that need to be addressed, how do you want to spend your time? If you don’t want to hire staff to make sure it’s all covered, outsourcing is an option. A number of well-established companies provide outsourcing for portfolio data management, reporting, human resources, compliance, billing and investment strategy. Some combine multiple services, like portfolio reporting and billing. 

Portfolio data management and reporting is the one area where it makes the most sense to outsource, because it requires an understanding of both investments and accounting, as well as a technical or computer systems background. Finding the right person to do these tasks in-house can be a challenge. You need information reliably at your fingertips when analyzing your clients’ portfolios, which is why having someone outside the office troubleshooting and creating your quarterly reports makes sense. Outsourcing data management also takes pressure and stress out of the office.

To get the most out of your portfolio data management system without outsourcing, the process can be time-consuming. First, the investment and account data must be gathered. Much of the data will be available electronically through your custodian or custodians, but if you monitor alternative investments or your clients have assets held at other custodians that you do not have download capability for, you will need another way of feeding data into your system.

Even once you’ve gathered it, reconciling the data and maintaining it in the system’s database requires a lot of time. And while many reports are available on the fly, it is often useful to have the ability to create custom reports, which can be difficult.

Portfolio reporting is critical to building client relationships, so don’t let it become a chore. Not only can outsourcing the data collection, reconciling, and reporting save time and money, it also reduces errors. When outsourcing helps you serve your clients more efficiently, more effectively, and with less stress, both you and they benefit. This is the first part of a series of blog posts on outsourcing. The next entry will discuss questions to ask when evaluating an outsourcer.

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