Advisers unaware of better outsourcing options


By Krystine Lumanta

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Many financial planners are using outdated and expensive investment management processes as they are unfamiliar with alternative structures that offer full control, client experience consistency and liquidity.

Implemented Portfolios managing director Santi Burridge said nearly every adviser outsourced their investment management, but not in the best possible way for their business or their clients.

“They outsource in a way that’s very clunky, not transparent, high cost, illiquid and with poor after-tax outcomes, and that’s essentially the traditional platform and managed fund structure,” Burridge told financialobserver.

“Embedded within that is poor compliance because it tends to be one-by-one-by-one, so no clients are receiving consistent experience and the outcome of that is the inability to communicate relevantly.

“We’re not trying to educate advisers to outsource; we’re trying to educate them that there’s a much better way to do it, but the industry has [dictated] that this is the only way and so you must do it this way.”

He said from industry discussions, advisers were not showing an interest in their outsourcing options, nor were they considering the issue in general.

“I genuinely believe stakeholders of advice businesses are not sitting around the board table having discussions around what they are actually good at,” he said.

“The industry is fighting around platforms with the evolution of separately managed accounts, but no one’s talking about helping advisers run a better process to deliver a consistent and relevant client experience.”

In order to determine whether investment outsourcing, through a managed account structure, was appropriate for an advice business, it was imperative advisers asked themselves whether they were an asset manager or an asset gatherer, he said.

“That’s something that I will maintain as a very strong focus on this year,” he said.

“Every principal in every practice needs to ask themselves that question because the common denominator of successful practices is that they’ve worked that out.

“That’s what’s limiting growth in this industry – it’s why we’re not seeing individual advisers grow to a significant size, whereas we’ve seen it elsewhere in the world as they’ve answered that question.”

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