Financial planning, wealth management, investment advisory – whatever you might call your service, an integral contributor to your success is the amount of time spent with your clients. Another important activity is spending time with potential clients and in other ways “getting out there” in the public. The common resource to perform these activities is time, a rare commodity among the advisor community as evidenced by the many types of technologies and services available to help practitioners become more efficient and profitable.
The investment function is no different. The rise of robo-advisors is a testament to advisors’ desire for an investment management delivery mechanism that is inexpensive and easy to use. At the other end of the spectrum, subadvisors, separate account managers, and other types of services are available so advisors can offload the portfolio management function to specialists. The characteristic both of these options share, however, is the lack of customization. Every robo-advisor customer with a similar risk tolerance will get an identical portfolio whether they use ABC Financial Planners or XYZ Wealth Management if each of those advisors uses the same robo in its practice.
If you have a core investment philosophy that works for you, if you wish to retain your firm’s identity in this element of your practice, and if you want to retain control over your clients’ portfolios, the traditional option has always been to hire professional investment staff. If your firm can afford experienced, credentialed (CFA, for instance) staff, be prepared to shell out mid-to high six-figure salaries and possibly give up equity in your firm. More junior staff might be affordable, but will they actually deliver the quality you expect? Benefits, vacation time, and other human resource issues may also pose challenges to adding to staff.
Finding a collaborator to perform exactly the tasks your firm needs may allow you to achieve your investment outcomes and business goals at a fraction of the cost.