Advisors often think about adding to their teams as they expand, but that may not always be the best approach.beast01/iStockPhoto / Getty Images
Offering a suite of services under one umbrella can be a goal for many advisory practices. But for advisors in growth mode, knowing when to invest in hiring team members and when to partner with external experts may be a challenge.
While there’s no one-size-fits-all solution, determining how best to offer services will not only require careful consideration of the budget but also the team’s capacity, areas of expertise and client experience.
Outsourcing to free up capacity
As a practice grows, advisors should try to spend more time on their highest-value work, says Jason Heath, managing director at Objective Financial Partners Inc. in Markham, Ont. That means either outsourcing or hiring to take over other tasks.
While Mr. Heath has seen more firms opting to hire – a trend he expects will continue as they seek to simplify and integrate services for clients – it’s not always a simple decision.
Especially for newer or smaller firms, choosing to bring on new full-time team members can be difficult, as there are volume, cost and expense considerations.
“Each hire is a pretty big jump in terms of capacity, in terms of availability of time – and you’ll want to make sure that somebody’s not sitting there, idle,” he says.
Mr. Heath, who has taken both approaches in his fee-only firm over the years, says it’s important to consider factors such as the capacity of existing team members and their areas of focus.
Before scaling, he recommends reflecting on work that can be outsourced, which may free up capacity among existing employees. Outsourcing may also make sense in niche or specialty areas in which a business may not have the expertise or scale to offer services in-house.
For example, his practice has grown to bring services including bookkeeping in-house. It also acts as an outsourced financial planning desk for other professionals in the wealth management industry.
But there are some areas he continues to refer externally. These include specialty tax matters, information technology and social media.
“Try to figure out what the best value is you and your team can provide in terms of services and roles, day to day. If it’s something you should not be providing to clients, then look to refer it or outsource it,” Mr. Heath says.
Scale matters
For Simon Reilly, financial advisor coach and founder of Leading Advisor in Victoria, the question of whether to hire a new employee or refer to an external service provider comes up constantly with advisor teams.
Mr. Reilly says the decision to hire or outsource ultimately comes down to volume and business goals. As a firm scales, keeping certain functions in-house may become more efficient than outsourcing.
It comes down to a firm’s vision and goals for the number of clients they want to be able to serve, he says.
Mr. Reilly says advisors should keep core functions or client-facing activities in-house, as they tie into company culture. They can outsource non-core or highly specialized areas such as bookkeeping and accounting, legal services, IT, customer relationship management and marketing.
The client experience factor
Indeed, for Grant White, portfolio manager and investment advisor with Endeavour Wealth Management at iA Private Wealth Inc. in Winnipeg, client experience is a top consideration when deciding whether to add to his team or outsource services.
During the past five years, Mr. White has taken both approaches to growth. He has expanded his team but also built strategic partnerships and outsourced services to external professionals in fields with separate regulatory and licensing bodies such as certified professional accountants, general insurance, law firms and estate planners.
He’s looking to bring some of those outsourced services in-house at some point so the client can receive all of them in one place. That becomes easier as his firm matures and has more financial and operational resources in place, Mr. White says.
But it’s still more complicated than outsourcing, as there are increased regulatory, management and marketing considerations when adding professionals from other fields into the fold.
Ultimately, he believes the shift will be worthwhile.
“It always starts with, ‘Who do you want to serve and what would the best experience in the world look like for them?’” he says.