Outsourcing Helps Wealth Management Firms Re-Energize Their Focus On Clients

Written by admin on December 6th, 2010

Customer pressures have also risen considerably and are most accutely felt by investment managers and customer
relationship managers (CRMs) whose clients are increasingly disengaging. CRMs are now forced to devote more
resources and time than ever before to restructuring portfolios and understanding, and complying with arcane regulations.

A PricewaterhouseCoopers Survey (July 2009) states that “CRMs were spending 16 percent of their time on operations
and error resolution. This is comparable with the 17 percent spent on the much more valuable marketing and prospecting.
Even more concerning is that this is double the time spent on investment research and analysis”. In this context, there is
clearly a case for wealth management firms to redirect their resources away from operations and focus on marketing as
well as prospecting for and strengthening existing client relationships. To meet this need, wealth management firms can
create pools of competence which are solely aligned to serve clients’ priorities in these uncertain times.
In this circumstance, firms should consider partnering with an outsourcing service provider (OSP) who could serve as an
extended arm by providing support in the following areas:
1. Retaining clients: Shaky markets have made customers extremely jittery, requiring increased reporting, explaining and
detailed portfolio walkthroughs. This requires CRMs to conduct extensive background work in areas such as reporting and
scenario planning. A competent OSP can help by providing capable resources, increasing response time by working 24/7
using its global delivery network or undertaking customized projects to help CRMs address client issues. CRMs in turn will
have more face time with their clients that can be used to attract additional assets, educate clients about alternative
investments and improve relationships.
2. Managing Compliance: Complying with norms and regulations can be daunting, especially since they are generally
country-specific and evolve rapidly. Traditional wisdom suggests this task is best left to a team that continually monitors
regulations. However, recently, with regulation increasing, the size of this function and sophistication of systems required
have been increasing. Wealth management firms can conceivably carve out industry-standard functions such as AML
checks and BSA reporting and assign them to OSPs to deliver. Moreover, an OSP can monitor regulatory changes and
ensure that the customer adheres to them.
3. Managing risk: It is evident that wealth management firms should strengthen their risk management function. Here
again, an OSP can conduct more rigorous and frequent evaluation of counterparties; similarly OSPs can be leveraged to
ensure that the product sales and processing is protected from statutory and operational risk.
Outsourcing is clearly one of the most effective ways by which wealth management firms can ensure that they remain
profitable, compliant and focus on such client relationships – the bedrock of their survival and growth.

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