Expanding Investment Services? Trust the Experts!

Investors are demanding more from wealth managers. Investment firms need to combine rich digital experiences with consumer choice, innovative solutions, and a personalized approach. 

Building solutions in-house is complex, delaying speed to market and reducing your competitive advantage. Fortunately, investment firms have an alternative: partnering with a trusted fintech service provider. Outsourcing your back-office wealth management processes to an investment provider lets you take advantage of deep expertise, specialized services, and best-in-class technology. You get the flexibility and scale needed so you can focus on meeting the changing needs of investors

Here’s how partnering with a specialized wealth management provider will strengthen your investment firm.

Get Deep Wealth Management Specialization Without Having to Build In-House Expertise

Outsourced providers thrive by offering clearly defined investment services in a consistent, efficient, and integrated way. In contrast, trying to build and retain this expertise within your wealth management business takes a great deal of time and effort, for an uncertain, perhaps marginal, benefit. This is exacerbated by:

  • Competition for top-tier wealth management technology talent.
  • Significant spending on hiring, training, and compensation. 
  • Loosely defined requirements that change rapidly depending on client needs and the investment landscape.
  • Capital expenditure on the people, tools, and systems your investment technology team needs.

A trusted wealth management service provider solves these problems through:

  • Offering technology and expertise that have been tested and refined over time. These services can be structured to align with your teams’ needs.
  • Providing robust management services and solutions that scale alongside the growth of your firm.
  • Defining the scope of services and SLAs specifically appropriate for your business, which will enhance your client experience. 


Easily Add Functionality that Aligns with Your Investor Needs

Investors’ wealth management needs are evolving, and you need to provide productized services that support this shift in priorities. Client expectations are increasingly moving towards apps and services that:

  • Clearly communicate their personal investment journey, from top to bottom. 
  • Treat them as an individual investor, rather than as part of a group.
  • Allow them to uniquely approach their investment decisions and follow non-traditional advice.
  • Answer their own questions through easily accessible, online, trusted knowledge.
  • Explain and minimize the risks and downsides of investments.

A trusted wealth management service provider can help you adapt to these changing investor needs:

  • Use their experience to create an “investor-first” approach to reporting and development.
  • Integrate flawlessly with your existing systems to speed up and scale the client experience. 
  • Offer unique tools and data to let you zero in on desired functionality that fits your clients’ unique needs.
  • Support you over the long term through prioritizing innovation and win-win scenarios as industry and client standards evolve over time.


Avoid Risks Due to Expanding In-House Infrastructure and Capabilities

In our first point, we discussed how partnering with a trusted investment technology provider means you don’t need to build as much in-house expertise, but it’s worth digging into the other side of this: The heavy resource costs and risks of developing capabilities and expanding your wealth management infrastructure.

Up-front costs are a vital part of proving-out any business case, budget, and return on investment. If you decide to develop new digital investment capabilities in-house, you will need to account for:

  • The purchase or upgrade of servers, network capacity, and other parts of your technology infrastructure.
  • Investment in the workforce, either by taking on and training new hires, or moving current engineers and developers off of existing projects, possibly incurring missed opportunity costs.
  • Time costs associated with having to get everyone up-to-speed on new requirements and functionalities.
  • Program and project management overhead.

According to the Project Management Institute, there’s also a significant risk to these types of projects: 

  • Only 69 percent of projects meet original business goals.
  • Only 57 percent finish within their initial budgets.
  • Only 51 percent complete on schedule.
  • 49 percent suffer from scope creep.
  • 14 percent overall were deemed failures.

A trusted wealth management service provider can reduce some of these risks:

  • Easily turn your desired features and functionality into defined specifications and requirements.
  • Integrates with your existing team and technology, providing support and expertise as needed.
  • Significantly reduce the amount of in-house talent that you need.
  • Avoid up-front capital expenditure through providing on-demand costing as your investment business grows.
  • Keeps the project scope narrow, by offering clearly defined investment and wealth management services.
  • Take on more provider services as your investment business scales up and adapt to changing needs.


Meet Rigorous Wealth Management Compliance and Regulations

According to a Deloitte report, “Managing regulatory and compliance risk at investment management firms,” the burden of regulatory oversight has a significant impact on wealth managers. Over the past few years:

  • Regulatory oversight has doubled.
  • Almost 20 percent of investment businesses are investigated or audited by the SEC or SRO.
  • More bills are being passed to legislate wealth management providers. 
  • Enforcement actions against investment firms are rising.

Many of these increased compliance requirements are necessary for consumer protection, but they also add a very considerable burden to wealth managers. A dedicated investment service provider has already normalized these regulations into their offerings, meaning that:

  • The external services and data that you request have been tested and audited against established and new regulatory requirements.
  • You don’t need to build as many compliance business processes into your services if some of that regulation is guaranteed by your wealth management service provider.
  • An investment services provider will already be using financial industry best practices to provide compliant, low-risk technology.


Ultimately, a trusted provider exists for one main reason: to allow you to focus your wealth management activities on what you do best—meeting customer needs, increasing assets under management, and scaling up your business. 

How can you recognize a trusted wealth management provider? Look at the average length of their client relationships, their attrition rates, and the percent of clients using current releases that provide the latest features.

A trusted financial service provider will have a proven track record, a range of customizable products, and transparent pricing and business practices. That lets you build with confidence.

Recommended Posts

Start typing and press Enter to search