Learn how embracing back-office to centralize processes can save you time, money, and hassle.
The balancing act.
“I swear I spend more time troubleshooting computers, reading up on regulatory changes, and looking at benefits packages than I do meeting clients,” a Partner at one small RIA once told me. “I think I need a bigger business card just to handle all my roles.” If this sounds familiar, you’re not alone…
What is back-office centralization?
Back-office centralization is the process of outsourcing your administrative and operational tasks to a dedicated group at an organization who specializes in enterprise level support. Often, this support is aligned with applicable back-office departments, such as Operations, Compliance, Marketing, Investments, IT, Trust and Estate, etc. This includes processes involving account opening, billing, reporting, reconciliation, tax preparation, estate evaluation, and regulatory filings. By delegating these tasks to a back-office, you can focus on growing and cultivating your business and client relationships.
What are the benefits of back-office centralization?
Back-office centralization can offer several benefits for your business, such as:
- Cost Savings: You can reduce your overhead expenses by limiting the need for hiring, training, and managing administrative staff on your team. You can also leverage the economies of scale and expertise of back-office, who can process higher volumes and specialize as authorities in operational processes.
- Time Savings: You can free up your time and resources by avoiding the hassle of dealing with multiple vendors, systems, and processes. You can also streamline your workflows and improve your efficiency by having a single point of contact and a standardized platform for all your back-office needs.
- Risk Reduction: You can mitigate your operational and compliance risks by relying on back-office’s subject matter experts, best practices, technology, and security. You can also reduce your audit and regulatory burdens by having a centralized back-office manage the processes associated with these activities.
- Client Experience: You can enhance your client relationships by providing them with an exceptional level of service minus the distractions of day-to-day operations.
- Business Growth: Few (if any) advisors have the time and expertise to handle IT, HR, Marketing, etc. and even if they did, every hour spent on these is an hour taken from activities that can grow their business. Client service, building a referral network, and other business development are all critical to growth and are a better use of advisor time than operations. Back-office centralization allows advisors to employ experts dedicated to these functions to allow time for business development and relationship building.
Is back-office centralization the same as using a TAMP?
TAMPs, or Turnkey Asset Management Programs, bring together asset management, custodians, and technology to manage client accounts. Fees are account based, and while some back-office services are available, there is a level of control that is relinquished in using a TAMP provider. Advisors employing a TAMP are using third parties in some of the decision-making processes surrounding client portfolios, like asset management, research, and available investment and technology providers.
Back-office centralization, on the other hand, allows the advisor to have full control over the client relationship, from portfolio selection to fee structure, to overall process control in the client lifecycle. Back-office centralization allows the advisor to maintain autonomy in their business and client relationships through their parent firm who has the autonomy to make offering changes as opportunities are identified.
How do you choose the right firm with centralized back-office support?
Choosing the right firm with robust back-office support is a strategic decision that requires careful evaluation and due diligence. Here are some factors to consider when selecting a partner:
- Services: You should look for a firm that offers a comprehensive and customized suite of back-office services that match your needs and goals.
- Technology: You should look for a firm that uses a robust and secure technology platform that is well integrated. Additionally, the firm should be forward-looking in the FinTech landscape to ensure advisory needs are being met and future proved. You should also check the firm’s data security, backup, and recovery policies and procedures.
- Support: You should look for a firm that offers a dedicated and responsive back-office support team that can handle your queries and issues. You should also check their service level agreements, turnaround times, and escalation processes.
Taking the first step.
Back-office centralization is a smart and effective way to optimize your advisory business. By partnering with a firm that centralizes back-office operations, you can save costs, save time, reduce risks, and enhance your client’s experience. If you are interested in learning more about back-office centralization, let’s talk!
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