As RIA firms grow, they often encounter scalability, regulatory compliance and operational efficiency challenges. RIAs need to anticipate how the increasing workload will impact operational efficiency and client service quality. This includes evaluating whether current systems and processes can accommodate the expansion or if additional and ongoing investments in technology and infrastructure are required. Do you find your business at a crossroads between pursuing internal growth or outsourcing various operational functions? Let’s look at different options available to support future growth.

Internal Expansion

Have you invested in support staff and associate advisors, only to find that you still spend too much time managing people, technology or non-revenue-producing aspects of your business? You’re not alone. According to the 2022 Kitces Research Study on advisor productivity, financial advisors spend about 20% of their time on overhead-related tasks (administrative, management and professional development), while only 20% is spent in client meetings. Another 9% of their time is spent on investment-related tasks.

One option for supporting growth is through internal expansion, which involves investing in resources, technology and talent to manage various aspects of the business in-house. This approach allows for greater control over processes and client relationships. However, it can be resource-intensive and may divert focus from core advisory functions.

Scalability is another pivotal aspect that RIAs must weigh when expanding their team internally. While growth is a positive indicator, it can strain existing resources if not managed effectively. RIAs often spend time and money to fill staffing needs in many functional areas that keep their business running, only to discover that their employees are completely tapped out and have reached the end of their bandwidth.

Outsourcing Options

If you’re feeling stuck and need to re-evaluate where you spend your firm’s time and energy, a Turnkey Asset Management Program (TAMP) might be the solution to help you address critical gaps, fill essential staffing and back-office needs and develop a realistic growth plan.

Additional research by Kitces Research points out that two main factors separating the top 25% of advisors from the bottom 25% are delegating middle- and back-office tasks to create more client-facing time. According to the firm’s calculations, this can free up time for 200 more client one-hour meetings per year between the top 25% and bottom 25% of financial advisors.

TAMPS are designed to help financial professionals save time and allow them to focus on providing clients with service in their areas of expertise. This approach enables RIAs to outsource various functions and tap into the expertise of seasoned investment professionals while maintaining control over client relationships. By outsourcing functions to a TAMP, an advisor will avoid the cost of having to set up in-house functions, which often necessitate hiring more employees, providing more benefits, etc.

TAMPs offer a bridge between internal management and complete outsourcing. They offer comprehensive solutions that provide RIAs with pre-built investment strategies, portfolio management tools and operational support. More specifically, they can provide technology, back-office support, tasks like investment research and asset allocation, as well as account administration, billing and reporting. The service might also include supplying proposals, wealth management tools, compliance services and investment policy statements.

Considerations For Using a TAMP
  • Efficiency: TAMPs provide access to proven investment strategies and tools, reducing the time required for research and strategy development.
  • Expertise: RIAs can leverage the expertise of experienced investment professionals without the need to build an in-house investment team.
  • Scalability: TAMPs offer the flexibility to accommodate growth without significant increases in operational complexity.
  • Risk Management: TAMPs often have robust compliance frameworks, helping RIAs adhere to regulatory requirements.
  • Compliance: TAMPs can act as an expert resource for compliance tasks in regulatory matters to help ensure adherence to industry standards.
  • Loss of Control: RIAs retain control over client relationships but relinquish some control over investment decisions to the TAMP.
  • Cost: TAMPs come with fees, which need to be weighed against potential cost savings and efficiency gains.
  • Customization: TAMPs may offer standardized strategies, limiting the ability to customize portfolios fully.
Factors to take into consideration when choosing the right TAMP for your business include:
  • Alignment of the TAMP with your investment strategy
  • The type of relationship the TAMP will have with your custodian
  • The fees the TAMP charges
  • Whether the TAMP works on your internal platform
  • Additional services and resources available through the TAMP
  • The quality of service support the TAMP provides
  • Additional technology the TAMP offers
What Makes WAA Different From Other TAMPs?

At the Wealth Advisor Alliance, we operate as a 100% advisor-owned model. Our partnership structure sets us apart from others in the industry. The people setting the vision for our firm are meeting with their clients, and that comes through in the decisions they make and how they think about the business. If you choose to retain your RIA firm to keep brand consistency, control core differentiation elements or target a specialized niche, the Wealth Advisor Alliance provides highly efficient back-office services for RIA firms and a community of like-minded advisors.

We go beyond “standard” TAMP services by providing greater flexibility in how you affiliate with us with access to a broad community of subject matter experts and advisor-friendly technology. Our TAMP investment platform is purposely designed for advisors who adhere to a Dimensional and Vanguard investment approach.

At the Wealth Advisor Alliance, we have the experience and resources to fuel success for solo RIA practitioners and larger organizations. For insights into how we allow you to own your business while better leveraging your time to raise client engagement, referral and revenue, see our Partnership Case Study featuring Christopher Lamia.

 

We help advisors establish and grow successful wealth management practices. To learn more about how we can help you amplify your life’s work, contact us at team@waalliance.com. You can follow us on Twitter@theWAAlliance and on LinkedIn.

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