How Operations Outsourcing Helps Wealth Managers Expand Globally

Wealth management firms that outsource their operations will have less complicated time when they go international.

Entering a new country comes with its own financial and regulatory hurdles, which are unavoidable.

What is avoidable is dealing with middle-office and back-office work.

A wealth management operations outsourcing provider can help firms run a more efficient operations when they go global.

How Wealth Managers Benefit from Back- and Middle-Office Outsourcing When Going Global

Lower Expenses

Cost Savings with Wealth Management Operations Outsourcing_EmpaxisBack- and middle-office outsourcing companies have the resources and expertise to provide daily reconciliation and performance reporting services at a lower cost.

Even if labor costs are lower depending on the country you’re going to, there are still unknowns:

  • How large is the talent pool?
  • How reliable is the talent pool?

But there are costs associated with hiring talent:

  • Recruiting
  • Training
  • Employee turnover

With outsourcing, investment managers don’t have to worry about the local talent situation, and they’ll avoid the costs associated with hiring.

Operational Continuity_EmpaxisOperational Continuity

As a result of not having to recruit and replace talent on your own, there will be less interruption to your middle- and back-office processes.

When wealth managers hire talent in-house, they have to train new employees on the portfolio accounting system and teach them all of the ways to find reconciliation cash and positions breaks. There might be a steep learning curve for these new operational hires, and productivity and efficiency is lower until the staff are fully functional, which can take months. And by that point, they might already be looking for their next job.

The outsourcing company can provide labor as needed. When a wealth managing firm’s operations are ramping up, the outsourcing provider can supply the talent, and when things slow down, the provider will remove excess labor.


Challenges with security will exist when entering another country, particularly if the host country is more vulnerable to cyber attacks. Securing systems and networks can be a costly an ineffective endeavor without expertise.
Cyber Security Measures_Empaxis

  • How vulnerable could your systems be to hacking?
  • How much will it cost to set up an IT infrastructure?
  • What is the office’s or building’s physical security situation like?

Security is not to be taken lightly. According to a Cybersecurity Ventures prediction, cybercrime will cost the world $6 trillion annually by 2021, up from $3 trillion in 2015.

Wealth management operations outsourcing companies can alleviate some of the challenges around security. In addition to running  the middle- and back-office reporting, the outsourcing provider can set up and maintain a firm’s IT infrastructure.

There a few (of many) things an outsourcing provider could do:

  • Require password and VPN to access computers and networks
  • Whitelist IP addresses, ensuring only specific devices have access
  • Detect and stop threats (hacking, viruses, adware, malware, phishing scams, etc.)

In addition, the outsourcing company should be audited by one of the Big 4 consulting firms, and these audits will ensure the outsourcing firm has a secure facility and policies for handling sensitive electronic and non-electronic information.

Time Zone Advantages_EmpaxisTime Zone Advantages

Many investment management outsourcing companies operate on a 24/7 schedule, so the provider can deliver daily reconciliation reports whenever the client needs them.

Whether a firm expands to Europe or Asia, they won’t have to worry about staffing a team late at night or early in the morning just to have reports ready before the regular work day begins.

Back-and middle-office outsourcing firms can begin running reports for their clients once the transaction data is available from the custodians, and it doesn’t matter how early or late it is in the  local time.

Operations Outsourcing Providers Make Global Expansion Easier for Wealth Managers

It’s hard enough opening a business in a new country that has its own regulations and security challenges, and when dealing those, costs will be incurred.

Operations outsourcing companies for wealth managers can make global expansion for your firm a smoother process.

A provider not only handles the middle-office and back-office reports, they also can manage the IT side of operations.

An outsourcing company should have the resources to delivery timely and quality reports while ensuring a secure environment for their clients’ data.

With the services of a middle- and back-office operations outsourcing provider, wealth managers will face fewer obstacles in going international.

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