The Reason Wealth Managers Aren't Growing Their Business

The lack of time is the main reason wealth managers aren’t growing their business fast enough.

Over the last 15 years, I have met with several wealth managers, and the most common challenge I’ve heard from them in expanding their business has been not having enough time.

Sure, not enough funding is one thing, and the resources larger competitor firms have to attract new clients don’t help matters.

Lack of funding and larger competitors will almost always pose challenges to growth, but it’s the lack of time for using existing resources that really hurts. How do they know they’ve given it their all?

So what do they not have enough time to do? And what should they do instead?

Reasons Wealth Managers Aren’t Growing Business Fast Enough

Not Enough Time for Business Development

When a business grows, so do the investment, compliance, and middle- and back-office operational workloads.

At a certain point, the tasks related to serving new clientele will eat up precious time to focus on activities that allow for attracting new clients.

According to a Schwab Institutional study, inadequate time dedicated to business development is the number one barrier to growth.

And business development is not to be taken lightly.

The study also found:

  • 50% of participating firms’ asset growth came from new clients.
  • 88% of those new clients were generated from either existing client (59%) or professional (29%) referrals
  • the top 20 percent fastest growing firms, excluding investment performance, generate two to three times the referrals as the typical firm

From when these findings were published, my professional experience says what was true then is still true now.

Not Enough Time to Focus on Investment Research

More clients and accounts to manage mean more time spent on reconciliation and performance reporting.

These tasks are important, but they are time-consuming for a wealth manager, and they could very well take a few hours out of each day.

More time spent focusing on investment research and strategy would be a more likely positive effect on cash flow, revenue which could help in further business expansion.

For those whose strengths are investing, is doing operational work really the most efficient use of their time and energy? Activities related to the middle- and back-office could be outsourced.

Not Enough Time to Hire Properly

Employee turnover hurts, and due to the time-sensitive nature of work, advisory firms end up hiring in a hurry.

  • Trades need to be executed.
  • Client reports need to be finished.
  • Someone needs to generate recon reports from your portfolio accounting system.
  • SEC audit reports needs to get done.

The hiring process is dictated by time-sensitive work more than it is controlled by you, on your time.

As a result, you may end up hiring someone who is either not fully qualified, or even if they are qualified, they might turn out to be a real pain.

They don’t get along with coworkers, they are arrogant, argumentative and disrupters of organizational unity.

Outsourcing as an Option

Wealth managers are pressed on time, and if they had more money, it might help things out.

But resources are often limited, and that’s where outsourcing could play a role.

Wealth managers can outsource various functions, from HR to IT, from compliance to middle-office operations, and even investment work, with the help of an outsourced CIO (OCIO).

A business process outsourcing (BPO) company’s business model is based on helping wealth management firms achieve greater output and efficiency, delivering services at a lower cost than if performed in house.

Because these vendors specialize in a specific function, they should have developed cost-effective methods for performing a quality service, and therefore they can pass cost savings on to you.

In the end, it frees up time to focus on growth activity like business development. It also allows more to time focus on investment research and strategy, and revenue generated from those activities can be used for growing the business.

Other Time-Related Problems Outsourcing Can Solve for Wealth Managers


The outsourcing providers take care of hiring and staffing for the tasks you need done. The burden no longer falls on you to find someone at the last minute.

Reconciliation Reporting

When a key operations analyst is sick, on vacation, or leaves the firm for good, the reconciliation reports still have to get done.

But if nobody is there to do them, now you’re in trouble.

A reconciliation outsourcing services provider would ensure there is the quantity and quality of talented labor needed generate reports before a certain time you need them, likely before the markets open.

Working Unusual Hours

Certain tasks like reconciliation reporting often demand an early start time because the custodial data is available for download in the early AM hours, and in order to have things ready before the markets open, you need people in the office.

But it’s hard retaining skilled employees willing to go into the office at 4 o’clock in the morning, especially in a strong jobs market.

A portfolio accounting and reconciliation outsourcing company would have the labor and means to get the reports done in those early hours consistently for you.

Furthermore, for wealth managers that still try to do everything, often resulting in working long nights, outsourcing various functions would lessen their burden and:

  1. allow them a set time to focus on their high-priority tasks.
  2. go home at a more reasonable hour.
  3. feel well-rested and motivated going into work the next morning.

Wealth Managers Need Time to Focus On Growing Their Business

The lack of time really hurts RIAs from expanding their business, and it’s not just because of a lack of money or strong competition.

It’s the lack of time to utilize existing resources properly.

If wealth managers had the time to focus on business development and investing, and less time on admin work, these firms might grow faster.

Passing on various in-house activity to an outsourcing firm is one way to free up capacity as well as enjoy cost savings.

The opportunity to expand is there. Just use your time and resources effectively.

Chat with an Expert

Get the latest in automation, investment operations technology, & outsourcing

Our monthly newsletter features helpful resources, articles, and tips to implement at your investment firm. Enter your email below to subscribe: