A Northern Trust survey of financial advisors shows that the trend of outsourcing investment management activities remains popular. One half of the outsourcing respondents reported contracting out all investment management activities. These respondents say outsourcing helps them achieve productivity and profitability, with 64 percent saying it gave them more time to spend with clients and 60 percent saying it gave them the ability to develop a more consistent investment management process.
Investment outsourcing is the use of external providers for investment management as opposed to conducting all investment management-related activities in-house.
The survey, "Investment Management Outsourcing: The State of the Art in 2012,” an update to Northern Trust’s initial 2010 survey on this topic, polled more than 500 financial advisors with assets under management from under $50 million to over $1 billion.
The 2012 survey found that advisors who outsource said that it positively impacts the growth of their practices. Ninety-four percent said they were satisfied with their outsourcing solution. Outsourcing advisors also noted that the top drivers to outsourcing were:
- Access to asset allocation models
- Access to managers that advisors could not hire on their own
- The potential to generate alpha through investment ideas.