Wealth managers dissatisfied with outsourcing
Wealth managers are becoming increasingly dissatisfied with the performance of their outsourcing firm, but most agree it is still cheaper than doing it in-house, according to a new survey.
Over half of wealth managers said they would consider taking outsourced processes back in-house, according to the new report commissioned by Microsoft and software supplier Financial Objects.
Of the 85 firms that responded to the survey, 75% said they felt improvements could be made to outsourced services, particularly in the mid-front office functions of asset management, client reporting, and performance and trade execution.
Furthermore, while outsourcing is deemed to deliver more cost benefits, when it comes to the quality of client service, insourcing was overwhelmingly favoured.
Brent Randall, managing director of the wealth management division at Financial Objects said: "Many third party administrators simply don't own or can't afford technology sophisticated enough for the needs of their clients, the wealth managers. Over the next year we expect to see many outsourcing firms updating their systems in order to meet their clients demand."
Randall said that quality and cost were the most decisive factors for wealth management firms looking to outsource and the TPAs surveyed also cited this as the most important aspects their clients look for. When asked about pricing model preferences, most wealth management respondents opted for a hybrid of fixed fee and volume based.
While most TPAs said they offer this, most also offer pricing models with additional charges for ad hoc user requests, which is the pricing model wealth management firms least prefer.
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