There’s an old saying about specialisation: Liberace was paid to play pianos, not to move them. Yet, Australian advisers aren’t taking that lesson to heart, spending too much time doing the financial planning equivalent of shifting furniture and not enough time with clients.

To be fair, many advisers didn’t choose to spend much of their time fighting the never-ending war of office administrative paperwork, book-keeping, records management and marketing. But some end up that way because they lose sight of what clients pay them to do.

The simple fact is that to make money from advice, advisers need to see people. They should aim to spend about 80 per cent of their time in face-to-face contact with clients or connected via other means. In short, their highest value is found in building and maintaining trusted relationships.

Outsourcing or offshoring 

The gap between the need for more client time and the administrative workload to support that effort can be filled in a number of ways – by pursuing efficiency gains through optimisation and process improvements, automation, digitisation, outsourcing and offshoring.

A starting point for change is to do a stocktake of how you spend your time now. What tasks are you doing that someone else could pick up? If more than 20 per cent of your time is being devoted to low-level admin, consider outsourcing to a third party – either someone in house or external.

Recognising this need in the Australian market, particularly at a time of ever-increasing administrative office requirements, a number of new providers have emerged who enable local firms to shift a majority, and sometimes all, of their back-office functions overseas.

Clearly, given the sensitivity of clients’ data and the demands of transparency, advisers who do go down the outsourcing or offshoring route need to undertake a high degree of due diligence on third party providers, particularly in relation to security and the qualifications of staff.

Due Diligence

Last year, I attended a conference in the Philippines hosted by one such group that provides back-office support in general administration, paraplanning, bookkeeping, accounting, and marketing to about 115 boutique planning firms in Australia.

In the time I was there, I was struck not only by the quality of the people employed by this provider – many with tertiary Australian qualifications – but with the strict measures in place to maintain security and client confidentiality.

Globally recognised standards for information security management were enforced, including password protection, encryption, employee monitoring software, the banning of personal devices at workstations, firewalls, offsite back-ups and detailed compliance ordinances.

Understandably, security was the most frequently asked question by Australian firms researching this offshoring option, but one that appears to have been comprehensively addressed. Clearly, the demand is there, as staff have grown from four people five years ago to more than 500 today, including more than 100 para-planners.

This is just one of a number of operators in Asia who service Australian firms, so it is important that if you go down this route you feel you are entirely comfortable with the systems, processes and protections – and are clear with your own clients that this what you are doing.

But with appropriate and detailed due diligence, such as I undertook, there is no reason why the offshoring option should not deliver great benefits to your clients by increasing the time you spend with them understanding their needs and objectives. Of course, the pay-off for your own business is greater efficiency, reduced costs and an improved margin.

A mix of both

Sometimes, the hardest aspect when considering outsourcing is understanding exactly how it would work for your business and what would be the benefit. Often, advisers are concerned about the quality of work, turnaround times and what is involved in being able to outsource.

This is why the time spent researching your options is a good investment. It may be a valid option to use an insourced option for the additional non-core work.  And, of course, there can be cultural and communication advantages to having someone in-house doing the work.

But you need to be realistic about cost. For instance, the headline cost of adding another paraplanner or administration clerk can rise significantly once you take account of all the extras – including super, payroll tax, workers compensation etc;

Also consider that it does not have to be an all-or-nothing division. You may decide to keep some non-core, but nevertheless critical, functions in house and just outsource those at the margin. This is why the first step, of evaluating what you do now and why, is so important.

The bottom line is that outsourcing for the right business can improve back-office operation, reduce cost and improve task turnaround time while allowing more client-facing hours for advisers – revolutionising how effective financial advice is done in Australia.

David Haintz is founder and principal of business-to-business consultancy Global Adviser Alpha. He is a CFP and a past director of the Financial Planning Association of Australia (FPA), where he was instrumental in the push for professionalism. David has had a 26-year career with his own firm and subsequently became a founding director of Shadforth Financial Group. He departed Shadforth in 2015 and established Global Adviser Alpha.
One comment on “A message for advisers: ‘Play the piano, don’t move it’”
  1. Avatar David Carney

    Just like not all advice businesses are the same not all outsourcing businesses are created the same either. There is a big difference in the development of the people, quality of the infrastructure and the security of information. When you look at the Australian Privacy Act (OAIC, yet another regulator for advisers) there is essentially 2 requirements you need to abide by if having information shared outside Australia, 1) Disclosure to clients. This is usually covered in your Licence Privacy Statement but make sure you check, and 2) you must take reasonable steps to protect the data. You need to take responsibility to do the due diligence so you can confirm that you have taken the reasonable steps in protecting client infomation. A good place to start is to ask the outsourcing provider if they have a Infomation Secuirty Management System (ISMS) and if they are ISO27001 certified – a gold standard in Information Secuiry

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