Why Investment Research Outsourcing Allows More Time For Financial Planning

Why Investment Research Outsourcing Allows More Time For Financial Planning

The beauty of life at a boutique RIA is, obviously, the independence. Some advisors spend their entire careers never knowing what it is like beyond the reach of a global financial firm’s chain of command.

However, this can be hard to appreciate when you are always running from asset management… to meetings… to research… and never feel as though you’re gaining ground.

In fact, if your operation is too small, you can wind up wondering if your financial planning is really where it should be, quality-wise. Established clients may not complain, but deep down, you know the difference, even if they don’t. 

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How Do You Get Back to Your Best Planning?

The upshot is that you probably have not missed your best days as an advisor. You may feel like you will never get back to your best work, but believe it or not, this option is not off the table. It just may require a slightly different approach.

The secret lies in delegation: You need to free yourself from tasks that do not require your personal involvement, specifically. In other words, the only way to get back to giving financial planning more of your attention is to clear your path to it. 

There are a number of ways to go about this, but, obviously, some have more merit than others. For instance, you could try the advice-only route. It certainly sounds more fun, but where the rubber meets the road, is it really doable? 

Unless you are based in an area with wall-to-wall UHNW clients—who love crunching their own numbers—the advice-only approach is far from a sure thing. To be blunt, I doubt that a majority of RIAs can find enough of these specific kinds of clients to make it work. 

If you have a cloning vat handy, you could make copies of yourself, but that brings up ethical concerns.

Okay, seriously, you might try tapping a team member to be CIO, but not everyone is cut out for the job. If they are not, you could wind up even busier, once that burned-out employee leaves. The necessary kind of multiple-hat-juggling aptitude does not grow on trees.

What else does that leave? Hiring a new person? It is certainly possible, but once you start paying a full-time CIO’s salary, insurance, benefits, parking, and so on, your firm could find itself with considerably less money at the end of each quarter. 

Outsourcing Options

Certainly, outsourcing is an option. TAMPs are always eager for your business. Some are even lowering their fees, too, but despite purportedly similar risk and return targets, their results can vary significantly. This is not the only potential drawback, either.

Despite the high-tech approaches some tout, their years in the financial industry, supplemental services they offer, or their sheer size, it can be difficult determining who their actual money manager is. In some cases, that person’s qualifications for the work can seem equally inscrutable. 

We believe that your best choice is an outsourced chief investment officer (OCIO). This individual can serve your firm as an independent contractor. Many work on a simple fee basis, so there’s no salary to pay or any of the usual trappings required for a full-time CIO. 

At the same time, they can genuinely join your team: You may be able to list them on your firm’s meet-our-team page. The instant prestige that accompanies this perk cannot be overstated. The credentials in a fiduciary OCIO’s bio are typically nothing to sneeze at. 

Visitors may not always know the entire significance of having a Chartered Financial Analyst® in your ranks, but they do not need to in order for you to optimize your fees accordingly. The bio of a quality outsourced CIO can include impressive continuing education credits, as well. 

The choice as to how much asset allocation work you delegate; your fiduciary OCIO can do a fraction of the workload, if you choose. In all honesty, though, we are convinced that you will see the most optimal benefits by dumping as much as you can onto them. 


Could an OCIO Hold the Edge You Need? We Have 12 Reasons Why We Believe So Here.


Time the Financial Planning Advantage

Clients tend to hold financial advisors who keep them feeling attended to, personally, in higher regard. Meanwhile, it gets next to impossible trying to manage all your firm’s assets yourself, prospecting hit-and-miss when time allows, and then hoping to squeeze planning and meetings in there somewhere (almost an afterthought).

Vector illustration of Businessman fishing goldfish

So, by offloading all the investment decisions you can, you escape this maze: You instantly get back time for reallocation to financial planning and prospect-pipeline-growing outreaches. After all, the personal touch is often a big reason why your clients chose you rather than a mega wirehouse. 

Especially while market volatility is a consistent factor  it can be tough keeping clients’ feathers stroked and keeping an eye out for tactical investing opportunities. That is why the right outsourced CIO can be not just helpful, but integral to your firm’s ongoing success.

For an RIA, diminished interaction with clients and prospective clients is essentially diminished revenue waiting to happen. Pair this with the likelihood that more clients leave their current advisor during volatile markets than any other to see even more of the bigger picture. 

It does not matter that you have done nothing wrong, whatsoever. When people bombarded with inflationary headlines and reports see their assets losing value, you know who they are going to blame for the state of their portfolio. Rightly or wrongly, it is often their advisor. 

So the choice, clearly, is yours: You can free yourself up to focus on retaining existing clients by calming their fears, when necessary—or you can become one of those firms that may soon wonder where chunks of their book went. 

In fact, by utilizing a reputable OCIO, you could potentially do more than just avoid this disaster: We believe that you could position your outreach net to scoop up new clients from those potentially leaving your competitors. You cannot do this if you are not free to lean over the side of the boat, though. 

Cornerstone is here to manage the ship while you get ready for the potential catch of a lifetime. Contact us today. 

CPS eBook Reasons to Outsource
Cornerstone Portfolio Research (“Cornerstone”) is an SEC-registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training.  This publication should not be construed by any consumer or prospective client as Cornerstone’s solicitation or attempt to effect transactions in securities, or the rendering of personalized investment advice over the Internet. The statements in this publication are the opinion of Cornerstone regarding Outsourced Chief Investment Officer (“OCIO”) services.  These are not personalized recommendations and you should consider your own criteria when choosing an OCIO.
A copy of Cornerstone’s current written disclosure statement as set forth on Form ADV, discussing Cornerstone’s business operations, services, and fees is available from Cornerstone upon written request. You should not assume that any discussion or information contained herein serves as the receipt of, or as a substitute for, personalized investment advice from Cornerstone or the professional advisors of your choosing.                          

More about the author: Thomas Balis

Thomas holds a Bachelor of Science in Business from Ohio State and has since earned the Chartered Financial Analyst® (CFA®) designation as well as the Accredited Portfolio Management Advisor (APMA®) and Chartered Mutual Fund Counselor (CMFC®) certifications.