Investment Management Outsourcing Research

In the summer of 2012, Northern Trust revisited a 2010 research initiative and again surveyed financial advisors about their use of investment management outsourcing. We employed this research as a means of deepening the understanding of advisors’ perspectives on outsourcing the management of their clients’ assets. We hope this research will benefit outsourcing solutions providers as well as advisors who are considering whether it makes sense to outsource their investment management function. The survey enabled us to tap the experience and insights of two groups of financial advisors:

1) Advisors whose firms are outsourcing investment management

These advisors say that outsourcing has positively impacted the productivity and efficient growth of their practices. With the possible exception of disappointing investment performance, outsourcing advisors are categorically satisfied with their solution and what it achieves for their firms.

2) Advisors whose firms are not outsourcing investment management

The majority of these advisors contend that their in-house management of client assets is central to their firms’ value proposition. The 2012 survey found a higher percentage of advisors maintaining this view – across firm type, firm size and compensation model segments – than in 2010.

2012 Research and Supplemental Information
Investment Management Outsourcing: The State of the Art in 2012

2012 Whitepaper for Outsourcing Solutions Providers

Presentation: Current Trends in Investment Management Outsourcing

Summary of Advisor Perspectives Webinar on Investment Management Outsourcing

2010 Research
Outsourcing and Loving It (2010 survey of advisors that outsource)
Full Outsourcing is Not for Everyone (2010 survey of advisors that do not outsource)

Listen to a replay of a webinar on this topic from October 3, 2012

   A Summary of the Findings
  • One-half of the outsourcing respondents outsource all investment management activities.
  • Six out of 10 respondents outsource more than half of their clients’ assets—37% outsource 75%-100% of clients’ assets.
  • While more than half (57%) of those surveyed say outsourcing has had no effect on fees charged to clients, almost one-third (28%) say they’ve increased fees and 15% say fees have decreased.
  • The 2012 top outsourcing drivers: Access to asset allocation models, access to managers firms could not access on their own and the potential to generate alpha through best investment ideas.
  • When advisors are asked for the single factor that most positively impacted the firm’s outsourcing experience, time freed up to spend on the business is valued even more highly than it was two years ago.
  • Ninety-four percent of advisors say they’re satisfied with their outsourcing solution. One-third says they’re “very satisfied.” This is nearly identical to the results reported in 2010. However, advisors in 2012 are more forthcoming about the negatives—investment performance, notably.

    For more highlights and detailed information about advisors' views on outsourcing, download the research paper!


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