Outsourcing of investment management remains popular: Northern Trust

According to recent survey conducted by Northern Trust, hiring the service of financial business process managers remains still popular. Northern Trust, the leading investment management service provider worldwide across the world conducted the survey among the financial advisors representing different geographies. The respondents said that the hiring the service of investment management service providers helps them to achieve productivity and profitability.

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Northern Trust Corporation is a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services based in Chicago in US.  The company which has a history of more than 120 years has built the trust among the business leaders in financial industry. The corporation commissioned the survey among 510 financial advisors over the period June and July in 2012. The report published is an update to Northern Trust’s 2010 research study.

As per the report titled “Investment Management Outsourcing: The State of the Art in 2012” most of the financial advisors have benefited from hiring the service of investment management service providers. According to the survey, 64% of the respondents said that hiring investment management service providers gave them more time to collaborate with their clients, while 60% felt that it gave them the ability to develop a consistent investment management process for their clients. The respondents claimed that outsourcing had a positive impact on their growth strategies. The report also found that top drivers to hire the services of financial business management service providers are easy access to asset allocation models, costly resources and potential grow.

Key highlights of the report

  • One-half of the respondents hired the service of investment management service providers.
  • Out of 10 respondents, 6 of them hire service providers to manage their clients’ assets. It is said that 37% of them hire the service providers to manage 75-100% of the clients’ assets.
  • 28% of the respondents have increased the fees of the clients as a result of hiring the service providers while 15% of them reduced the fees. About 57% of them have not changed the fees.
  • According to the respondents now they can spend more time with the clients after hiring the financial service providers.
  • 94 % of the advisors are satisfied with the services of the providers.
  • Among those advisors who have not hired service providers, key reason has been the thought that investment management is central to the firm’s value proposition. Hence they are reluctant to outsource it to third party service providers.
  • About 34% of the respondents said that their attitude towards outsourcing won’t change.
  • Advisors who do not hire the service providers are burdened with their investment management related tasks.

You can view the report here.

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