99% of wealth managers embrace outsourcing
Some 49% of wealth managers outsource some or all of their middle and back office operations to a third party, according to a survey by business consultant Knadel.
Almost all (50%) of the remaining participants said that they would consider it in future.
“It’s clear that wealth manager’s attitudes have changed towards outsourcing. We now have a critical mass of suppliers, a barrier to growth, and this greater choice is fuel to the fire,” said Gilly Green, wealth management practice leader.
With over 30 providers and more set to enter the market, a quarter of participating suppliers in the survey started up in the last five years, outsourcing is becoming less constrained by a lack of credible service providers.
The survey of over 50 wealth managers and third-party service providers, representing assets under management of £135bn ($230bn), also found that the variety of functions outsourced was far greater than in the institutional sector.
Driven largely by increasing regulation and a need to scale, wealth managers are outsourcing further up the value chain, focusing on core value activities such as investment process and client services.
“The regulatory focus on client experience and suitability means that wealth managers are choosing to outsource as many of the non-client facing and administrative functions as they can,” said Green.
“They are outsourcing activities including investment activities like market execution and research. This is very different to what we currently see in the outsourcing market for institutional asset managers.”
Despite the extent of outsourcing seen, he said wealth managers need to get better at service provider governance and the need for recovery and resolution planning – many wealth managers are unaware of the regulators focus in this area.
Bruno Prigent, global head of Societe Generale Securities Services, recently spoke to Global Investor/ISF about opportunities in the UK outsourcing market, read about it here: http://bit.ly/1nGFpii
Almost all (50%) of the remaining participants said that they would consider it in future.
“It’s clear that wealth manager’s attitudes have changed towards outsourcing. We now have a critical mass of suppliers,
With over 30 providers and more set to enter the market, a quarter of participating suppliers in the survey started up in the last five years, outsourcing is becoming less constrained by a lack of credible service providers.
The survey of over 50 wealth managers and third-party service providers, representing assets under management of £135bn ($230bn), also found that the variety of functions outsourced was far greater than in the institutional sector.
Driven largely by increasing regulation and a need to scale, wealth managers are outsourcing further up the value chain, focusing on core value activities such as investment process and client services.
“The regulatory focus on client experience and suitability means that wealth managers are choosing to outsource as many of the non-client facing and administrative functions as they can,” said Green.
“They are outsourcing activities including investment activities like market execution and research. This is very different to what we currently see in the outsourcing market for institutional asset managers.”
Despite the extent of outsourcing seen, he said wealth managers need to get better at service provider governance and the need for recovery and resolution planning – many wealth managers are unaware of the regulators focus in this area.
Bruno Prigent, global head of Societe Generale Securities Services, recently spoke to Global Investor/ISF about opportunities in the UK outsourcing market, read about it here: http://bit.ly/1nGFpii
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