Advisors Saving Time with Model Portfolios and AI
Advisors intent on increasing their appeal to wealthy clients might consider entrusting portfolio construction to outside partners. According to the latest report on U.S. asset and wealth management by Cerulli Associates, advisors who use model portfolios built by outside firms or other partners spend only 10.6% of their work hours on investment management, whereas those who build portfolios on their own spend roughly a quarter of their time on that task. This outsourcing of investments frees up enough time for advisors to spend just under two-thirds of their workday on average dealing directly with clients.
Young advisors, in particular, can benefit from outsourcing investment management. Many newcomers to the industry lack the support staff that would allow them to handle portfolio construction within their own firm without a great expenditure of time and effort. Broker-dealer training programs are doing a good job educating junior advisors on the benefits of leveraging model portfolios, making them more likely to feel comfortable and confident relying on financial planning and tax management as the primary pillars of their competitive positioning.
How AI Can Save Time
One of the big promises of artificial intelligence is that it will spare advisors from tedious but necessary tasks, allowing them to focus on what drew them to the industry. AI has already found numerous uses, most of them aimed at providing more face time with clients. A tech executive estimated that AI is already saving advisors 10 hours a week.
Read more about how AI is saving advisors here.
When the Promise Falls Short
However, as with all new technologies, AI can disappoint. There are occasions when AI ends up costing advisors more time than if they had not turned to it for help in the first place. Proper training of an AI system on its role and the advisor’s expectations can help avoid such issues.
Read more about when AI shortcuts backfire on advisors here.
Outsourcing Often Key for Solo Advisors
With consolidation rampant in the industry, a question arises about whether solo advisors and small shops will continue to have a place in wealth management. Fortunately, the industry now offers a variety of third-party firms that can help lighten the load of tasks unrelated to financial planning. These services include assistance with portfolio construction, regulatory compliance, cybersecurity, and technology.
Read more about how solo advisors can thrive in a consolidating industry here.
How About Outsourcing Estate Planning?
In addition to portfolio construction, advisors are increasingly seeking outside help with the complex considerations involved in estate planning, especially as clients approach retirement age. Attorneys caution that advisors may face challenges if they try to add estate planning to their service offerings, making third-party firms even more crucial.
Read more about advisors clamoring for estate planning tools here.
Time to Find New Clients
Before advisors can spend time with clients, they must first acquire clients. Building a book of business can be one of the most time-intensive tasks for advisors, especially for those new to the industry starting from scratch. Various RIAs have developed effective methods for finding people in need of financial planning and converting them into clients.
Read more about how new RIAs can grow organically here.
Source: Here
