In 2024, wealth managers are looking to improve scalability, reduce costs and achieve digitalization across their offerings.
Much of the wealth management industry has struggled with scalability. Data from Compeer1shows that in the last 5 years, only 37% of the industry was able to grow their revenues at a faster rate than costs. According to Oliver Wyman2, rapid growth in AUM over the past decade has meant wealth managers have been able to maintain cost-income levels at around 70%. However, volatile markets in recent years have meant fluctuating AUM figures thereby affecting revenue growth; whilst rising cost pressures have also negatively impacted profit margins. But what’s causing the rising cost pressures? Aside from the knock-on effects of the inflationary environment, businesses pursuing growth, historically tend to prioritise areas such as internal technology development or the increase of headcount in order to achieve business objectives. This can result in increased costs and lead time when compared to outsourced, white-labelled tech and operational teams. There really is another way to grow while optimizing efficiency.
Furthermore, as a new generation of investors emerges, following rapid advances in digital change brought about largely by the pandemic, wealth managers’ clients are starting to demand more modern financial technology.
One way all three of these goals can be achieved is by outsourcing.
Outsourcing certain business functions to third parties whether operational or technological, has been proven to increase efficiency and reduce costs. For example, outsourced providers can offer solutions to facilitate scalable growth and reduce the need to maintain bloated in-house teams to run operational/administrative processes. A Fidelity 3 survey on outsourcing for wealth managers showed growth in clients and AUM was larger in those who outsourced, specifically, 81% of advisers who outsourced two or three functions saw an increase in their number of clients in the past year, compared to 71% who didn’t outsource any functions at all.
As a provider of outsourced services, Titan can offer scale and margin enhancements to our clients and affiliates via leading-edge technology focusing on automated solutions for seamless client onboarding, asset management and administration. Outsourcing is only the easier option when it saves you time and resources, and our tech is fully web-based with embedded API options, the platform and reporting can be white-labelled with client branding, and an end-client portal allows underlying customers to monitor their investments in real-time. Platforms and outsourcing are there to reimburse your time, freeing up your schedule so you can build relationships with your clients.
Additionally, we’ve created a complementary set of business services designed to readily integrate with wealth management firms’ existing systems and operations architecture. Uniquely, our services platform caters to discretionary, advisory, and execution-only businesses and sits alongside a broader investment proposition as well as in-house dealing and CASS custody.
Global Prime Partners Limited is authorised and regulated by the Financial Conduct Authority. Global Prime Partners Limited is a wholly owned subsidiary of Titan Wealth Holdings Limited. This content is for financial intermediaries, it is not aimed at the general public. This document is published and provided for informational purposes only. The information contained within constitutes the author’s own opinions. Global Prime Partners Limited do not provide financial advice. None of the information contained in the document constitutes a recommendation that any particular investment strategy is suitable for any specific person. Source of data: Bloomberg, Global Prime Partners unless otherwise stated. Registered address: Global Prime Partners, 101 Wigmore Street, London, W1U 1QU.