As outsourcers find IT management increasingly
challenging their contracts, a new survey jointly sponsored by
Financial Objects and Microsoft has revealed that insourcing is
rapidly being favoured in order to maintain client service
quality
Just over two-thirds of private client wealth managers in the UK
outsource to third party administrators (TPAs), yet more than half
(54%) would consider taking outsourced processes back in-house.
Quality and cost stood out as the most decisive factors for
wealth management firms looking to outsource; they were the most
important aspects their clients looked for.
However, three-quarters of respondents felt improvements could
be made to outsourced services, particularly in the mid-front
office functions of asset management, client reporting, and
performance and trade execution. Most worryingly though, even
though outsourcing was regarded as being able to deliver more cost
benefits, when it comes to the quality of client service,
insourcing was overwhelmingly favoured.
When asked about pricing model preferences, most wealth
management respondents opted for a hybrid of fixed fee and volume
based. While most TPAs said they offer this, most also offer
pricing models with additional charges for ad hoc user requests,
which – in stark contrast – is the pricing model wealth management
firms least prefer.
The survey results also found that 85% of third party
administrators would consider adding a third party tool if it
increased their competitiveness. Four-fifths of wealth management
firms already use third party systems and 85% said that technology
was highly important in supporting business growth. Less than 15%
of respondents were satisfied with client reporting and performance
measurement services