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