Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

1st Quarter | 2022

Market insights and analysis

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Updates on how dynamic, risk-managed investment solutions are performing in the current market environment.

By David Wismer

I recently interviewed a financial adviser for Proactive Advisor Magazine, who said,

“As a financial adviser, I think it is important to understand your strongest skillsets and areas where other professionals may be able to provide specific expertise that will benefit your clients. … Most notable here is our use of third-party asset managers. They bring research, staffing, strategy development, and overall investment sophistication that I could not replicate on my own.”

This adviser is far from alone, as I have heard similar thoughts from dozens of advisers over the past nine years.

The concept of investment outsourcing among advisers is also well-documented by industry analysts and a variety of research reports. These studies have shown that more advisers are (1) moving a greater percentage of their book of business to a fee-based practice model, (2) increasingly using the services of third-party money managers, and (3) supportive of active investment strategies with a strong risk-management focus. (See the December 2021 article for a full discussion of these trends.)

While estimates vary on the percentage of financial advisers who outsource investment management—either in whole or part—the consensus is that it is an accelerating trend.

Michael Kitces, a noted commentator on the advisory space, quoted a study from research firm Cerulli Associates in a 2018 article on the subject:

“While Turnkey Asset Management Platform (TAMP) solutions were first launched in the 1980s, they have grown dramatically in the past decade … accentuating a rising trend of financial advisors outsourcing their investment management, which a recent Cerulli study found is now being done by the majority (54%) of CFP professionals. 

“And as advisors increasingly focus on giving financial planning advice (and not just providing insurance or investment solutions), this trend seems likely to only continue further, as more and more CFP professionals adopt some combination of TAMPs and technology tools to minimize the time they spend implementing portfolio management for their clients. In other words, notwithstanding their recent growth, TAMPs and the world of outsourced investment management is about to get a whole lot bigger than it is even today!”

The “Impact of Outsourcing study,” conducted in 2021 by an independent research firm, makes Mr. Kitces’ comments three years earlier appear prescient. An introduction to the study states,

“Why are 4 out of 5 advisors planning to increase the percent of outsourced assets over the next 3 years? The top factors include:

• 98% of advisors report they deliver better investment solutions as a result of outsourcing.

• 95% said they have a better work-life balance due to outsourcing.

• 91% experienced increased growth in total assets as a result of outsourcing.”

Among many findings, the study looks at the specific benefits financial advisers see as most compelling for using outsourced investment management.

What about the benefits of investment outsourcing for advisers’ investor clients?

Clearly, clients benefit greatly when advisers can deliver better investment solutions and can spend more time addressing the financial planning and day-to-day service needs of their clients.

Specific to “investment solutions,” the study referenced above breaks that down into the following categories:

• 80% of adviser respondents say they have time for “greater oversight of portfolios.”

• 56% cite “access to a broader range of investment products.”

• 48% report “improved investment performance for clients.”

• 41% have experienced the “ability to incorporate products I was not as familiar with.”

Importantly, 83% of advisers who outsource investment management report enhanced client relationships and 82% say this translates to increased client retention (which only comes about via higher levels of client satisfaction).

Flexible Plan Investments’ (FPI) unique approach as an investment resource

FPI is a TAMP with a 40-plus-year history of being a leading innovator within the investment industry, garnering recognition from many prestigious industry organizations. Over this long history, FPI has supported independent financial advisers and RIAs with the financial services and dynamic risk (and opportunity) management needed to help their clients reach their financial goals.

FPI strives to provide investors with competitive returns while working to reduce risk through the use of diversified investment products, cutting-edge technology, and dedicated support services.

In today’s investment environment, FPI’s unique approach to risk management is particularly relevant.

Each of FPI’s QFC portfolio solutions applies dynamic risk management at three levels:

This results in multiple benefits for investors:

• The confidence that their portfolio is working continuously to smooth out volatility.  

• The long-term compounding advantage of helping avoid deep losses in their portfolio.  

• Access to sophisticated risk-management tools in an investment strategy that is customized to their risk tolerance.

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The bottom line? The consideration and selection of a third-party investment provider—or “outsourcing”—is an immensely important decision for financial advisers as they guide their clients in building and preserving wealth.

To this point, Flexible Plan Investments’ world-class investment solutions can deliver a high degree of value—through dynamic, risk-managed strategies that can help navigate today’s volatile and unpredictable financial markets.



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