All about outsourcing

All about outsourcing

Financial advisers are increasingly sending their back-end processes to out-of-house workers. But despite many positives with this approach, caution is also required.

The moment you employ your first staff member is the same moment you begin outsourcing.

That is how financial adviser Ashley Pattinson, principal of Pattinson Financial Services, describes the approach becoming increasingly popular with financial advisers as a way to lift efficiency in their businesses. “Outsourcing is really taking the work out of your own hands and putting it in somebody else’s,” he says. “If we broaden that concept, then it’s about you taking it out of your office and putting it in another office.”

If this seems too simplistic, Mr Pattinson says that is because it is. Advice firms can outsource almost anything that is non-client facing, from filling in applications to chasing up product providers. However, he does have a warning: just because something can be outsourced, it doesn’t always mean it should be. “Any work that support staff in your office can do can be outsourced, but being selective of what you outsource will allow your team members to focus on the high-value transactions like client contact and the building of and maintaining of relationships,” Mr Pattinson says.

The benefits

According to business consultant Jenny Pearse, founder of Jenesis Consulting, advice firms should consider outsourcing tasks that can be automated and does not require in-person contact. “Typically, we have seen outsourcing from advice practices for paraplanning and client administration. But we are also seeing satellite service businesses develop, such as marketing and communications services via apps and software platforms,” she says.


“Outsourcing allows you to gain control of the things you want and need to do, and allows for the most efficient use of your time and your team’s.

“Take a look at how much time you spend on tasks that are urgent but not so important. These activities can create a vacuum on your time.”

Outsourcing specialist Jayesh Kasim, managing director of Valenta BPO Solutions, would agree, and says that clients value human engagement the most in accounting and financial advice practices. “So accountants and financial planners need to free up their time by putting in place strong workflows and team members so they can spend more time with their clients and prospects,” he says.

But newfound freedom is only one benefit of outsourcing, Mr Kasim says, as many firms can expect to see a difference in their bottom lines within 60 days of implementing the new structure.

“Depending on the business requirements, they can increase the number of team members to perform tasks at a cost-effective price point that can facilitate new business or they can lower their operating costs,” he says.

“For example, if a staff member is resigning, a business may want to consider replacing that person with two or three offshore staff without increasing costs, but increasing working hours. “That will automatically cater for redundancies as well, which is a very big problem for most SMEs.”

Ms Pearse, however, warns advisers to “inspect what they expect” so that they do not end up with an outcome where a task would have cost less time or money if they had done it themselves.

“Create a plan that allows you to set yourself on a course to generate income through increased productivity and activity. Ask yourself, ‘If I didn’t have to do this task tomorrow and someone else was doing it for me, what would I do with my time?’” she says.

“If you are going to add an expense to your business you must offset it with income producing activity. Do not fall into the trap of simply replacing it with more administrative activity. “Pick up the phone, send an email or interact on social media with your community. Whichever it is, just make sure the conversation you’re having is about building your brand and spreading the great message about the importance of financial advice.”

Working alongside staff

In addition to looking at how outsourcing will boost revenue, advice firms must also consider how this new structure will work alongside any existing staff.

Mr Kasim says outsourcing is generally well-received by staff in most cases, but it does depend on their understanding of the concept. “I usually meet with directors, principals, heads of departments, who are looking at increasing efficiencies to their business. They are also very mindful of the tasks their team members perform and always ask for assistance in freeing up their time so they can perform more value-added tasks,” he says.

“For example, generating documents, processing applications are tasks that should be outsourced rather than having an in-house team member perform. An in-house team member would be better off speaking with clients more regularly and managing the workflow instead.”

Ms Pearse warns, however, that there can be hesitation from staff, as is common with any change to a work environment. The best way to deal with this would be to simply ask the staff members what they want, she says. “There can be initial hesitation whilst change is being implemented and processes are defined but in the longer term, team members can typically see the benefits and reap the reward,” she says.

“A word of advice: ask your team what they want. Often, they will have done the research for you already but just haven’t had the confidence to bring it to the table.” Still, some staff may be resistant to adjusting to outsourcing, especially if it leads to redundancies. In this case, Ms Pearse urges firms to “be honest”.

“If the outcome is likely to have an effect on one or more of your team, then sit down and have the conversation about why you are doing it. Be open to other opportunities that your team may put in front of you,” she says. In Mr Kasim’s experience, outsourcing has typically led to promotions, rather than redundancies.

“In most instances, if a team member’s role has been identified as a potential outsourcing role, they are offered a career progression if suitable,” he says. “This may include training or skilling up so that they can contribute more to the business. This, however, depends on the capacity of the business and the willingness of the team member.”

Risks and challenges

Beyond getting staff members on board with outsourcing, firms must be aware of the risks, such as the potential for data theft.

Mr Kasim recommends his clients use password vaults, set up IP address restrictions for platforms as well as inspect the outsourcing facility. And as part of that inspection, firms should, as a minimum, put in place ISO certification, server and firewall configurations, and cyber risk insurance.

To protect himself, Mr Pattinson says he has established “clear written parameters” that define the activities involved in the outsourced task. “To address [security issues], you need to ensure the method of transferring information between offices and access to files and client information has very strict parameters around it,” he says. “We operate a zero-tolerance policy on password protection and password sharing. Staff cannot share their passwords and they must not record them anywhere that another person can access.

“Additionally, when staff work in our business in the Philippines, they have to check their phones and bags at the door with the security guard. We use dumb terminals so that there can be no printing, or saving files and we have intranet email facilities which prevent data from being emailed to anyone except those approved to receive it.”

There are other challenges that come with outsourcing, including potential language barriers and different time zones. But Mr Kasim says there can be pros and cons to working on different time zones, although language barriers are tough to get around. “For example, if the time difference is four hours, then things can be completed overnight and it also means the first one to two hours each morning can be used to schedule work for the outsourcing team,” he said.

“In terms of languages, it’s very important to have outsourcing team members who can speak, read and write well. It does not have to be 10/10, but at least 7/10. Anything below will make the process harder than it needs to be.”

Ms Pearse says pricing is also a big concern for her clients. She advises them to “try before you buy”. “Subscription-based service providers have become popular and frequently offer free trial periods to engage you. Take advantage of these trials to test technology and ongoing support and service. It’s a must but remember don’t sign up unless it is going to add real value to what you do,” she says.

Mr Pattinson reminds advice firms that while outsourcing can provide many benefits, it is not the answer to all problems. “Outsourcing won’t improve your time management nor will it make you more productive. It provides the opportunity for better outcomes but only you can make that happen.

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