Preparing For The Next Downturn

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We already know that there are not enough hours in the day to get everything done. We hear it all the time. Time management studies1 show advisors are time constrained and our conversations with advisors confirm exactly that. There is too much to do and not enough time to do it all.

It seems that any time I read the trade press these days, there is another article on outsourcing. Our own Michael Kitces penned a blog earlier this year on the topic. Many articles quote statistics from a Cerulli Associates reportstating that advisors spend nearly 20% of their time on investment management and just over 20% on administrative tasks. That totals nearly half of an advisor’s time spent on non-client facing activities.

I am reminded of some conversations I have had this year with advisors I have spoken to about our Strategic Partnership. A few of these solo practitioners estimate that it takes them several weeks to execute a single trade in their portfolios. Yes, that’s right. Just one trade. In a stable market environment, that rate is slow but sustainable. What happens, though, when the markets turn volatile?

We are in the final innings of the longest running bull market cycle in history.3 At some point the bear cycle will take hold and clients will need more hand holding. How will these advisors cope? The 20% of their time spent on investment management could balloon to half of their time or more. All at a time when they will need to increase client contact to address concerns and allay the fears of their clients during market uncertainty.

This begs several questions – Do they have the tools to proactively defend against the downturn? Does their investment platform enable them to make trades quickly and efficiently? Will they have the time to hold client hands? If not, then perhaps now is the time to explore what options are available for outsourcing so that when the market does turn, they will have the time to devote to client care and conversations.

Years ago, options for outsourcing various facets of the business were virtually non-existent. Today, however, the landscape is much different with advisors having myriad options to choose from. Perhaps if you are like so many advisors who already feel the time crunch and are wondering how you will best deal with the next downturn, now might be the right time to explore solutions that will help you best serve your clients.

1FPA/RPI Doing More With Less, April, 2014
2Cerulli Associates, US Advisor Metrics, 2016
3CNN.com Market milestone: This is the longest bull run in history, August, 2018

About the Author

Peter McGratty CFAPeter is co-founder and Vice President of Strategic Partnerships of Pinnacle Advisor Solutions and is also the author of From the Corner Office.View all posts by Peter McGratty CFA →

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