Scott Daniels, co-founder and director of outsourced paraplanning firm Plus Group, tackles an age old debate for advice firms.
Whist the title of this article may seem strange when discussing outsourcing vs in house support, bear with me!
The debate over which is better, in house or outsourcing has ranged as long as, well, arguments over who is better, Batman or Superman.
Certainly, outsourcing has, over the last few years been increasing in demand, with more and more outsourced solutions for advisers becoming available.
With the increased pressures on advisers to be ‘all things to all people’, handing over responsibility for a number of tasks they traditionally did themselves, frankly, was inevitable.
The people who provide this service, from administrators to paraplanners are heroes of the profession (see what I did there?!) I recently had an adviser thank a member of staff for taking away a lot of stress and allowing her more time with her young family.
She was particularly pleased as it didn’t diminish the support she could offer her clients, nor the quality, in fact it meant she was able to do more of what she loved, meeting with clients, instead of sat in front of the computer at nine o’clock at night catching up on administration work.
Whether in house or outsourcing its clear that support can provide a number of benefits. So, what of our Batman vs Superman battle?
As an owner of an outsourced support company it’s easy to extol the virtues of this option. But I have run a paraplanning team in a financial advice practice, so I have a good understanding of both options. There are of course pros and cons to each.
Benefits of outsourcing
An obvious benefit of outsourcing is being able to control costs. Particularly if you pay on a project basis. Just think no NI to pay, no pensions auto enrolment oh and no salary and PAYE! It is also easier to flex the resource up or down depending on the needs of the business, something which had been invaluable for advisers in the current climate
In addition, you do not need to worry about sick pay, nor maternity/paternity leave. It is also easier to quantify the cost of each client, as the cost can be allocated on a client by client basis. e.g. £300 for the report or £50 on admin, allowing you to assess the commercial viability of each client you take on.
Outsourcing I would argue also gives you access to a wider pool of knowledge and experience, particularly if you use a paraplanning or admin firm with multiple people.
You benefit from the collective experience of those individuals. If you do not do a lot of, say, IHT in house, then your inhouse support may not be fully up to date with the process and latest legislation. As an outsourced company we come across hundreds of different scenarios each month meaning our knowledge and expertise is always kept up-to-date and ever expanding.
Another key benefit is we are not employed and as such we can push back or question the adviser easier. This is something a large number of our clients like. They like that we are not ‘yes men’ and are always ensuring that the advice given, or approach taken is the correct one.
In addition, outsourced firms don’t tend to be 9-5. There is normally an agreed service level in place to help manage expectations. This often means they are about when needed, after that client meeting at 6pm on a Friday!
And finally, you don’t need to worry about recruitment (or the eye watering recruitment fees!) finding that rare hens’ tooth is no longer your concern.
Benefits of in-house
In house however also has a number of benefits. The most obvious one is that they are solely focused on your business. They are a constant resource that can change direction at the drop of a hat. Need that report updating in an hour? No problem they can drop all other work and allow you to prioritise without needing to think how this will impact other clients of theirs.
In addition, in house support is likely to be more in tune with the processes and procedures of that particular advice practice. They can build up an expert knowledge of the products used and the administration processes of those product providers.
Communication can also often be easier if they are at the end of the desk, although I would argue this becomes less relevant with the advent of video calling such as Zoom, and Teams and chat systems like Slack, etc.
One thought, however, that doesn’t seem to be talked about a lot, is having the best of both worlds. And this is where my Batman vs Superman analogy comes full circle. Like discovering both your mothers are called Martha.
Whilst we work with a large number of advisers where we are their complete paraplanning or back-office support, we also work with a large number of practices that utilise our services in conjunction with their own in-house support.
Whether that’s tapping into our administration and client servicing expertise or asking us to complete a complex IHT case that the in-house support doesn’t have the knowledge or time to be able to complete. Or taking on additional work when the in-house support is at capacity. One adviser likened it to having an outlet tap on standby that they can switch on to stop them all drowning!
A team approach then, just like the justice league, could be back-office nirvana.
Avengers assemble….. sorry wrong superheroes!
