Outsourcing in Wealth Management: The Drivers and Strategies

by Kelley Byrnes, November 21, 2016
Industry Trends
Global, Asia-Pacific, EMEA, Latin America, North America

Abstract

Celent has released a new report titled Outsourcing in Wealth Management: The Drivers and Strategies. The report was written by Kelley Byrnes, an analyst with Celent’s Securities & Investments practice.

This report establishes the primary drivers of outsourcing today and projects what the drivers will be in the next 12 to 18 months.
 
The top motivations to outsource, compared to five years ago, include: improving efficiency; adapting to fast-changing technology without spending on dedicated IT teams; enriching the customer experience; and regulatory compliance and transparency. In an increasingly digital ecosystem, outsourcers must deliver solutions that address the needs of: cybersecurity, omnichannel delivery, client-facing tools, client-advisor collaboration tools, and real-time client reporting.

In the next 12 to 18 months there will be an acute focus on outsourcing front office functions that include: suitability tests; KYC procedures; components of the advice and planning process; and help desk services.
 
“At today’s rate of technological progress, it does not make sense for wealth management firms to build or buy every new technology that comes along,” Byrnes commented.

“One of the main drivers of outsourcing today is experimentation. Wealth managers can experiment with the latest technology by working with a technology provider before committing vast resources to a technology that may only be a fad,” she added.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

2

Outsourcing Primer

3

 

Definitions

3

Market Trends

5

 

Drivers of Outsourcing

5

 

Limitations of Outsourcing

8

 

Spending on Outsourcing

9

Outsourcing Strategies

10

 

Outsourced Functionalities

10

 

Vendor Selection

11

 

Vendor Overview

13

Conclusion

18

Leveraging Celent’s Expertise

20

 

Support for Financial Institutions

20

 

Support for Vendors

20

Related Celent Research

21

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