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To most financial advice businesses, the concept of Outsourcing is not new. Many businesses have outsourced their licensing and/or paraplanning for years – but more and more advice businesses are also outsourcing elements of their administration either to onshore or offshore providers.


Advice businesses today face many challenges in implementing the heightened paperwork and administrative requirements of delivering advice. Those advisers who have been in business a while usually have a team around them to assist with the engagement and servicing of clients, and yet still have periods of peak workflows that require extra hands. Those businesses who are small, and sometimes a single owner-operator, find that outsourcing can be a great solution until their workflow and cashflow consistency warrants hiring staff. Whichever camp you’re in, you are likely still finding it difficult to get through it all with the same staff you had two years ago.


When deciding on how to get additional help, advice business owners often find that developing more in-house resources to dedicate to certain projects or activities is much more expensive than is desired. Seeking an alternative for some highly repeatable, lower value tasks or one-off projects means that your in-house team can get back to what they do best, and that is engaging clients! This is where outsourcing, either onshore or offshore comes in.

Before you start to think about the alternatives, it is important to understand the benefits and risks to outsourcing, and then overlay the same in the context of an advice business. I recently hosted a webinar with special guests Marc Lincoln from onshore outsourcing firm, VSource, and David Carney from offshore outsourcing provider, Virtual Business Partners. Evolve Alliance members can view that video here, and I’ve summarised in this article some of our key points and learnings from our experience with advice firms around the country.


Advantages of outsourcing

Focus on core business – Outsourcing can free the business to focus on its strengths, allowing the team to concentrate on clients and being future focused.

Efficiency – Outsourcing done well will ensure you are obtaining efficiencies. A key step to outsourcing is to understand the processes in your business well. Many outsourced providers will help you understand and document your processes, which can be a great first step to cementing a successful outsourcing relationship (and provide added benefits for the rest of your team!).

Continuity – For many businesses, the loss of productivity and downtime caused by planned or unplanned absence can be significant. Outsourcing can support the team and business activities by stepping in and picking up where the team left off. Continuity of processing is vital in an Advice Practice – without continuity, you can miss important deadlines and the team can feel like they’re constantly playing catch up rather than feeling empowered, in control and able to look forward to what’s next.

Cost savings – When it comes to outsourcing, the number one cost saving is always salaries, but it doesn’t stop there. Typical savings you might also experience will be faster turnaround times, less time spent interviewing for new staff and training, office space and technology. Using an outsourced provider means this is all taken care of for you.


Disadvantages of outsourcing

It can be daunting to hand over control of a business activity to a third party – you can outsource the tasks, but not your responsibility to your clients and the regulator. This is why we tread with caution. Some challenges you may run into are as follows:

  • Security and confidentiality
  • Management of workflow
  • Lumpy service delivery – they don’t or can’t do what they said they could
  • Inadequately trained staff
  • Inaccuracy – causing in-house staff to spend additional time fixing mistakes
  • Inflexible outsourcer business model or contract – may not be able to change


Offshoring vs Onshoring

The requirements to select a quality provider who can deliver to your needs is the same, regardless of whether you’re selecting an on or offshore provider, and yet there are some differences between these two options.


Without a doubt, offshoring is usually cost-effective, provided you have a well-trained resource and you can integrate their skills into your team. In most locations, the hourly rate of the team member combined with their supervisor will often come in below the cost to employ staff in Australia. Offshoring can, however, come with some disadvantages and may present additional challenges, such as working with staff located remotely, inflexibility in contracts and for the firms that provide you with a dedicated resource, the inability to ‘turn the tap on and off‘quickly. Often offshore companies recruit and train based on your needs, so there may be costs associated with switching services off if you don’t need them anymore. For some, even managing an offshore relationship may be challenging – whilst time zones in, for example, the Philippines are close to Australia, language and cultural differences – whether real or perceived – may cause some challenges.

Having said all of this, making sure that you’re working with an Australian based company with a remote offshore workforce will go a long way to ensuring that the process, transition, communication, training and management are well in hand – designed and suited for Australian advice businesses (and ensuring that you’re not breaching any Australian laws in the process).


Onshoring to companies with Australian-based staff may make liaising with clients and providers easier, and your training period may be shorter, given the fact that most team members have worked within Australian advice businesses. These benefits must be weighed up against a higher hourly rate than offshore staff – taking into consideration, the effectiveness of the staff and opportunity cost of your internal staff being unproductive while training and/or mentoring. It’s often quoted that even when an onshore admin person is on a higher hourly rate than an in-house staff, they can likely do the work in a much shorter space of time as they’re very task-focused and don’t have unproductive time in socialising and ‘general’ office related commitments. Furthermore, the business doesn’t absorb all their on-costs, such as leave entitlements, insurances, equipment etc.


Regardless of on or offshore, outsourcing comes with the challenges of staff working from a location outside of your office. We’ve all learnt to deal with this to varying degrees through COVID, and whilst the inability to just get up and speak to someone immediately or show them something ‘in real life’ can be a challenge – many have discovered that their team can be more productive working away from the office if the team has developed the discipline to get into the right rhythm of communication.


A great idea is to start with the end in mind: what outcomes do you want from a potential outsourcing arrangement; what’s your why in terms of thinking about outsourcing? Get clarity on what you’re wanting to achieve and ONLY then, start looking for the right service provider to partner with. Ask for recommendations from some trusted sources – either a personal contact or perhaps your licensee who may have already done some leg work for you. Evolve Alliance members can look to the Provider Members* in the portal, who have provided answers to our vetting questions and two video testimonials from happy clients. Once you have a list of recommendations, make time with all of them to work through your vision and ask how they can help (or check out the video or audio interviews with the Evolve Alliance providers to see if they make your shortlist).

*(Please note that the Provider Member portal is in its launch phase, so if there’s not enough providers today, check back each time you’re seeking a solution as the membership is growing rapidly!)


Evolve Alliance members can also access the remainder of this article in their portal for more details on how to clarify your outcomes, what to consider when assessing potential providers, how to manage your risks, and how to get the most from the provider you ultimately choose.