latest Content

Growing demand for outsourced admin services

Small- and medium-sized adviser firms looking for ways to streamline their businesses are employing outsourced administration services

Outsourced administration services are beginning to make greater inroads into the financial adviser market as advisers running small- to medium-sized firms look at ways of streamlining their business structures, so they are doing less admin and more business.

Outsourced paraplanning firm The Paraplanners is one business receiving an ever-increasing demand for its outsourced administration services, according to managing director Richard Allum.

Allum says the firm set up the administration capability to support its own Paraplanners in their work and began offering it to clients of the outsourced paraplanning service three years ago. But increasingly, the firm is receiving demand from adviser firms for outsourced administration as a standalone service.

“We’re now working with double the number of firms that we were a year ago, providing a purely admin service,” Allum says. While admitting these are low numbers at present, in comparison to the firms that take their paraplanning service, Allum believes the number will only continue to grow. “The concept of outsourcing is becoming the norm rather than the exception nowadays. Firms are outsourcing their fund management, compliance, accounting and paraplanning, so why wouldn’t they outsource their administration?”

Outsourced paraplanning company Para-Sols, run by Cathi Harrison (pictured), is another firm that offers administration as part of its services.

Harrison Cathi 2Harrison says the firm has also gone through a “phase of having a lot of demand for administration” and can see demand climbing further as more and more advisers become comfortable with outsourcing. “Once an adviser is comfortable outsourcing one area of their business then they will generally look to outsource another area,” she says. “And having a single firm managing your paraplanning and administration can work really well as you get the benefits of improved communication and consistency. As technology keeps improving, the concept of outsourcing generally will keep growing, and services such as outsourced admin are bound to benefit from that.”

Advisers ‘lulled into involuntary administration’

Allum says that advisers can be all too easily drawn into day-to-day administrative tasks – time spent using back-office systems or platforms or on the telephone waiting for provider support. Allum and his team refer to this as being “lulled into involuntary administration”. “The answer is to outsource,” Allum says.

Most firms using administration outsourcing service are small firms of one or two advisers, Allum says “where they don’t have enough activity to employ a full-time administration person. This means they invariably end up doing the admin themselves, which detracts from their real job, which is seeing and advising clients. Or they employ someone who is under utilised.”

By outsourcing to a professional firm, Allum points out, “you know you’re going to get quality, experienced people who know how adviser administration works inside out. So they know the back-office systems, platforms, processes and procedures – people that as a small business you wouldn’t be able to get if you tried to recruit them on your own.

“A good administrator is worth their weight in gold. They are a critical part of the team. Our business would not work anywhere near as well as it does without good administrators,” Allum says.

The Paraplanners charges on an hourly basis, at £30 per hour. This means advisers only pay for the service they use, Allum points out. “It’s plug and play – you only use it when you need it, which makes outsourcing very cost effective.”

Para-Sols charges a fixed fee per case.

As well as the services offered by outsourced paraplanning companies, there are now a number of standalone administration services in the market, such as Intuitive Support Services, run by Debbie Condon (see ABR’s Special report on Virtual PA and Admin Support Services).

Reasons to outsource

Reasons why advisers should outsource their administration, Allum says, include:

• Paying for administration services as and when you need them, charged on an hourly basis, rather than employing someone full time.

• Spending most of your day thinking about clients or running your business, rather than spent on your back-office or other admin tasks that “creep up on you and suck away your time”.

• Outsourcing means you’re guaranteed to benefit from the experience of someone who already knows the providers, the platforms, the wraps, the fund managers, the back office systems.

• No time or costs spent training staff.

• No employer’s liability.

• No sickness or maternity leave, holiday pay or employer’s national insurance contributions, and the other responsibilities that come with employing staff.

• No recruitment process. Outsource to someone already doing the job and with experience.

Typical tasks
Typical tasks undertaken by an outsourced administration service include:
• Drafting and sending letters of authority to providers;
• Pursuing providers for required information;
• Obtaining plan information from providers and entering it into spreadsheets and back-office systems;
• Obtaining new business illustrations;
• Submitting online application forms to providers;
• Chasing the progress of new application submissions;
• Setting clients up on wrap platforms/adviser back-office systems;
• Submitting online fund switches;
• Inputting adviser fees or commissions to spreadsheets and back-office systems.

Visit The Paraplanners website

Visit Para-Sols website

Visit Intuitive Support Services

More Articles Like This