One of the most popular articles we’ve ever written was titled ‘Integratable’ Does Not Mean ‘Integrated,’ But There’s Hope.  The reason it resonated with so many readers is because advisors are often sold on the exciting dream that once they launch their RIA, all of their back-office systems will seamlessly talk to one another and data will flow freely from one system to the next.  They are sold on the premise that all RIA tools are ‘integratable’ with one another, and many people looking to profit on the movement of these advisory teams to the RIA channel don’t want to focus on the sobering fact that owning and operating a business can be hard work.  As we wrote in our article, integration isn’t a pipe dream, but the steps to get there can be more cumbersome than advisors are mentally prepared for.

Just recently, we tackled another common source of frustration for many RIAs, and that is the  expectations around outsourcing.  Advisors contemplating a move to the RIA channel are told they will not need to hire additional support staff upon the launch of their firm because they can outsource many of the core functions of their business: Trading, Performance Reporting, IT, HR, Compliance, etc. — and not only can they outsource each individual function, but there are plenty of firms offering to handle all of these functions on behalf of the RIA.  By outsourcing these core functions, the advisors can focus solely on clients and prospects, and everything else will magically run smoothly in the background!  Every vendor and platform provider serving the RIA community has good intentions – they aren’t blatantly lying to these advisors, but as we advised in our recent article, “Regardless of the nature of the task you are looking to outsource, it is imperative that you understand there will always be components of those tasks that will remain the responsibility of your internal team.”

Trading, for example, can be outsourced, if your firm subscribes very closely to model portfolios.  But there always seem to be restrictions with every client: “This client can’t own this or that company’s stock,” or “This client has imbedded gains and can’t sell certain positions,” or “This client isn’t fully on discretion – we have to call them before making any changes to their portfolio.”  Trying to convey all of these nuances to an outsourced trading provider can be more difficult than simply handling the task in-house.  The same can be said for Performance Reporting: it is a fireable offense if the children are accidently granted portal access or sent a statement revealing how large their trust fund is.  A vital secret that has been hidden from the kids their entire life, blown up in a matter of seconds when someone not deeply involved in the family dynamics is tasked with batching account numbers and creating households within the performance reporting tool.  There will always be components of each task that must be controlled and executed by employees of the RIA, who are intimately aware of each client’s unique situation.

We run into problems with misguided expectations within our own consulting business as well.  Some RIA owners assume that simply signing our contract is the extent of their involvement in the process of improving efficiencies and profitability of their firm.  When we ask, “OK, when are you available to dig into your workflows and processes?” they reply, “What do you mean?  I hired you – you’re going to build out the workflows and processes and make us more profitable…that’s what we hired you to do!”  To that, I always reply, “We can’t do the push-ups for you!”

Hiring a personal trainer and accountability coach will undoubtedly get you in shape faster than a simple Google search for “best ab workout” and relying on your own willpower to get you out of bed and into your sneakers every morning.  The trainer can build a customized plan based on your specific lifestyle and your exact fitness goals.  They’ll tell you what you can eat, how much sleep you need to get every night, how much water you need to consume every day, and they’ll create an exercise regimen guaranteed to get you the results you are looking for… but they can’t do the push-ups for you.

Imagine someone complaining to their friend, “My trainer is awful – I’ve been working with them for six months now, and I have only GAINED weight!”  And when their friend replies, “That’s weird, my coworker worked with that trainer and he got amazing results!  Are you doing what the trainer advises you to do?”  Imagine if the response was, “Of course I’m not doing what they tell me to do – I hired them for six pack abs, I didn’t hire them for a bunch of exercises – that’s hard work!  I’m paying good money – the trainer should just give me the six pack abs!  If I was willing to put in the work, I never would have hired the trainer. It’s supposed to be easy if you’re willing to spend the money on the trainer!”

Consultants and vendors can take a lot off the plate of busy RIA owners.  We can save hours upon hours of RIAs heading in the wrong direction by steering them exactly where they hope to go, thanks to the work we’ve done with similar firms looking to achieve similar results.  We can share industry best practices, create customized solutions specific to each RIA’s goals, and we can help RIA owners sleep at night by answering the common question, “Am I crazy for thinking this way?”  Just like a fitness trainer, we can help you achieve your goals faster, with less pain, and in a more confident fashion… but we can’t do the push-ups for you!

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