thewealthnet: One size doesn't fit all when it comes to outsourcing, PAM Annual Operations Dinner hears

12 October 2017

One size does not fit all when it comes to outsourcing, diners at the PAM Annual Operations Dinner heard.

Farzana Khalil, client solutions manager at Multrees, pointed to a growing trend with the wealth management industry towards outsourcing with most senior level executives considering it as an option.

However, she noted, outsourcing is quite immature within the industry as a whole with it being more common in other industries.

Taking the example of Apple, Ms Khalil considers that the technology multinational used outsourcing to successfully leverage their platform. By understanding their value chain, Apple used partners to build various component parts which drove their proposition forward.

In another example, Ms Khalil pointed to designer brands such as Chanel using outsourcing to expand their product line to build a more sustainable model. Remaining selective when choosing partners ensure the same standard of quality.

These examples, described as "well thought out", by Ms Khalil, demonstrate the use of a modular approach to outsourcing which necessitates an understanding of one's value chain and priorities before selecting a partner.

Ms Khalil stated that business models can be "spliced and diced" but the way firms view their value chain will differ from one to another. This means that "one size does not fit all" as firms will have different priorities.

"There are different styles of wealth managers and different styles of strategy so there needs to be a different style of service proposition," Ms Khalil commented.

She also warned against "mis-buying", meaning that clients do not fully understand an outsourcer’s proposition. Also cultural alignment is an important factor when choosing a partner.

The key takeaway for Ms Khalil is making sure that the choice of client partner is the right one and that there is a well thought out approach in order to succeed in outsourcing.

The PAM Annual Operations Dinner was held at the Goring Hotel on Tuesday 10 October 2017. It was attended by 22 wealth management chief operating officers (or the like), three speakers, and chaired by James Anderson, founder of PAM Insight.

The evening was kindly supported by Deloitte, Pulsant and Multrees.