Should You Outsource to a TAMP?

What size RIA firms do TAMPS typically work with? Is this available to everybody?

The RIA firms that a TAMP would work with come in all shapes and sizes. They tend to be smaller advisory shops with $150 to $250 million all the way up to billions of dollars.

So if a TAMP helps the advisors with the investment management, does this enable the RIA firm to spend more time on expanding their business by focusing on marketing?

It absolutely can. A TAMP can be instrumental in helping advisors leverage their time to better focus on marketing and client acquisition. It helps them provide a higher level of service to the client. That’s a lot of the appeal.

Many advisors work with a TAMP because they feel that they can run their practices better for the client if they don’t do it all themselves. The universe of investment products is proliferating at a far faster pace than the advice and guidance on how to use those products.

Does a TAMP also provide its RIA firms with guidance about marketing?

A number of TAMPS do. As far as the ones I’ve been involved with, I’ve seen the TAMP act as that expert closer who will go with the advisor into a meeting with a large client to help them close the deal.

Many TAMPS do help the RIA firms with strategies for positioning and marketing themselves and reaching the target audience.

In episode 7 of my podcast, business celebrity Jeffrey Hayzlett said that advisors in the future should outsource the investment management because that’s becoming commoditized and focus on the service delivery. Do you agree?

I would agree with that. If you look at both what is happening in the investment side of things but also in financial planning, you have many technologies that are making it easier to reach people. You have a generation of consumers coming into their own and their own set of wealth. They’re much more comfortable using online tools and never ever talking to a human being.

For financial advisors to maintain the level of fees they are used to, they are going to have to up their game in terms of how they work with their clients and the experience they deliver. Just providing plain vanilla portfolio management isn’t enough – the fees and pricing on that are going to zero.

Connecting on a more sophisticated, in-depth level than perhaps many firms are accustomed to is going to be what it takes.

What’s an example of what you call “upping the game?”

There’s a good amount of advisory firms who get paid 75 basis points to package together a portfolio of mutual funds and meet with the client once or twice annually. They’ll review goals and risk tolerances and that’s it. Consumers can go to any number of services and get that for almost nothing. At Schwab the joke is that a Schwab robo-portfolio has zero fees – that’s what the client sees.

A number of years ago when I worked in Dallas, TX. In that particular wealth market we catered to a very high number of clients that worked in the energy, oil and gas industry. We would host specialized seminars targeting execs and more senior level professionals who worked at big energy and oil production firms – Chevron, Exxon, Conoco Philips. In late 2015 and into 2016 oil prices swooned to rock-bottom levels – and in energy-rich Texas, energy exploration and production companies shed over 60,000 jobs.

We would put on seminars with the flyer agenda headline: “The economy, swooning oil prices, what it could mean for the energy sector, your working life, and your retirement plans.”

There was an opportunity where you could fill up a room with 70-80 clients and prospects, talk a bit about what is happening in the arena of investing and the economy, but more importantly how it could affect them, their lives and the decisions they make – and how our firm and our wealth advisors are particularly well equipped and knowledgeable to help them navigate and course correct given what we are seeing unfold.

Things like that are going to be needed to justify the level of fees that the industry is accustomed to earning.

So it would be more about integrating the various components such as estate planning, tax planning, liability management, etc.?

Exactly, managing their entire financial lives, even if they have any question about buying a house or their business. You can’t just be that person who puts together an investment policy statement or manages their money.

What are three things you would say, to sum it up, to advisors who are considering working with a TAMP? I’ll kick it off by starting with one. Think of three ways (write it down on a piece of paper) that you as an advisor could help clients in ways that you have never done before in the history of your firm.

I like that. Test your comfort zone a bit. I would say to know your identity and your target, and deploy the right talent and technology. Look for those outsourcing opportunities whether it’s investments, marketing, writing or branding. Know that you don’t have to do it all by yourself. Look for people and teams of people who can really be additive to you.

I have three kids ages foor and younger. Everything in my apartment is plastic and unbreakable. There is no printer. I’m looking to transfer an account with one of my custodians and I have to produce paper statements. Give me a break!

There are opportunities for paperless onboarding nowadays. There’s no need for that huge binder anymore with mostly irrelevant statements. Those types of tools are making your experience with the client and your workflows more efficient. The only obstacle to implementing them is learning something new.

Right on. So number three is this: no more paper, advisors. Have paperless options. And there you go, three action items and this interview is done!

Great. Thanks for talking. I love what you’re doing and think it’s great.

Thanks, buddy! I’m sure you’ve seen the Twitter rants. People seem to want to take me down hard so it’s always nice when I receive a compliment; it’s rare. Thank you for being my guest.

Sara’s Upshot

Thanks everybody for reading and please make my day and subscribe to my podcast for more insightful interviews such as these. Link is here.

Sara Grillo, CFA, is a top financial writer with a focus on marketing and branding for investment management, financial planning, and RIA firms. Prior to launching her own firm, she was a financial advisor and worked at Lehman Brothers. Sara graduated from Harvard with a degree in English literature and has an MBA from NYU Stern in quantitative finance.

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