Top 3 Asset Management Outsourcing Companies

Asset management outsourcing trends continue to rise as companies seek ways to reduce internal costs. Endowments and foundations are becoming increasingly interested in securing third party outsource providers to manage their investments.

What Is Asset Management Outsourcing?

The definition varies a lot depending on who you ask. This is probably the biggest reason so many companies end up losing money due to poor decisions when it comes to financial outsourcing. At the most basic level, this kind of outsourcing is implemented when a company begins to expand to a point where they can no longer manage their growth internally. Hiring an outsource provider to handle the asset management structure is often necessary not just for a cost saving measure but to also increase efficiency.

From an IT outsourcing perspective, asset management outsourcing is considered BPO as many of the functions are back office financial systems.

These functions include but are not limited to the following:

Financial risk management
Budget and forecasting
Financial accounting
Employee Payroll
Financial systems applications support
Financial reporting
Accounts receivable and collections
Accounts payable and vendor management
Tax compliance and planning
Travel and expense processing

Some companies elect to use asset management software to accomplish their goals. Others opt instead to outsource to a asset management provider.

Business Models

TAMP stands for turnkey asset management platforms – This business models is considered the most simplistic. The provider manages all of the back office functions. This would include portfolio management, performance reports, record keeping, etc…Choosing this model means a company only has to deal with one vendor.

Another model for asset management outsourcing is called Unbundled TAMP. This is where an outsource provider takes each of the functions listed above for example and separates each and allows a company to hire a different vendor to manage each area.

In a customized model, an adviser locates different providers to take care of different functions independent of each other.

Each model offers distinct advantages and disadvantages. Companies considering outsourcing should figure out what their needs and goals are before choosing one model over another.

Future Trends

All indications suggest this is an area that will continue to grow. At the end of the day, companies are struggling to find as many different ways to reduce their operating costs as much as possible. However, many organizations still question the practice of allocating so much of their assets to a third party. There are also concerns in regards to giving up control of their core investments and wonder if doing so could be too risky.

Financial management is an area that continues to evolve. In order for a company considering this approach to have a profitable experience will rely heavily on how much planning they are prepared to do. In addition to planning, organizations need to get a clear understanding of what asset management outsourcing is and whether or not their company will benefit or not.

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