As changes to the financial advisory business impose greater demands on advisors’ time, more advisors are choosing to outsource necessary but routine tasks, including some aspects of writing a financial plan, e-mail archiving and data entry.

Outsourcing non-core tasks allows advisors to focus on what they do best and enjoy most — building client relationships, says Kevin Howard, principal with Wealth 21, a Calgary financial planning firm that is part of Berkshire Investment Group Inc.

“There’s only so much time available, and you can’t be all things to all people,” says Howard, a certified financial planner. “Some advisors may feel they add value by sitting at a computer for several hours a day. But I’d rather spend the time with my clients.”

That thinking led Howard to seek the services of Financial Plan Advantage Ltd. , an Edmonton-based firm that offers planning services to planners, investment dealers and insurance agencies.

The firm charges $500 to prepare a comprehensive financial plan and provide ongoing financial planning and software support to advisors, says FPA president Dave Faulkner.

“Unlike some paraplanners, who create complete financial plans, we focus on diagnostics,” he says. “The advisor provides the raw data, which we input; we then prepare a set of financial projections using the client’s current asset allocation and annual savings data, and assess the likelihood of the client achieving his or her goals in areas such as retirement or children’s education.”

The next step is to implement basic tax and investment planning strategies and provide a risk-management assessment, covering client needs in the areas of life insurance, disability income replacement, critical-illness capital and long-term care cash flow.

Based on the results of the client’s risk-tolerance questionnaire, FPA formulates a series of “what if” scenarios designed to help clients attain their goals. Scenarios might include: what if the client changed his or her asset allocation; or what if the client increased his or her savings rate?

Says Faulkner: “We can pinpoint the client’s critical needs. The advisor then begins discussions about how to address them while we address longer-term issues.”

In addition to saving time and eliminating frustration with unfamiliar software, says Faulkner, who is a CFP and a chartered life underwriter, advisors appreciate being able to discuss their clients’ situations with a peer.

“Many advisors have assistants who help prepare financial plans,” he says, “but they lack the expertise to offer advice about items such as income-splitting and business exit strategies.”

Another advantage of outsourcing is that advisors don’t have to hire and train an assistant, says Sarah Holland, president of Holland Advisory Services in Prince George, B.C.

“We charge only for time spent on a plan, which can be as little as two to three hours,” she says.

A more complex plan might require five to 10 hours. Her company charges an hourly rate of $100.

In addition to preparing financial plans, Holland, who has both the CFP and CLU designations, does fee-only planning and template and customization work for Emerging Information Systems Inc.’ s financial planning software, NaviPlan.

Her familiarity with financial planning software means she can work much faster than most advisors, she says. There’s a 20-hour learning curve with most programs and, if they’re seldom used, the user often needs time to become reacquainted with the software.

While the market for paraplanning services is better established in the U.S., Holland says, there’s growing recognition among Cana-dian advisors that such services can make life easier.

“It wasn’t always necessary to do so much fact-finding with clients,” she says. “But the business has changed. There’s an ever-widening array of products and services available, and advisors must spend time determining what their clients want and need.”

In addition to getting help with plan preparation, advisors can outsource a variety of administrative tasks. Beth Cummings, who spent 15 years providing administrative support in the financial services field, now offers such serv-ices through her Toronto company, Office Flow Virtual Assistance.

“Advisors often say they spend too much time on tasks that deflect their focus from clients, yet they don’t want the commitment and expense of hiring an assistant,” Cummings says. “As an independent contractor, I work from my office, which eliminates those expenses.” Her services are easily tailored to individual advisor.

SEAMLESS COMMUNICATIONS

Cummings points out that by using new technologies, a virtual assistant can maintain seamless communication with advisors while working off-site.

@page_break@“Much of the information necessary for obtaining insurance quotes, for instance, is available online. I can gather medical information for insurance applicants and death certificates for processing claims. And, while I’m not licensed to sell insurance, I can discuss beneficiary forms with clients.”

Cummings can also access an advisor’s computer to check and respond to e-mail messages, or she can collect phone messages. All such services are protected by confidentiality agreements. Her regular hourly rate of $35 is negotiable and, best of all, she says, “I charge only for time spent on task.”

Heightened compliance requirements are one reason more advisors are outsourcing
e-mail archiving. The Investment Dealers Association of Canada, for example, requires that members retain communications records for five years.

“The use of e-mail has changed dramatically,” says Paul Chen, CEO of Fortiva Inc. , a Toronto-based e-mail archiving provider. “Compliance is just one aspect; e-mail has become a powerful tool for solving business issues.”

The total cost of e-mail archiving is often significantly higher for in-house solutions than for outsourced options, according to a survey conducted by Osterman Research for Fortiva. Osterman found that, over a three-year period, maintaining an in-house archive costs $4.53 per user each month for a mid-sized organization. Fortiva’s managed e-mail archiving solution provides similar capacity for $3.58 a month per user.

Fortiva guarantees the confidentiality of all customer data through what Chen calls “the technological equivalent of a safety deposit box.

“Customers use a ‘key’ to encrypt information, and we do the same when we receive it. When they want it back, the process is reversed. We manage the data and can search it on request, but double-blind encryption technology prevents us from actually seeing it.” IE