business man with flyswatterA survey from Vestwell finds advisors' practices plagued byinefficiencies. (Photo: Shutterstock)

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In the quest to grow their businesses, advisors find challengesin new opportunities and in managing scale. But a survey fromretirement platform Vestwell finds that they're overlooking gaps in theway they approach making their practices more efficient.

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While advisors outsource a number of noncore functions—nearly 70percent do so for plan administration, and 41 percent outsourcedata and reporting—the report points out that less than 30 percentoutsource fund management, front-to-back 401(k) services,integrations, RFPs, financial planning, or practice management,which it characterizes as "other nondifferentiating aspects oftheir business."

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Meanwhile, 75 percent of advisors say that what doesdifferentiate them is "some form of relationship management,including employee education and holistic wealth management."

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The report also says that some firms aren't sure that what theyhave outsourced should be outsourced—with 68 percent saying thatthey've done so for plan administration, but just 64 percentthinking that's really the way to go.

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In addition, 20 percent of advisors have six or morerelationships with recordkeepers, "which takes up a great deal oftime and management."

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Nonetheless, 80 percent of advisors don't plan to winnow downthe number of relationships to a single recordkeeper any timesoon.

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Reviewing all the functions in their practice could giveadvisors a better idea of just which activities really merit beingkept in house, and which could perhaps be turned over to an outsideexpert who could save them time that could be put to better use inother work for clients.

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The report concludes, "Taking a step back to identify areas ofexpertise and differentiation will help advisors recognize whatservices should remain in-house and what can be best servicedoutside…. [B]y creating deliberate relationships and a streamlinedapproach, advisors can more effectively help their clients offerand engage with a successful retirement plan."

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