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3 Red Flags RIAs Need to Look Out for With Outsourcing Firms

Updated: Sep 15, 2022

Sometimes in business, you must first go slow to go fast. This logic is especially true for RIAs looking to hire an outsourcing firm.

Your clients trust you to do right by them. By extension, every outsource partner you hire to help run your RIA firm must also maintain the fiduciary duty you uphold for your clients.

After speaking with our fair share of RIAs switching outsourcing firms, we noticed a theme; there were three major red flags RIAs noted about the outsourcing partners they were leaving.

Whether you're looking to outsource operations admin work, marketing, or a service bureau to handle portfolio management downloads, reconciliation, and billing, we encourage you to look out for these red flags.

We also welcome you to chat with us to see how we do things differently than most other back-office outsourcing firms.

Red Flag #1 - The Outsourcing Firm Rushes Your Vetting Process

Many salespeople know the adage "always be closing." However, rushing to get your signature on a contract is the first red flag that should raise your suspicions.

When you choose an outsourcing firm for your RIA, you must feel completely and utterly comfortable with the people and processes behind that firm. After all, the outsourcing partner will be an extension of your team.

That is why at AllBackoffice, we have a deliberately slow-paced sales process. "Trust equity" is a phrase we often talk about because there is no solid foundation if there is no trust.

If you get the sense that the outsourcing firm, you are talking to is telling you what you want to hear, rather than taking the time to understand what you need, take a step back and recalibrate. You will be able to move much faster with the right firm after the foundation of trust is established.

Red Flag #2 - Poor Communications Skills

Another reason you want the sales process to take a while is to get a sense of an outsourcing firm's communication style. Ideally, the outsourcing partner adopts your RIA firm’s culture when it comes to communicating with your clients and working with your staff.

You want to meet with and interview the individual operations team that will be working with you and your team, and design a feedback loop that allows for open, transparent communication before signing any agreements. As yourself: Does this outsourcing partner align with our company values? Have they gone above and beyond to answer our questions? Have they been consistent during this vetting stage?

We have onboarded RIAs who recently let go of outsourcing firms that did work they were not asked to do (or did it in a way that was not agreed upon), as well as work that was not in the best interest of the firm, and, more importantly, the firm’s clients. How your outsourcing firm conducts itself during the sales process is a leading indicator of how it will function later.

Please do not feel bad for putting them through the wringer. Instead, ask potential firms questions like: "Tell me about a scenario when there was a miscommunication with a client. How did you handle it?" Make them earn your business by demonstrating their expertise, integrity, and excellent communication skills.

Red Flag #3 - Answers To Questions About Processes (or Ethics) Are Unsatisfactory

While delegating and outsourcing are how large companies and successful entrepreneurs scale and grow, they first ensure fool-proof processes are in place.

Your firm is no different.

Poor processes can be a breeding ground for decision-making you did not write off on.

That is why it is wise to probe potential outsourcing firms about their processes for the tasks you will hire them to do.

Ask specific questions about how they would approach scenarios relevant to why you are hiring them. Ask questions that will illuminate whether they uphold the same standards as you do for your client's best interests. Bring up a scenario you recently went through with your internal team that ended with a less than desired outcome. Take the time to understand how this future partner will handle the same situation.


You need to trust your outsourcing firm fully.

Ensuring that the firm you hire is right for you means doing your due diligence. Check to make sure you trust your outsourcing partners to:

  1. Know your industry and how you serve your clients

  2. Do what they say they will do

  3. Conduct themselves professionally and responsibly

  4. Communicate proactively and/or on an agreed schedule

  5. Adhere to your code of ethics and ethos

If anything feels "off" to you, then walk away. Because to go fast, you must first go slow.

If you’re interested in chatting with us about how we can free up your time and grow your firm, we’d love to hear from you.

At AllBackoffice, our team of operation and administrative professionals are U.S.-based

with offices in North Carolina, Texas, and New York. Since 2009, we have been providing financial advisors with professional operations and admin services:

  • Compliance Administration

  • Client Requests

  • New Client Onboarding

  • Quarterly billing & reporting for clients

  • IT Services, Implementation, & Support

  • Portfolio Management Services (e.g., daily downloads, posting, reconciliation)

  • Marketing

  • Administrative tasks and functions

  • … And much more!

Outsourcing and delegating can provide you peace of mind, grow your business, and stay in compliance. Focus on doing your best work by choosing your outsourcing firm wisely.

About AllBackoffice

Founded in 2009, AllBackoffice Consulting provides operations and administrative services to registered investment advisors, financial planners, and holistic wealth management firms. Through AllBackoffice, financial professionals transform daily functions and tasks into automated data management. Outsourced workflow support, turnkey management of technology platforms, designing and implementing workflow best practices, quarterly billing and reporting, client support and training, and more are all included in AllBackoffice's personalized support packages.


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