Investment advisors often lament that they live in a world that’s always on, where there are no boundaries on time. They are right to wonder if they are spending their days in ways that best serve their clients. Is it better to try to be all things to all people, for example, or play to your professional strengths, even at the risk of paying less attention to some things that may matter to some clients? While the latest Rydex|SGI AdvisorBenchmaking report doesn’t answer that question, it shows the many demands on advisors’ time and how they manage it as well as the mix of services they offer.
The 2011 report revealed, for example, that advisors surveyed spend up to half their time on just three activities—portfolio management, client meetings and acquisition, and client service. However, the largest shifts in how advisors spend their time—a trend over the past three years—suggests that the industry may have settled into a “new normal,” with a strong emphasis on relationship basics, including spending more time on client communication and client relationship management. The single biggest change seen in 2011 was a shift toward more time spent on portfolio management, which jumped from 10% in 2010 to 17% in 2011. Challenging markets appear to be taking up more of advisors’ attention as they develop investment strategies focused on meeting clients’ objectives, in spite of volatile market conditions.
The areas that appear to be suffering from a lack of focus are those that require the advisor to work “on” the business: e.g., business strategy and administration. The one increase in this area was time spent on marketing, which is important given that advisors’ also place a lot of emphasis on asset growth. In a breakdown of the study group, almost 40% were small RIA firms (those with less than $50 million in assets), up slightly from the prior year, but down from the years immediately preceding a difficult 2008.
What was surprising in this year’s data was the decline in time spent on compliance—despite the fact that advisors also said that they view the compliance burden as a threat to the business. The decrease in time spent on compliance, however, corresponds to a sharp increase in outsourcing in this area, suggesting that advisors have found an effective way to manage their compliance challenges while freeing up their time for other important activities.