How to Build an Effective Service Provider Oversight Program in Three Easy Steps

Investment advisers of all sizes face new and growing challenges in today’s competitive and evolving environment. As the investment management industry becomes more consumer-focused, individual investors are pressing advisers for more innovative products and a personalized client experience. Further, the growth of passive strategies has created fee pressure across the spectrum, leading to contracting margins. Outsourcing certain critical functions can be an effective tool for advisers looking to focus on more strategic goals.

Organizations cite several reasons for pursuing outsourcing arrangements. While cost-cutting is often the primary factor mentioned, the ability of a firm to focus on its core business functions, solve capability issues and enhance service quality are also important considerations. Third-party service providers can efficiently deliver critical services, technology and infrastructure, and continue to evolve and innovate to meet the adviser’s changing needs. However, advisers are still responsible for the performance of its service providers, creating a duty of oversight. Thus, firms must ensure that critical functions are being performed correctly and that sensitive information is being handled and protected.

Firms that have been successful at executing effective service provider relationships tend to devote a significant amount of time to the RFP and selection processes, have well-defined service level arrangements, and have a developed process for ongoing vendor management and oversight.

With that in mind, the following are three key steps in implementing an effective oversight program:

  1. Identify and prioritize providers
  2. Monitor the performance of providers
  3. Implement a governance structure

Want to read more?

Fill in the form below to download the full article.

Loading form...

Latest Content

Form CRS and Its Impact on State-Registered Advisers

While many investment advisers are starting to plan for Form CRS/Form ADV Part 3, one group of investment advisers can breathe a sigh of relief that this is a project that does not need to be on their ‘To Do’ list. As of now, no state regulator has adopted this disclosure document for state-registered advisers. … Continued

Effective Compliance Policies & Procedures and Annual Reviews: Meeting the Reasonably Designed Standards

Investment Advisers must perform an annual evaluation of the effectiveness of their compliance program. This starts with ensuring, maintaining and implementing reasonably designed policies and procedures. This ComplianceCast webinar covers the recent regulatory changes that may trigger a need to reevaluate your present policies. Who Conducts and How to Conduct the Annual Review Planning and … Continued

7 Reasons to Attend Our Scottsdale Fall 2019 Compliance Conference

If you’ve been considering joining us in Scottsdale for our Sept. 23-25 compliance event, here are seven reasons you should take the plunge now! The Best Mix of Informational & Educational Speakers – We just added OCIE’s Co-National Associate Director of Investment Adviser/Investment Company Examination Program Marshall Gandy to our stellar list of presenters. He joins ex-NFL star Merril … Continued