CHICAGO--(BUSINESS WIRE)--

Northern Trust Asset Management released its latest update today to its study on financial advisor adoption of external investment management first conducted in 2010. The 2016 survey which was fully completed by 550 financial advisors reveal their attitudes and rationale for utilizing third party managers vs. keeping the investment management function in house.

This new research reaffirms the positive views of outsourcing found in earlier Northern Trust surveys of advisors. Satisfaction hit an all-time high of 96% in 2016, as a majority of respondents claim outsourcing frees up more time to spend with clients. More than half report growing their business as a result of using an external manager.

This comprehensive study identifies historical trends across advisor channels, business models, and firms’ assets under management (AUM). Overall, significantly fewer advisors (17 percent) are outsourcing all investment activities than in years past, but more (41 percent) report using external management for more than 75 percent of their client AUM.

“Using a third-party manager can be a win-win scenario for advisors and clients, as is demonstrated by the percentage of client assets being outsourced,” said Marie Dzanis, CIMA©, head of intermediary distribution at Northern Trust. She continues, “Increased usage of investment management by turnkey asset managers, registered investment advisors (RIA), ETF strategists and the increasing use of robo advisory or ‘fin tech’ capabilities highlight the need for scalability. Advisors need to serve diverse global clients with more assets in real time and these tools can help.”

Using an external manager is not embraced by all advisors. A majority of respondents do not currently outsource, but most have not ruled it out in the future. The key reason for keeping the function in-house is because investment management is core to a firm’s value proposition.

Since the inception of this research in 2010, the percentage of advisors outsourcing has remained stable at about 40 percent, but usage by advisor channels vary considerably. The upcoming Department of Labor Fiduciary Rule, regulatory concerns, changes in the market environment and client investment and service needs factor into advisors’ decisions on whether or not to use an external investment provider.

“At Northern Trust we are agnostic to advisor preferences on investment management. Our goal is to serve our diverse client base by providing critical thought leadership in the advisory space and unique industry trend research to help all of our clients grow their businesses,” said Dzanis.

About The Survey

To conduct the survey, Northern Trust worked with Investment News, a leading advisor trade publication, which sent the survey electronically to advisors across the United States for three weeks in late May through early June. There were 680 advisors that responded, and 550 that fully completed the lengthy questionnaire. Northern Trust was not identified in the survey.

Respondents were split into two groups based on their response on whether they used an external investment manager. Analysis of the research included consideration of the advisors’ firm type (RIAs, hybrid RIAs, independent broker/dealers (B/D) regional B/D, independent B/D, insurance B/D and bank/trust firms); firm size across a spectrum of AUM levels; compensation model (asset, commission or a combination of asset and commission based models); business model (financial planning, investment advisory, investment management and wealth management firms). Financial advisors used the survey’s comment fields to add additional considerations or to elaborate on their responses. Their verbatim comments appear throughout the summary of results report.

To download a copy of the advisor summary of results report, “External Investment Management Advisor Attitudes and Adoption: 2016 Edition,” and to register for more information including a forthcoming whitepaper, infographic, video webinar and links to previous surveys, visit www.northerntrust.com/outsourcing.

Northern Trust Asset Management is a leading global asset management firm serving institutional and individual investors in 29 countries, with $906 billion in assets under management as of June 30, 2016. Northern Trust Asset Management’s robust investment capabilities span all markets and asset classes, from passive and risk-factor to fundamental active and multi-manager strategies, delivered in multiple vehicles. For more information, please visit our website or follow us on Twitter @NTInvest.

Northern Trust Asset Management comprises Northern Trust Investments, Inc., Northern Trust Global Investments Limited, 50 South Capital Advisors, LLC, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc. and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, and affluent families and individuals. Founded in Chicago in 1889, Northern Trust has offices in the United States in 19 states and Washington, D.C., and 22 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2016, Northern Trust had assets under custody of US$6.4 trillion, and assets under management of US$906 billion. For more than 125 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit northerntrust.com or follow us on Twitter @NorthernTrust.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/disclosures.

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