Christopher Lion of Barnett Financial in Austin, Texas, acknowledges that prospective clients sometimes notice that his office doesn’t appear to be “a beehive of activity.”

But that’s okay, Lion says. He is a proponent of the “completely virtual business model,” and spoke about the concept’s virtues at the Bob Veres Insider’s Forum conference in Dallas this week.

Lion believes the upsides of a virtual business far outweigh its downsides. Surprisingly, the primary advantage of a virtual office is not lower labor costs, he says. Lion says his costs are roughly similar to what he would have if he used a staff model.

Instead, he views the advantages as the services he provides to clients by relying on outsourcing companies that provide back-office support, custodian communications, and compliance consulting. By using outside vendors who are experts in those fields, Lion says he is able to focus on his “core business” or person-to-person service to clients. He also steers clear of spending his time on employee performance reviews.

But Lion warns that advisors who plan to go the virtual office route should establish some safeguards. They should make sure their communications with the external providers are crystal clear and thoughtful. “If you want them to answer clients’ calls the same day, then you have to tell them that,” he says.

He also acknowledges that advisors who establish virtual businesses might miss some of office camaraderie.

They won’t have “team lunches” and “drive-by conversations” with colleagues, he says. But they will also not have staff turnover and other headaches of employing people, he says.

Miriam Rozen, a Financial Planning contributing writer, is a staff reporter at Texas Lawyer in Dallas.

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