Outsourcing in wealth management has been gaining strong momentum, according to a Celent study.

The international financial research and consulting firm found that cost cutting is the primary driver for the rise of outsourcing. Celent said outsourcing can cut costs by 20% to 30% over a three-to-five-year period. Outsourcing also offers “easy scalability,” Celent said, which has become more relevant as financial firms cut or close operations in some markets while expanding in others, all in a short period of time. “Wirehouses and regional brokers are definitely outsourcing parts of their technology and operations,” Celent analyst Arin Ray said. “Firms are primarily engaging in such activities to get rid of non-core operations: mundane yet essential parts of the business that take up advisors' time.”

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