Offshoring as a strategic lever for US wealth managers

The US administration’s tariffs on multiple trade partners have triggered global uncertainty. And while the long-term consequences of the tariffs continue to unfold, economists have warned of a possible slowdown in global economic growth in the short to medium term. 

A slowdown could push up the cost of goods in the US, fueling inflation, which would reduce household spending and investments. Fewer investments would affect the flow of new money, which would lead to slower growth in the assets under management of wealth firms and, in turn, impact their revenue. 

Since the impact on revenue is direct, addressing the cost-to-income ratio becomes a more immediate priority for wealth management firms already struggling with a high ratio. Wealth firms must focus on cost optimization and advisor productivity gains to protect their bottom line and grow revenue (see Exhibit 1).

In this note, we examine how these firms can leverage offshoring to do so.

Exhibit 1

In an uncertain global trade environment, US wealth management firms must focus on their core competencies and use available resources to optimize value-added workflows. 

To achieve this, many firms are offshoring their workflows.

Secondary research by our team reveals that leading wealth firms, including JP Morgan, Morgan Stanley, Barclays, Deutsche, UBS, Goldman Sachs, Bernstein and Julius Baer, are harnessing their offshore capability centers to enhance wealth management operations. These firms have built high operations capabilities in their offshore centers and intend to expand them across advisor support, lending, investment strategy, research and other critical functions.

Wealth management firms can adopt a hybrid approach, in which critical workflows that require in-person client interaction, regulatory certifications or strategic decision-making are retained onshore, whereas value-added workflows that support these processes or require scalability can be performed offshore.

We have identified the workflows that are best suited for onshore centers and those that can be effectively offshored (see Exhibit 2). 

This mapping exercise provides a clear framework for wealth management firms on offshoring workflows, enabling them to streamline operations and enhance productivity. Our blog on Empowering advisors in a changing US investor landscape shows how wealth firms can adopt a targeted approach to enhance advisor productivity.

Exhibit 2

Although offshore capability centers can help optimize costs and enhance productivity, scaling them up is a challenge (see Exhibit 3), particularly with complex wealth workflows.

Exhibit 3

As wealth management firms expand their operations at their offshore centers, they can benefit from strategic partnerships with specialist firms that can seamlessly integrate with their in-house teams.

To ensure a successful collaboration, it is essential for the firms to select specialist partners carefully (see Exhibit 4 for desired characteristics and traits).

Exhibit 4

Wealth management firms should implement a well-defined strategy that outlines the onshore and offshore functions to unlock greater value. 

As they expand and refine their offshore workflows, strategic partnerships with specialist firms can help them attain key objectives faster.

We offer tailored support to wealth management firms and their captives, covering the entire value chain. 

Our expertise enables us to establish a center of excellence for advisors, boosting their productivity and efficiency. 

Additionally, our domain experts can integrate seamlessly with the teams of these wealth management firms, driving process enhancements and cost optimization in workflows.

We can also co-create artificial intelligence-powered accelerators with firms, empowering them to scale up operations, enhance efficiency and achieve sustainable growth.

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2. Scalable Tech and Operations in Wealth and Asset Management
3. The looming advisor shortage in US wealth management