This is a self-explanatory sketch, but I would urge you to think about these lines and internalize them.

Sadly, many of us think that our job is to select mutual funds or investments. Many also feel this is the only way to demonstrate value and that they are really good in this space. I have come across very seasoned people in our industry confused on what their true value proposition is.

If you indeed are that good in asset management, a better way to invest your time would be to start your mini mutual fund or portfolio management scheme or even a newsletter reaching thousands of subscribers. Some of you may be super good and thus you should consider an alternate career by becoming a manufacturer yourself or better yet a newsletter service (with no investment other than your intellectual capability) as that would lead to an outstanding ROI for you. However, the reality is we know that asset management/portfolio management is a very specialized business and the skills required are very different than the ones required in the personal, trust and investor management business.

One of the key concepts that I had explained in one of my previous posts was the concept of Leverage. We all understand this so well.  The key to successful leveraging is to understand the concept of Collaboration and Outsourcing. Even the fiercest competitors in the pharma space J&J and Merck are collaborating to increase manufacturing capacity of vaccines.

The need of the hour for everyone is to collaborate with partners who can provide you the know-how, team, support, and technology required to scale and/or outsource the functions that are taking up a lot of your time but are not providing you with any competitive advantage.

Ask yourself – Why did my client sign up with me?

Initially it was about Access or that you were local or that you were referred by someone. However, the competition today is at a very different level and revenues are constantly under pressure while costs will continue to go up. This calls for innovation in terms of your business model and value proposition.

Ask yourself some more questions.

1. Do you think your client will not sign up with you because you are offering XYZ Mutual Fund versus ABC Mutual Fund?
2. Do you think you can predict the performance of mutual funds? Remember that it is so difficult for asset managers to select securities in their portfolio and to construct a portfolio. How often do they go wrong? Many times. Now imagine how difficult it is to select a manager while hoping that their assets do not grow fast enough (causing them to underperform) or that they don’t bet on the wrong sectors or that they don’t do anything silly to cause loss of reputation to you.

There are professionals who have understood that the real value of their work does not lie mainly in selecting investments, but it lies in helping their clients live the lives they have imagined with their money. Thus, many have TAMPed it and it is a trend that is likely to continue.

Remember Singapore’s First Prime Minister Lee Kuan Yew’s famous quote “If you deprive yourself of Outsourcing and your competitors do not, you are putting yourself out of business.“