Originally published in Bachmann Group Communiqué: Issue 3 August 2004
Outsourcing has certainly become part of "business speak" over the past few years as the practice has become increasingly more acceptable - particularly in fields such as investment management. The trend has been slower within the arena of trust administration. Nevertheless there has been a marked increase in the level of interest in recent months.
The issues faced by accountancy and legal practices are numerous:
- They face escalating costs of providing the service
- Staff recruitment can often be problematic
- Increasing regulations
- Trustee risk issues.
Often the small number of trust structures involved, means that it is virtually impossible for an organisation to administer them efficiently and therefore profitably. Hence they will look increasingly at the possibility of placing the administration elsewhere.
The advantages are numerous:
- Cost efficiency
- The outsourcer maintains control but uses "experts" in their particular field
- Better continuity of staff
- Flexibility - the trust company can provide all or just part of the process depending on the specific requirements of the client company. For example Bachmann can provide the full trust administration service from the establishment of the trust or in the case of a legal practice, just the accounting service and tax return filing
- The ability to refocus on core business rather then diversifying into areas potentially outside main area of expertise
- No need for the outsourcer to invest in expensive trust software
- Significantly reduced risk.
Evidently there are certain concerns in the industry with regard to reputational issues from errors and therefore it is essential that the outsourcer is confident that the selected trust company offers the level of service and efficiency required. Equally, communication is an area which is of concern. Can the outsourcer guarantee to its clients that the response time will be as rapid if the trust administration is not carried out in-house? Again this can be overcome without difficulty, as long as the trust company has sufficiently up-to-date and efficient systems in place to guarantee swift communication links.
A Professional practice will inevitably only consider this approach if they are confident of the quality of the trust company taking on the work.
The content of this article is intended for general information purposes only; we are at your disposal to give a specific advice and any complementary information.