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
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:
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.
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