One of the ways that your startup business can grow is by making investments. When done right, these investments can generate additional income to sustain your business. But managing these on top of running your company itself can be a rather tedious effort.
This is where outsourcing investment management can be a lot of help for you. But how does it work exactly and how can you do it right? Let’s take a closer look.
Why Outsource Your Startup Business Investment Management?
One thing you might be curious about is why get a third party to manage your investments, instead of doing it in-house. However, there are certain benefits here that would make it suitable for smaller businesses like yours.
Lower Costs
Hiring an in-house investment manager can itself be a rather expensive investment. These managers will typically charge around 3% of the value of the asset they manage for you. While this might seem small at first glance, it can become proportionally more expensive for a smaller business, especially if the investment is of significant value.
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Outsourced investment managers can have up to a 17% lower operating cost than in-house ones. They do this by taking in multiple clients instead of being employed solely by you. They can then take a smaller percentage from you. Additionally, this can save you plenty of work hours instead of having to oversee the work directly.
Expertise
Okay, in-house investment managers are themselves experts in the field. But their cost means that they can be inaccessible for a smaller startup business like yours. With outsourcing, you can quickly get access to that expertise. This is vital, as having your investments handled by capable people as early as possible will ensure that they create good returns.
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Additionally, the outsourced investment management team can be very flexible. Depending on the types of assets you acquire, they can reassign a more knowledgeable manager to your team. This without the disruptions of having to hire a new manager for the new investment.
How Your Startup Business Can Outsource Investment Management Right
Nevertheless, with all the funds riding on these investments, you need to do the effort right. Outsourcing your investment management needs follow much the same principle as any finance-related outsourcing effort. As such, here is a quick overview of some of the things you need to do early on.
Identifying Your Exact Needs
The first thing to decide is whether to get an outsourced firm to manage a single asset or one that will handle multiple investments. With the first method, you can get a more focused management strategy. On the other hand, the latter might be more suited if you only have a few assets that are closely related to each other.
Another thing that you would want to consider here is what kind of service to get. There are typically two different types you can get here.
- Bespoke portfolio: This is an investment plan developed based on your specific needs and is suitable for larger investments.
- Model portfolio: An investment plan designed for entry-level needs consisting of a collection of investments pre-researched for you.
Note that making this choice actually begins during your initial investment selection. But you would want to get an outsourced investment manager that is familiar with your chosen investment type.
Assessing Outsourcing Providers
Once your startup business has a shortlist of possible providers, you need to interview them extensively. Aside from the general inquiries on their service, you would also want to ask providers the following specific questions.
- What are your total funds under management?
- What is the minimal level of investment portfolio you accept?
- What access can I have to your investment managers?
- How do you report portfolio performance?
- Do you supply funds performance data to private client consultant indices?
These questions will give you an idea of how each provider handles different aspects of your investments, including risk management/ Note that there is no single way to go here. But you would want to look for a provider that has enough flexibility to accommodate future investment ventures your startup business will make.
Working With Your Outsourced Startup Business Investment Managers
Once you have signed up with an outsourced investment management team, you can begin providing them with the necessary information about your current investment portfolio. After they review your portfolio, the provider begins outlining the management plan you will use.
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Depending on the initial arrangement you have with the provider, you may or may not be directly involved in crafting the plan. Nevertheless, do thorough research on the plan to better understand what it entails.
Coordinating With Your Outsourced Investment Manager
While they will be working independently, you will still need to be in constant touch with the investment manager. But having to communicate with them regularly while attending to the business can be rather tedious. This is where Virtua Solutions comes in.
Our virtual assistants can serve as liaison officers between you and the manager. They will receive and organize updates from the latter so that you can read them at your leisure. Additionally, we will be assisting the manager on your behalf to secure important documentation.
Note that this is part of our overall virtual assistant and back-office outsourcing service. With us, you don’t need to get a separate assistant just to handle communications with your investment manager. That streamlines your outsourced team significantly, ensuring a more efficient management effort.
Additionally, our VAs have a considerable amount of experience working in different industries. They can then use their expertise to communicate your desires better to the investment manager. By ensuring proper communication between you and them, we can help you better oversee the management of your investments.
Grow Your Startup Business Investment Through Outsourcing
It might seem uneasy at first, but outsourcing your startup business investments can be a great way to expand it. You might even find a lot more gains here than if you did it by yourself. And while we don’t have direct involvement in the management process, our team at Virtua Solutions is ready to provide support. Contact us today and we will get to work immediately with your outsourced investment manager.