In January 2025, DeepSeek, a Chinese AI company, launched a ChatGPT generative AI competitor that stunned the tech world. They claimed at the time a spend of just $6 million on development and made the code open-source, accessible for anyone to use. In the wake of this announcement, NVIDIA, a leader in AI computer chips, saw its market value plummet by nearly $600 billion – the largest market value drop in U.S stock market history, according to Bloomberg.
For financial advisers, the investment risks behind such shocks are all too familiar. Advisers have long relied on principles like diversification to guide their clients through volatile times. These strategies, rooted in deep experience and historical knowledge, can be powerful tools for risk management.
But when it comes to their own businesses, advisers face increasing opportunities and threats that don’t come with the same safety nets. Research from the Harvard Business Review reveals a stark reality: the average lifespan of companies in the S&P 500 has dropped by 80%, from 67 years to just 15 years. The speed of creative destruction is accelerating, and business models must evolve to stay competitive.
Adapting to Change: The Resilience of Innovation
Generative AI is poised to disrupt industries at an unprecedented pace. How can financial advice businesses survive and thrive? The same Harvard Business Review research found that the most resilient companies survived by focusing heavily on continual innovation. Operating a nimble business model that can adapt quickly to changes in the environment is required.
One key strategy for business success is Jim Collin’s renowned concept of the “Hedgehog Principle”. It’s simple yet powerful: Do one thing and do it well.
For advice firms, that “one thing” could be anything from adapting your operations to technology change to working with more clients or negotiating acquisitions. Although they recognise the importance of leveraging innovation to stay competitive, many advisers may not have the time and expertise to engage with technological advancements.
Once you’re clear on that “one thing”, everything else becomes a distraction. That’s where you delegate to someone with the expertise to do it well – your business partner, a supplier, or an outsource partner like VBP.
A Cost-Effective Way to Scale
Is there a margin advantage from outsourcing? Based on recent benchmarking data, costs for Philippine-based offshore workers are typically 35-45% of the cost in Aus.
This cost advantage is not theoretical – Invest Blue has scaled its business significantly, growing revenue from $10m to more than $110m. Central to this ability to scale has been the strategy of having a global team. They aim to keep a ratio of 2:1, so for every two onshore team members, they look to hire one in their VBP team.
The benefit to their bottom line varies between 6% and 9% and has averaged 8% of revenue over time, which is material.
Many advisers wonder whether that cost advantage translates to the same productivity outcome. In truth, clients generally find that 4 offshore team members do the work of roughly 3 onshore team members – they do lose a little bit of productivity in shifting the work offshore. This is however more than offset by the cost advantage.
This benefit can also translate to operational metrics.
How Outsourcing Can Help Increase Client Numbers by 40%
One financial advisory firm was struggling with significant inefficiencies in their client process, which created bottlenecks that prevented them from increasing the number of clients per adviser. This not only hindered their growth but also affected their bottom line.
Recognising the need for change, they decided to utilise the power of outsourcing to tackle the issue head-on. In partnership with VBP as their selected outsourced partner, they began carefully analysing the existing handover process to pinpoint areas where improvements could be made.
After identifying key inefficiencies, they implemented standardised procedures designed to streamline operations. VBP’s offshore team was then deployed to manage the high-volume administrative tasks, allowing the local team to focus more on client-facing activities.
To ensure the success of these changes, the firm provided ongoing training to its team, ensuring that everyone adhered to the new processes.
The benefit of this work was material:
- Client numbers per adviser increased by 40%
- Revenue growth was achieved without the need to hire additional team members
- The standardised handover process significantly reduced the time advisers spent on admin tasks, allowing them to focus more on client engagement
What are the takeaways?
- Regularly review and refine operational processes
- Consider outsourcing non-core activities to specialist teams
- Invest in ongoing training and development to ensure all team members can adapt to new processes and technologies
Outsourcing can add substantial value to financial advice firms – but like any business decision, it takes expertise, practice and time to make it work well for you. Having a reliable partner to explore outsourcing not just as a cost-cutting measure, but as a strategic advantage can make a difference in how you leverage this opportunity.
Start a conversation with our team today to explore how to build a business that thrives in a rapidly changing market.
