Many wealth managers are unclear about the advantages and costs associated with outsourcing technology, according to findings from a survey produced by WealthBriefing on behalf of Advent Software.

Many wealth managers are unclear about the costs associated with outsourcing technology, according to survey findings that suggest some industry players could be missing out on ways to boost overall business efficiency while external service providers may benefit from enhancing their marketing strategies.

Conducted by Weatherill Consulting, the survey was produced by WealthBriefing on behalf of Advent Software for the Technology and Operations Trends in the Wealth Management Industry 2014 report.

Almost half of those surveyed expect to boost their expenditure on cloud solutions over the next three years – with 14 per cent anticipating a significant increase – and so cloud vendors should be “gearing up for a significant spike in demand,” Advent said.

However, those statistics combined leave 38 per cent of wealth managers who don't plan to up their cloud usage, reasons for which are three-fold: costs, legacy systems and security.

According to a Lindberg International study, legacy systems are around 15-20 per cent more expensive to maintain than their cloud-based equivalents and yet almost a third of Advent's 100 European respondents cited cost as a barrier to change or migration.

“This suggests that cloud providers need to do a better educational job in their marketing,” the firm said.

Meanwhile, despite reluctance to outsource sensitive or proprietary data, the findings suggest that “off-the-shelf” technology solutions are in fact becoming more popular. Advent attributes this to an improvement in the quality of solutions in recent years, compounded by the fact that financial, regulatory and competitive pressures have “compelled firms to rethink their enthusiasm for tailor-made approaches.”

Regulatory burdens in particular - such as FATCA and MiFID II - are top-of-mind for 83 per cent of respondents, who said that technology plays a “very important” or “critical” role in helping their firm in this respect.

Overall, two-thirds of firms said they are willing or very willing to consider some form of technology outsourcing or hosting, while a similar proportion expect related expenditures to increase.