Asset managers must address every core function of the enterprise if they are to successfully transform.
Distribution, sales and marketing
Distribution operating models have not been immune to technology-driven disruption. Leading firms are redesigning their distribution organizations and adopting technology to address the rapid shifts in product demand and service levels across institutional, retail direct and intermediary channels.
From a product perspective, firms are adopting life cycle views and engaging resources from investments, operations, finance, risk, compliance and distribution to thoughtfully assess the end-to-end impact and cost of new product or mandates.
Nowhere has the need for differentiated talent been more evident than in the front office. Historically, product-led growth through innovation has been sufficient to drive net AUM growth. Whether a firm relied mainly on index, active or smart beta products, the infrastructure for product innovation and investment management has typically included:
- Specialty research
- Asset-class-based portfolio and order-management systems
- Many different Excel-based analytics and models
- A proliferation of market data
- Investment risk and compliance monitoring contemporaneous with the investment decision or trade order
This front office operating model has gradually evolved, with infrastructure and personnel costs rarely challenged.
Asset managers have clearly embraced data as a highly valued asset and embraced the stewardship of data, once it has been received from back-office platforms, for reporting to portfolio managers, finance, risk, compliance, clients and regulators.
As such, the middle office has traditionally been a high-cost function spanning manual processes and disparate applications for trade operations, post-trade compliance, performance reporting, position and cash reconciliation and reporting, corporate action verification, broker reconciliation and master data management.
Scale and complexity issues dominate the back office. The technology investment required to support top-tier firms as they approach or breach the trillion-dollar AUM mark — with hundreds of net asset values (NAVs) to strike and often thousands of separate accounts to support – forces a strategic decision on sourcing.