Delivering Change Effectively in Asset and Wealth Managers

Kevin O'Shaughnessy, Adam Starkey-Smith

Alpha’s 2023 Asset & Wealth Management Outlook identified a number of key industry trends that will shape the Asset & Wealth Management industry this year. However, the key theme that runs through all these trends is transformation. In 2023, Asset Managers are facing the difficult task of balancing transformational agendas against an uncertain market climate and constrained budgets. Investment Managers therefore need to ensure they are set up to maximise their investments by having the right organizational set up.

Alpha research has found that organizational set-up and governance is the largest blocker to delivering change effectively in organizations. This indicates that the way organizations set themselves up is potentially wasting a significant % of their investment each year.

From the extensive work we have done in this area, here are some of the key challenges we see Asset and Wealth Managers facing within their change agendas.

Common Challenges:

  • Poor partnership between the business and IT teams: The business (who is also often the customer) and Technology don’t effectively collaborate which has a significant impact on the value realised from the investment in technology. We regularly witness a cultural divide that creates a misalignment between the business and technology, which ultimately impacts their ability to collectively achieve the organizational objectives.
  • Too much focus on traditional metrics (time, scope & cost) negatively impacting value and quality: Too much focus on time, scope and cost rather than focussing on value based on the time available, is impacting the quality of products being delivered to customers. Compromised solutions are too often being deployed to meet time and cost targets, with limited consideration of how it impacts the long-term quality and speed of delivery.
  • Over governance in the organization slowing down the pace of change: Too many centralised discussions and signoffs required before starting to deliver value to customers. This shows lack of trust in the teams, creates too many hurdles, and ultimately slows down the pace of delivery.
  • Prioritising large projects / programmes which is reducing the ability to respond to change: Not having the necessary frameworks and data to make effective priority decisions e.g. which backlog items will deliver the optimum balance between value and cost.
  • Globalising the technology department to accommodate global needs: As Asset and Wealth Managers have increased the global reach of their business, they have seen challenges in globalizing the technology department. This includes where to place individuals and teams, how to leverage global technology solutions, where to access scarce talent and when to build tailored local solutions.
  • Complex technology stacks slowing down the pace of change: Complicated technology stacks makes it difficult to add new features and functionality and increases the overall cost for building, supporting, and maintaining the technology estate.

Common Solutions:

  • Align long standing teams to the business / customer: Align technology teams to the business / customer whilst also creating clear ownership and accountability across the business and IT for that area e.g. Portfolio Management or CRM. These teams can build a lasting partnership where they have collective accountability for delivering valuable technology that’s in line with the organizational objectives.
  • Focus on the value being delivered to the customer based on the time available: Developing a method to measure the value being delivered to the customer is key for shifting the focus away from time/cost. Value should focus on the measurable or observable changes in behaviour, such as reducing the time spent on manual processes or the ability to utilise ESG data sets in investment decision making. Getting closer to customers, understanding their needs and being able to test product improvements or new products with them helps the organization to better measure and understand the value being delivered to customers.
  • Decentralize decision making to help improve the speed of decision making and delivery: Trust and empower teams to make decisions (e.g. which backlog items to prioritize) whilst also having clear guardrails for teams to review decisions with certain governance groups when necessary (e.g. large investment).
  • Develop clear prioritization frameworks based on value and complexity: Firms need clear and transparent approaches to prioritization that consider both the value and cost of the work. Whether prioritising backlog development or strategic initiatives, the stakeholders and method involved needs to fit the size of the decision. As part of this, firms need to carefully balance the amount of time / effort that it takes to use a prioritization framework against the importance of making the right decision. Larger and more expensive decisions will typically require a more robust analysis than smaller and less expensive decisions.
  • Embed a global mindset and set up regional resource for business-critical activity: It’s essential for the Product Managers and team members to built products that can accommodate global requirements and put certain team members in region for business-critical activity (which typically focuses on Investments e.g. trading and Distribution e.g. CRM)
  • Simplifying and modernise the architecture: Reducing the number of systems across the technology estate is a key enabler to reducing complexity but there also needs to be a focus on technical agility. The cloud, automated testing, CI/CD pipelines, environments, development approaches (e.g. TDD) and observability are essential for increasing the pace of change and reducing the overall cost of supporting and maintaining the tech stack.

The overriding goal from the example solutions above is to make best use of the scarce resources that a firm has (both in Technology and in other business functions) and focusing teams on making technology an advantage rather than an overhead. This means firms can get the maximum benefit from the £/$ spent each year and the amount of time/effort it takes.

The good news for Asset/Wealth managers, is that there are a wide range of tried and tested techniques and approaches which have been deployed in other industries for many years.  As such it is less of a risk or experiment and managers, with a wide body of knowledge available to help tailor it and deploy it to a managers own specific situation.

Contact Us

At Alpha, we’ve been working with clients across the industry to optimise their organizational set up and we’d be delighted to share some more of the insights we’ve gained. Please contact Adam Starkey-Smith and Kevin O’Shaughnessy here to find out more.

About the Authors

Kevin O'Shaughnessy
Executive Director and Head of Digital & Agile

Kevin is an Executive Director at Alpha and leads our Digital & Agile Transformation practice. He has over 20 years’ experience of driving digital & client centric transformation across the Financial Services Sector and in particular in the Wealth and Asset Management space. His experience covers the full range of digital topics from strategy to execution which have deployed with a range of asset managers supporting a mix of Institutional, Wholesale, Retail and End Investor audiences.

Adam Starkey-Smith
Associate Director

Adam is an Associate Director at Alpha with over six years’ experience in the Financial Services sector. He has a broad range of skills and experience, including operating model design and implementation, agile transformations, project management and process improvement. He leads the agile proposition within the Digital & Agile practice and is active member in the Distribution practice.