Trends in Asset Management Operating Model Design

Advancing technology has changed the way asset managers are approaching their operating models. Many large firms are moving away from having multiple systems performing separate roles and towards Enterprise platforms.

Asset Manager Growing Pains

  • As Asset Managers grow in size and complexity, numerous pain points can present themselves – for example handling global cash positions and the costs of running oversized operations teams, to increased effort being spent integrating multiple systems and issues with inconsistent data
  • Although ‘best-of-breed’ or hybrid IT architectures can be beneficial for smaller or specialist Managers, firms with significant scale, multiple locations and/or wide-ranging asset classes are starting to move their businesses onto single Enterprise platforms as part of fundamental strategic change initiatives
  • Proper due diligence and assessment is critical before embarking on such programmes to ensure the future state will meet business needs

Operating Model Evolution

The shifting trend towards Enterprise structures among large asset managers is being accompanied by, and further enabling, other operating model evolution initiatives:

  • Synergies from Front to Back: Strategies to enable and simplify the processes and procedures in place
  • Standardisation: Move away from customisation of utility services and stripping out non-core service offerings
  • Global Manufacturing: A single platform for portfolio management and a move to global dealing and EMS capabilities. Firms are looking to use technology and data as a competitive differentiator
  • Front Office Position Records: A higher level of data quality for investment decision making using persisting positions in the OMS and reconciling to the middle office

Driving Forces for Change

Importance of Data: The management of data has become a core pillar of every company strategy and a key focus for the asset management industry. Data management is simplified in an Enterprise architecture – centralising data and streamlining the interfaces required

Regulatory Demands: The changing global regulatory landscape demands more detailed and proactive regulatory adherence. Incorporating risk management and compliance processes into a single standardised IT architecture enables a more joined up and visible approach to risk and compliance

PMAR Operating Models: The demands on Performance, Measurement, Attribution & Risk (PMAR) operating models are more advanced than ever. Dynamic reporting, custom classifications, composite benchmarks, price aligned analytics and transparency in the data model will all play a key role in future designs

Transparency & Audit: Higher public interest in the accountability of investors is leading to managers reviewing their transaction cost analysis operating models. This pressure to deliver clear and comprehensive data is accommodated by having fewer systems and interfaces

Moving to the Cloud: The leading Enterprise IT vendors now offer cloud hosted applications for clients which enables increased workforce flexibility and security plus faster deployment, reduced in-house IT footprint and, in some cases, automatic software upgrades

Growth in Alternatives & Multi-Asset: Rapid growth in the multi-asset investment and alternatives sectors show these are becoming more popular as managers seek to find alpha, diversify investment holdings, take advantage of specific asset allocation and investment strategies and reduce risk

How can Alpha help?

Alpha support our clients with all aspects of Operating Model design and implementation:

  • Target Operating Model: Leverage Alpha’s expertise in producing bespoke, detailed designs for future state operating models
  • Recommendations & Business Case: Our proprietary evaluation methodologies and vendor knowledge produce practicable recommendations, which are justified in comprehensive business case rationale
  • Implementation: Alpha’s experienced project managers can detail and deliver the full implementation process, from current state to new Target Operating Model.

Successfully delivering strategic change initiatives for the world’s leading Asset Managers has equipped Alpha’s team with an unrivalled understanding of each component of an asset management operating model across Front, Middle and Back Office as well as IBOR, Distribution, Sales and Marketing