After a torrid time, if I had to sum up the key themes firms are working on in asset management, I’d say: product innovation, client retention and acquisition, operational efficiency, and data. I may have missed some things, but in the round, I’d say these were key issues for asset managers large and small.  At first sight, some of these issues aren’t in the control of investment operations teams, but many are, and so I wanted to delve into what investment operations leaders can do to play their part in the recalibration of their firm to not only help the firm survive, but to thrive in the recovery. Of course, I also want to look at things through a talent management perspective.

Operational efficiency is fundamental to the success of an asset management firm, particularly when firms have seen their margins squeezed. In short, CEOs and shareholders are looking for more bang for their buck.

Investment operations leaders must prioritise streamlining processes and leveraging technology to boost productivity and reduce costs. The first part can sometimes just be stepping back and reviewing each chain in existing processes. The latter more dramatic, potentially costly, and slow moving. Tech providers take time to evaluate, upfront costs are high, and disruption to the business is often inevitable (albeit getting easier as systems are more easily able to “talk” to each other). Larger firms often have more complex architecture and legacy issues, but they also have the resources to cope with projects, increased regulation, and tech adoption. However, never letting a good crisis go to waste, difficult times are often the best time to take on these projects. Firms we’ve seen being brave in many aspects of their business, often pull away when the upturn arrives.

The benefits of leveraging technology are also very apparent over the medium to long term. Automation and data analytics are essential tools that can revolutionise traditional workflows, enabling firms to manage larger transaction volumes with greater accuracy and speed. By optimising back-office functions, such as trade processing, settlement, and reconciliation, firms can achieve significant cost savings and enhance overall efficiency.

Furthermore, adopting cloud-based solutions and advanced portfolio management systems can provide real-time insights and facilitate improved decision-making. As mentioned, firms are working hard on product development and without high quality data, this exercise can be overly skewered to “gut feel” or a dominant voice in the boardroom. Furthermore, improved technologies not only enhance operational efficiency but also support scalability, allowing firms to grow without a corresponding increase in operational costs.

We have seen firms working hard to review their distribution and client service offerings. They are not only looking for more predictable flows, but also to strengthen relationships and understand clients’ needs better. In a fiercely competitive market, like this one, it goes with saying that maintaining strong client relationships is vital. Investment operations leaders must ensure their teams are equipped to deliver exceptional client service. This includes timely and accurate reporting, seamless onboarding processes, and responsive communication channels. Focusing on onboarding, not only can it irk sales teams when the process is poor, it often starts the relationship off on a bad footing. Prioritising client service excellence helps build trust and loyalty, which are crucial for client retention and acquisition.

Leaders should also cultivate a client-centric culture within their teams, promoting proactive problem-solving and continuous improvement. Regular training and development programmes can equip staff with the skills needed to meet and exceed client expectations. For inspiration and new approaches, we advise leaders to look to other industries to see what they can glean.

Regulatory compliance is a non-negotiable aspect of asset management. Investment operations leaders must stay informed about regulatory changes and ensure their firms adhere to all relevant laws and guidelines. This necessitates robust compliance frameworks, regular audits, and comprehensive staff training on regulatory requirements.

Integrating compliance checks into daily operations can help mitigate risks and avoid costly penalties. Leaders should also utilise technology to automate compliance monitoring and reporting, ensuring all activities are transparent and well-documented.

ESG hiring has certainly slowed in our experience. Outflows have also been prominent from these strategies, but longer term ESG is here to stay. It’s not immediately obvious where investment operations teams fit into product development and ESG. However, operations teams need to be involved early in product development processes to ensure operational readiness. From setting up fund structures and adapting reporting to include ESG metrics, investment operations play a central role.

Collaboration with product development teams and continuous feedback loops can facilitate smooth launches and enhance the firm's ability to meet evolving investor demands. By staying ahead of market trends by launching new products, firms can attract a broader investor base and strengthen their market position.

Effective risk management is essential for safeguarding assets and maintaining operational integrity. Investment operations leaders must implement robust control measures to mitigate both internal and external risks. This includes addressing manual, repetitive processes, enhancing cybersecurity, and ensuring business continuity through comprehensive disaster recovery plans. With volumes being down, now is a good time to address any risk related weaknesses. There won’t be time when the upturn arrives.

You would expect Fram to advocate that talent is the critical component of operational excellence and long-term success in the asset management industry (or any industry). As a specialist recruitment firm, we understand the importance of attracting, developing, and retaining top talent. Investment operations leaders must prioritise talent management strategies to build high-performing teams, namely:

Attracting Talent: Competitive compensation packages, a positive work culture, and clear career progression paths are essential for attracting top talent. Firms should also highlight their commitment to innovation and professional development.

Developing Talent: Continuous learning and development programmes can help employees stay updated with industry trends and acquire new skills. Mentorship and coaching initiatives can also foster personal and professional growth.

Retaining Talent: Employee retention is critical for maintaining operational continuity and reducing turnover costs. Leaders should focus on creating an engaging work environment, recognising and rewarding achievements, and providing opportunities for career advancement.

Diversity and Inclusion: Embracing diversity and inclusion can enhance team performance and drive innovation. Diverse teams bring different perspectives and ideas, leading to more effective problem-solving and decision-making.

It’s been a difficult two years, workloads have been high and bonuses low.  However, we’d argue that there is a small window to make these changes, as we must be closer to the upturn than before. We are already seeing increased confidence amongst clients and therefore ensuring that you have the right talent in place for today and the future is key.