By Mary Storrs
It’s that time of year again, when our inboxes fill up with insightful Top Trends lists, offering predictions and insights for the coming year on industry changes, issues, developments, and technological innovations. The lists are self-promotional of course, but some can actually help you to anticipate industry direction, recognize new business issues, and re-prioritize your strategic plans for 2017.
Clients ask us all kinds of interesting questions, like which investment systems would be best for their operation, or which staffing model would be best for their organization. But the question they ask more than any other is, ”What are other firms doing?” They want to know what other firms are thinking about, or how other firms have solved a problem they’re having.
As the Italian academic Antonio Tabucchi wrote, “When you have three or four elements in hand, you don’t have to be a genius to reach certain conclusions” about the future (warning: self-promotion begins right about now). Because Cutter Associates works so closely with the 200 investment management firms belonging to our research consortia, we have the insight and expertise to reach certain conclusions about the next 12 months. So here’s our list of the Top Five Trends for 2017, revealing what our member firms are thinking about and working on for the year ahead.
Investors are more sophisticated than ever before, demanding more timely information, more modern tools, and more innovative delivery methods. Investment management has always been a competitive business, and standing still is not an option. So keeping up with these demands means investing in new technologies like web portals, artificial intelligence, robotic process automation, and blockchain, while managing the associated risk of failure. Maybe you need to analyze the business case or launch a proof of concept. But keep moving, or get left behind.
Firms are looking for innovative ways to reach new clients and improve service to existing clients. Some are launching or upgrading web portals to enhance digital distribution of reports and other data. Others are investing in sales enablement tools to increase the effectiveness of their sales teams. By anticipating client needs and exceeding their expectations, you’ll be in a stronger position in times of lackluster performance.
Cutting expenses is a perennial priority. Something is always encroaching on the bottom line. Right now, fee pressures, low interest rates, and trends like passive investing are impacting revenues. Some firms are consolidating their investment applications to reduce support and maintenance costs. Many are outsourcing technology functions and business processes in ways that fit their unique circumstances. And a great many are carefully weighing the costs and benefits of using cloud technology for their development environments and production systems. Understand your options and be proactive. There’s no time to rest on your laurels.
Data underpins an investment manager’s entire operation. Most firms now use a data management system, but systems alone are not enough. Strong data management also requires good governance, stewardship, architecture, and delivery. And above all else, it requires establishing and maintaining a corporate culture of data—a commitment to strong data management from top to bottom and across the enterprise. Everyone in your organization must understand and appreciate the high value of timely, consistent, and trustworthy data, and they must be willing to work continually to maintain it.
Data breaches, rogue traders, layoffs, and regulatory violations are great ways to make headlines, and great ways to lose investors and employees. To stay off the front page, firms are improving transparency and implementing comprehensive risk management programs to mitigate and respond to risk in all areas of the business, including investment risk, operational risk, and third party risk.
We hope our Top Five Trends for 2017 are useful to you in the coming year. But remember that situations inevitably change, and as Salesforce founder Mark Benioff has said, "You must always be able to predict what’s next, and then have the flexibility to evolve."
About the Author
Mary Storrs has more than 30 years of experience in the investment management industry. She has been with Cutter Associates for more than 16 years, first as a consultant focusing on front office projects, and then with CutterResearch since its inception. Mary has authored CutterResearch reports on many topics, including trading, portfolio management, transaction cost analysis, investment research management, and market data systems. She assumed leadership of the Research division in 2011 and oversees all the research Cutter Associates delivers to our members, ensuring that content is relevant and timely. Mary also leads the CutterBenchmarking team, helping our members understand their capabilities compared to industry peers and to industry best practices. Mary holds a B.S. from Boston College and an M.B.A. from Babson College.