2023 Trend: Performance Teams Must Invest Now or Pay Later

Jon Chandler

Director

Jon Chandler brings more than ten years of experience in the financial services industry to his Director's role at Cutter Associates. Prior to joining Cutter, Jon was a senior business analyst for State Street Global Advisors (SSGA), where he was involved in a number of projects for the front and middle office, including UAT design and execution for an order management system (Fidessa IMS), the implementation of a web-based due diligence platform (FundInsight), and an enterprise solution to support blended benchmarks. Prior to his project roles, Jon was a principal in fixed income trade operations at SSGA. He has extensive experience with post-trade operations and applications, such as OASYS/CTM, PORTIA, MBSExpert, and Failstation. Jon earned a bachelor of arts in history from the University of Florida and an MBA from Northeastern University.

Recent research assignments and publications include the following:

Alternative Investment Systems
Collateral Management
Investment Accounting Solutions
Order Management Systems
Performance Measurement and Attribution Systems
Reconciliation Solutions
Risk Management Systems

Lisa Masten

Consulting Principal – Data and Performance

Lisa Masten has more than 20 years of experience in the investment management industry, leading projects and designing solutions in the areas of performance and attribution, data management, market data administration, portfolio analytics, and investment accounting. Lisa leads Cutter Associates’ Data and Performance practice, where she advises and designs operating models, selects systems, and implements business and technology solutions. She also organizes the Implementation practice for Cutter, including leading development of its adaptable delivery framework and project toolkit.

Prior to joining Cutter, Lisa was a Senior Manager at Invesco, where she managed a global team responsible for designing and implementing data, performance, and accounting solutions. She has held roles implementing and supporting processes and technology across the front, middle and back office at multiple asset management firms. Lisa holds a Bachelor of Arts in finance and computer science from North Central College in Illinois.

Julie Snogren

Director, Consulting

Julie Snogren joined Cutter in 2021 and bring extensive expertise in performance and attribution - from oversight, calculations, monitoring, and managing the regulatory environment to automation of reporting and customizing reports for complex portfolios. Her experience includes deep dives into investment approaches that explain manager decisions that drive investment results. She has worked with equity, fixed income, multi-asset investment, and alternative portfolios, providing a solid understanding of the fundamental drivers of returns across a range of markets.

Julie’s experience in various roles also involved substantial emphasis on independent research, and the creation of communication materials and presentations. In Julie’s most recent role as Vice President, Global Performance Measurement, at Brown Brothers Harriman, she led a team of analysts that supported the global client base for all performance and attribution needs. She worked on various products across the fund range, including 40 Act, ETFs, UCITS, institutional/separate accounts, and alternative portfolios. Her accomplishments in this role included initiating and leading RFPs, resulting in the implementation of SS&C’s Sylvan Application. Other successes in this role included product roadmap enhancements and efficiencies to the workflow that increased current client adoption of performance services from 14% to 40% and increased new client onboarding by 68%.

Prior to her role at Brown Brothers Harriman, Julie spent 12 years in various roles at Oppenheimer Funds, where she led the Performance Measurement team. She ran the production of alternative product financial statements, utilizing GAAP, FASB, GASB, and Insurance accounting standards inclusive of the audit coordination/completion. Julie also spent time in several analyst roles in fund accounting, which gave her the opportunity to be the lead on multiple high-profile projects, involving the creation of GIPS requirements, designing the accounting workflow for newly acquired institutional products, and the successful start-up of several commercial paper conduit portfolios.

Julie holds a bachelor of science in accounting from Columbia College and a Graduate Certificate of Advanced Study in Management from Northeastern University.

Mar 13, 2023

The following blog post is one in a series of Cutter 2023 Trends that provide insights into industry challenges and considerations for our clients and member firms in 2023 and beyond.

Performance measurement as a discipline hasn’t materially changed in several years, but the role of the performance analyst is changing across our industry. And despite budget constraints and cost cutting measures this year, we still expect the industry’s leading investment managers to devote attention to their performance teams in 2023. If they have not already, firms should begin their transformational journey in 2023, despite whatever the market may bring.

For one, talent and expertise for performance have grown much harder to come by ─ and a lot more expensive. Top talent commands a premium, so it’s no surprise that some investment management firms are investing to optimize these roles, and we expect more of them to follow suit this year. One way to achieve this: create a performance measurement center of excellence (COE). While a COE requires some upfront investment and patience along the way, investment managers can realize a number of benefits by implementing one. A COE’s benefits include ensuring that they get better value out of their staff, while contributing to skill development, career progression, and, ultimately, retention.

Firms can establish a COE by product type, strategy, client segment, or region, among others, and if a firm organizes its performance staff members in a way that allows them to focus on their areas of expertise, then sales, distribution, and portfolio management can leverage their knowledge and skill sets. Because of these reasons, along with a variety of other benefits, we predict that more firms will move toward this model in 2023.

Some firms will find the budget and resources to invest in their architectures, while others will prioritize data strategy initiatives that will benefit their performance measurement and attribution teams. Both should help investment managers not only meet the increasing demands from the front office and their own clients but allow them to better leverage their performance analysts’ experience and talent. Performance measurement today is more about analysis and data mining, which should be the focus – not wasting time cleaning and reconciling your data. Today’s tools can, and should, achieve this for your firm.

While ESG is certainly a hot topic across our industry, we don’t expect any significant changes with respect to performance attribution and ESG this year. Regulatory pressure looms on the horizon, so ESG attribution models will become a topic of discussion, but firms will only begin to dip their toes in the water in 2023, in part because the vendor landscape remains immature and many of the tools available aren’t quite there yet.

Investment managers no doubt will be forced to cut costs because of what’s happening in the market today, and we already see signs of this happening. But firms should not lose sight of the importance of performance and the potential role that the performance team can play. You should not view your performance team, which can add significant value to the front-office decision-making process, as just another necessary cost center. If firms can set strategic goals for performance measurement while prioritizing the right initiatives this year, they will find themselves, as they enter 2024, leaps and bounds ahead of the rest.

To speak with a Cutter analyst or consultant about this trend, contact us at [email protected]. To read more 2023 Trends, see our whitepaper, Trends in Asset Management: 2023 and Beyond.