2024 Trends, Themes, and Predictions: A Never-Ending Balancing Act for Operations - Must-Haves and Cost Reduction Through Operational Efficiency

Chanelle Crabtree

Consulting Principal – Investment Operations and Outsourcing

Chanelle Crabtree has extensive experience consulting for the asset management industry in Australia for the past 20 years. Chanelle has considerable knowledge and expertise in investment management, outsourcing, and the development of operational models that support the investment management lifecycle. Chanelle leads Cutter Associates’ Investment Operations and Outsourcing practice, and oversees Cutter’s Australia office. She has decades of experience working for investment management firms, custodians, and consulting firms, in roles that included middle-/back-office operational, business analyst, project management, consulting, and senior management. She has a deep understanding of investment management, covering the operational, governance, and system requirements to support all types of clients, products, and asset classes.

A former Director at Deloitte, Chanelle led key engagements, particularly for complex clients with diverse asset classes, covering target operating model design, sourcing, and implementation. Prior to Deloitte, Chanelle was a Lead Consultant at Morse Consulting Pty Limited, where she led various engagements that covered target operating model design, sourcing of custodians/systems, and implementations with investment managers and superannuation clients.

Laura Jesson

Senior Research Analyst

Laura Jesson has more than 25 years of experience in the financial services industry as a project manager, business analyst, and consultant. She joined Cutter Associates in 2013. Prior to Cutter, Laura spent eight years at Wells Capital Management and Evergreen Investments, where she managed investment operations projects, including those focused on outsourcing, client reporting, and trade management. She previously worked at Omgeo as a member of the Central Trade Manager (CTM) product design team. Laura started her career at Andersen Consulting (now Accenture) as a process consultant supporting a variety of projects for clients in the financial services industry. Laura earned her bachelor of arts in economics and psychology from Amherst College. She holds the Project Manager Professional (PMP) certification.

Recent research assignments and publications include the following:

AI Use Cases in Investment Management: Infinite Possibilities 
Business Intelligence Tools
Cutter Benchmarking: Client Reporting
Cutter Benchmarking: Firmwide ESG Capabilities
Cutter Benchmarking: Managing Vendors and Service Providers 
DataOps: In Theory and Practice
Enabling Data Analytics
ESG Data Management 
ESG: It’s a Jungle Out There ─ A Look at the Data Provider Landscape
ESG Investing: One Vision, Many Lenses 
Execution Management Systems
Hybrid Work Arrangements and Their Impact on Firm Culture
Using RPA to Automate Business Processes
The Role of the CRM for Asset Managers

Danny Kramer

Director, Consulting

Danny Kramer is an accomplished consultant with deep expertise in middle and back office investment operations. In his most recent consulting role, Danny worked with a global financial services firm to evaluate the firm’s derivatives management systems landscape by examining current capabilities and derivative system compared with competing vendor offerings. He was responsible for documenting business and technical requirements, researching market vendors, producing Request for Information (RFI) and Request for Proposal (RFP) documentation, creating a structured scorecard for evaluation, and analyzing and presenting results.

Prior to working with Cutter, Danny was vice president of Global Middle Office at Fidelity Investments, where he held several senior roles within investment operations and business strategy. This included as business lead on a multi-year, multimillion-dollar middle office technology implementation of Calypso software to support processing of repo securities, securities lending activities, and derivatives. Prior to Fidelity, Danny spent eight years at Wellington Management Company as vice president and senior manager, Investment Data & Derivative Services.

William Walker

Senior Director, Consulting

William is a proven initiative-taking leader with proficiency in managing, defining and implementing innovative technology, operations and client data management solutions in the Asset & Wealth Management industry. Experience working with tier 1 asset, wealth, pension & superannuation fund managers in multiple global jurisdictions, including Australia, Asia, United States and Europe.

He has extensive knowledge of the full suite of front to back-office processes and technologies with experience devising, developing and delivering strategies in Australia as well as globally. He specializes in managing high performing delivery teams with direct involvement in technology, operations, data management, front office teams, and senior stakeholder management.

William spent 17 years at JPMorgan, initially focusing on client reporting solutions for asset managers and pension funds within the Securities Services business in London. After relocating to New York he was a central figure in the design and development of their first strategic mobile enabled, global client reporting and data management solution that was ultimately central to the client implementation effort.

Following his time in Securities Services William then took a key role in the Asset & Wealth Management Technology leadership where he was responsible for the delivery of portfolio management and portfolio implementation tools for the Private Bank Discretionary business, including; pre-trade controls, mandate management portfolio/model management and discretionary product launches. A key part of this role included managing the relationships with the Portfolio Management & Trading teams as well as senior Middle Office stakeholders. In addition to that William was a lead stakeholder in the selection process for appointing an outsourced Custodial service provider for a new product line.

In moving to Sydney William took a role as Fund Services Product Manager where a core function was to lead the response to Custodial RFPs.

Following his career in the industry William moved into consulting where he has led the search, selection & implementation of various platforms and the establishment of associated operational processes across the Australian asset, wealth and superannuation industry. This has included the implementation of Matrix and establishment of the data governance framework and middle office function. Most recently he is leading the program to define & deliver an investment platform for a major superannuation fund.

William holds a Bachelor of Commerce (Honours) from the University of Edinburgh.

Feb 08, 2024

The following blog post is one in a series of Cutter 2024 Trends, Themes, and Predictions that provides insights into industry challenges and considerations for firms in 2024 and beyond.

Operations has always been seen as a cost center for the organization, but it’s also a critical enabler for the front office and key contributor in meeting regulatory compliance. Looking ahead to 2024 for operations, we see an emphasis on supporting evolving investment needs through both tactical and strategic improvements via constant examination (and reexamination) of processes, automation, and review of supporting operating models to validate effective sourcing arrangements. Regulatory change will also influence allocation of investment and project resourcing for operations teams.

A continuing trend from 2023 is operations’ consideration of sourcing options. Outsourcing functions to service providers or leveraging vendor-managed services provide agility to the operating model and access to broader, more experienced resources. Opportunities exist for insourcing as well, especially where firms desire to have more control. Insourcing functions that have complex regulatory influence may be good candidates. We have seen asset owners insourcing more asset management, bringing into focus functions that support co-investment and direct investment. Additional examples of current priorities are ensuring readiness for T+1 settlement, improving derivatives management, and supporting alternative assets.

Optimizing the sourcing model extends beyond merely choosing a provider or selecting a managed service offering from vendors. Operational teams face the ongoing challenge of establishing an efficient and effective retained resource footprint that provides oversight without redundant functions. This necessitates a robust framework that encompasses strong service level agreements, diligent key performance monitoring, and a well-defined service model to fully leverage the value of the relationship. To enhance operational efficiency, it’s imperative that firms conduct regular reviews of services, costs, and workflows, facilitating continuous improvement in operations.

Tighter settlement timeframes impact the trade life cycle, including cutoff times from custodians, and increase the need for efficient end-to-end processes, especially exceptions handling. Teams have been actively preparing and working with custodians and counterparties for T+1 settlement, but some are still sorting through lingering issues with automation and the ancillary functions such as handling FXs, securities lending/borrowing, and corporate actions.

Most buy-side firms managing derivatives are just coming out of uncleared margin rules (UMR) compliance (phases 5 or 6) and can now focus on reducing risk and improve efficiency by advancing collateral management capabilities and envisioning collateral optimization opportunities. Cutter’s 2023 Benchmarking survey on this topic found that more than half of respondents (53%) cited collateral management as a top challenge, while the same percentage identified collaboration among the front office, operations, legal, and regulatory experts as a top challenge related to derivatives management.

Collateral optimization means making the best use of held assets to identify and deliver required collateral in the optimal way (least cost, least hassle, best return). As cash has become more expensive with rising interest rates, firms are looking to use other types of assets as collateral, including securities. Yet, this also requires more advanced capabilities such as measuring the cost and risks associated with collateral and more insight such as ESG data for securities used as collateral.

Operations teams are also examining support models and software opportunities for alternative investments, particularly to support private investments, which have historically patched together disparate data, struggled with challenging valuations, and relied on more manual processes.

These examples highlight that compliance with industry regulations deadlines and seeking opportunities for efficiency and alpha remain front-and-center on operations’ radar. As firms explore opportunities to leverage AI and advance their data-driven analytics, operations-related insights may expose further opportunities beyond 2024 ─ whether it entails larger efforts like restructuring to support more effective outsourcing and retained operations, enabling greater support for alpha generation opportunities, or a continuation of identifying and tactically remediating recurrent operational issues.

To learn more about this topic, or speak with a research analyst or consultant, contact us at [email protected].