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.
Fiduciary responsibility is nontransferable. You can outsource a service or a function ─ however, you cannot outsource the responsibility. You are always accountable for service delivery, and that’s why finding the right match is so important.
Finding the right outsourcing provider is not easy and involves much more than comparing RFP responses and watching videos. Sure, these steps can help you refine your shortlist, but a lot more is required to appropriately screen your providers and find the right match. You want to find a partner that understands your business and speaks your language. You need a provider whose strategic direction aligns with where you want to be in the future. The partner selection process focuses on the strategic benefits the service provider brings to the table and its fit for your firm’s future-state operating model.
You need to understand the provider as well as you understand your organization. You need to be clear on the provider’s:
- DNA – what is its history? What drives the provider?
- Clients – how similar is your firm to the provider’s current client accounts?
- Service Locations – which regions is the provider in?
- Service Model – who actually does the work?
- Road Map – does its product and service plans align with your future needs?
Outsourcer DNA
Some providers have a technology background, while others come from a service background and inherited their technology through acquisition. One is not necessarily better than the other, but a provider’s background may influence your perception of its capabilities and the services it offers. Some providers started their company more recently when the tools and technology capabilities available are vastly different, and this could also have implications for their platform design and integration capabilities.
Some solutions aim to serve a firm’s fundamental investment management needs, while other providers focus on meeting the needs of the most complex clients. For example, when it comes to multi-asset strategies, some solution vendors have been supporting private assets and complex derivatives for decades, and their clients may include some of the more sophisticated private asset managers or allocators (i.e., pension funds, endowments, etc.).
Yet, while a solution vendor may not be able to handle sophisticated investment vehicles, it may partner with other solution providers that specialize in complex assets. A platform with an open architecture means the vendor no longer needs to be everything to everyone ─ it only needs to connect your firm with the right solutions to meet your needs.
And with a curated ecosystem, the outsourcer can also eliminate some vendor risk by connecting you with new providers that can handle the complexity of new assets and investment strategies and are sourced by a trusted brand. When contracting with specialty vendors through a provider, remember to negotiate your contract so that your model remains optimized even if you change providers.
Outsourcer Clients
The key is not to determine if the provider has other clients in your peer group of similar size and complexity, but at what proportion. You want an outsourcer familiar with working with firms like your own to leverage support in meeting regulatory obligations. The outsourcer needs to not only understand your business, but also provide expertise for your specific needs and use cases and be able to support ongoing change requirements. Find a partner that’s already helped a client work through the challenges that you are facing. For example, if you’re the provider’s first insurance firm, it might not be the best option to handle your investment accounting.
“Follow the money,” as they say, and review the outsourcer’s client profile to understand how it invests and allocates its staff. How does its relationships and client support model work to support both strategic and day-to-day needs? Is the provider heavily resourced in product development, change management, technology and data, or marketing and sales? How a provider spends its resourcing budget tells you a lot about how it operates.
Outsourcer Service Locations
The provider may offer a comprehensive range of middle- and back-office services in your local region, but other regions may not offer the same services. Just as the types of firms the provider serves will affect its understanding of your business, its geographic presence also will affect its understanding of your regulatory or other jurisdictional requirements. Under current data privacy laws, as a client you will need to be comfortable with where your provider stores your data.
Most service providers leverage a global model with operating hubs across the globe. Some support centers may be organized as large processing centers to support clients 24/7. Other support locations may be a “center of excellence” for specific expertise. It’s important to understand who will be responding to your needs, where the support is located, and the associated service-level commitments.
It’s also important to understand how the provider will perform your functions, the service location, and the client interface to ensure it works for your model. It is preferable to have local client service teams within your region to sponsor your needs across the broader organization. Having boots on the ground does matter, and long-distance relationships typically don’t last. Find a partner that understands your business and the primary markets that you operate in.
Outsourcer Service Model
The partner selection process will require you to work one-on-one with the provider to get a feel for the relationship. It’s part of an assessment by you and the vendor as to whether a long-term relationship is viable. You want to determine if the work is performed by the vendor or a contracted third party, whether it is performed onshore or offshore because attrition could cause disruption, and you should find out how automation is used because it will help reduce the risk of the operational errors you’re trying to mitigate in the first place.
The principles of the sales pitch need to be validated and committed to contractual terms, and, in the end, the right fit may be determined by those working relationships. Client requirements are evolving to include strategic partners. Your choice of provider should consider its ability to work effectively with strategic partners to deliver on the operating model.
Outsourcer Road Map
It’s important to validate that your strategic roadmaps are properly aligned, and there is evidence the service provider reinvests into its business. If the service provider’s road map is focused solely on the middle- and back-office operational functions, but your vision for transformation is much broader, the provider might not be the best fit. And try to separate the sales pitch from what is currently in production. While those future enhancements might be enticing, you may not want to be an early adopter and be better off taking a phased approach until those services and capabilities have been battle-tested.
Want Some Help?
Cutter Consulting can help you evaluate outsourcers using our comprehensive evaluation criteria and frameworks to support effective decision-making across stakeholder groups. We identify and document model and services gaps and provide the data (qualitative and quantitative) needed to make the right decision for your firm.
We recently published our report on Outsourcing Solutions. Cutter members can download the report, read the Key Insights, and watch the event replay. An executive summary is available to anyone.
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