Fee pressure on asset managers is causing them to double down on key areas of improvement in the performance measurement and attribution and risk space, says Simon Robinson, head of product management, RiskFirst, during a recent FTF News video interview.
The risk management technology provider, which serves asset owners, asset managers and consultants, has conducted a great deal of analysis to find two areas of major challenges: the use of different models and approaches among stakeholders; and the need for faster performance operations.
When asked about the factors driving change for these problem areas, Robinson says that “the first is continual fee pressure” on asset managers. “It’s been around for a while but it just keeps coming.” The second factor is technology that “just continues to ramp up and improve over time.”
These aspects are driving asset managers to redouble their efforts to find ways to boost efficiency.
“So, communication between front office and middle office is critical,” Robinson says. “We’ve heard stories about performance teams/middle office creating huge a PDF report. You put it on the front office desk and it doesn’t jell with what they’re thinking and they just throw it away. That’s clearly not efficient for an asset manager and that’s going to come through in problems with fees. That’s generating some conversation.”
Those conversations will have to focus how asset managers can “effectively engage with asset owners, really insuring that that asset owners are understanding what the asset managers are doing for them and why,” Robinson says.
Once asset managers get a clearer idea of what their clients want, it may help with streamlining operations. One of the first things on the “to-do” is likely to be dealing with the many different models and approaches used among different stakeholders such as those used by front office, the middle office, the asset owners and consultants. The diverse models generate “a lot of need for reconciliation … and it really drives inefficiencies,” he says.
The second major area of improvement is “really, speed,” Robinson says.
The company has heard about the great “need for batch processes, overnight runs in order to generate the analysis for attribution,” he says. “We think that’s something, which apart from the time taken to do that analysis, it actually drives how that analysis is then used. We think that there’s something which can be done there. Finally, reporting. Attribution has multiple stakeholders who are interested in that information. Most of them need to look at that information and process it in different ways. So, finding ways to convey what’s important to the different stakeholders and report that in an effective manner — that’s pretty critical as well.”
The full interview took place during the Performance Measurement Europe 2018 conference, September 26 and 27, in London.
FTF News interview Credits:
Videography and editing: Timothy Foster Photography & Film
Interview conducted by: Maureen Lowe, president & founder of Financial Technologies Forum (FTF)
Co-Producers: Sarah Hathaway, vice president, Financial Technologies Forum (FTF) and Eugene Grygo, chief content officer for FTF.