November 24, 2017 | Bill O’Toole, SVP, Client Advocacy & Onboarding
The following was originally printed in Fund Technology, November 3, 2017:
Technology is an increasingly essential underpinning to the long-term health and success of any investment management firm. In fact, a recent KPMG report identified technology as one of the factors that creates a more flexible operational environment. So, it’s no wonder that more firms are enhancing their existing technology systems, or converting to new technology platforms altogether, as they seek to stay ahead in an increasingly competitive market. The benefits of technology investment are clear – easier firm-wide oversight, quicker data delivery, more seamless integration with additional outside service providers, increased speed to market, seamless scalability with growth, allows greater focus on core competencies, the list goes on.
The conversion process, however, isn’t always as clear cut. The decision to enhance or onboard new technology is significant and adds short-term complexity which can ultimately create both financial risk – impact to the bottom-line – and reputational risk – impact on the organization. However, complexity and risk don’t necessarily go hand-in-hand. In fact, using the right approach, investment management firms can overcome any risks, or avoid them altogether.
Having experienced years of successful conversions both in-house and as an external operations partner, here are what I believe to be the critical, foundational issues for ensuring a smooth on-boarding process and laying the ground work for future success when it comes to technology innovation.
- Set the Scene – Assumptions, preconceived notions, loosely defined terms and oversimplifications have no place in a technology conversion. The process requires solid teamwork between all internal stakeholders (IT, operations, sales, etc.), and any outsource providers or partners necessary, to establish exactly how the conversion will work, and what resources are required from each party.
- Both sides should demonstrate an understanding of your firm’s procedural matters, with documentation.
- Establish communication expectations – who is your project leader, what are milestones for progress?
- Develop common understandings of terminology. E.g: Make certain that your technology provider understands what you mean by a “model account” and how it fits in your process.
By using agreed upon language, process, and measures of success, fear of the unknown is eliminated. Setting the scene considers all of the details, and each party spends as much time as necessary to ensure everyone understands what is expected and required.
- Set the Standards – Each conversion runs differently based on a firm’s operating model, priorities and preferences, and those need to be fully understood and locked-down. Be certain to include all information, especially for exceptions. Many conversions are delayed from full execution because of things like, “All of our accounts follow this process, except for…”
- Who are the trade parties?
- Who are the custodians?
- Are fund accountants or recordkeepers involved?
- What are the client-facing reporting needs?
- What internal reports are required for oversight?
Setting the standards happens through in-depth, in-person meetings with key stakeholders and subject matter experts. The desired result must be fully understood and agreed upon.
- Set the Pace – Evaluate whether to approach the conversion timeline as date-driven or functionality-driven. Some examples of which is right for you may depend upon whether the conversion is being driven by an expiring technology contract, or if it is due to a firm-driven goal to improve operational efficiency or entering a new distribution channel.
- Is there an expiring contract? Design a base-to-full functionality plan that meets the expiry with a just-in-time install, first agreeing on the base-level functionality, then prioritizing the delivery of additional features.
- Is there a blank-slate opportunity, opening a new channel with provider-specified best practices? In these cases, work in unison toward a defined launch date.
- Teams that prefer a fully-featured installation and are not under deadline pressure may want to meld current procedures with technology-assisted operations standards to design and deliver an “ideal” conversion.
In all cases, complete information regarding dependencies and desires must be on the table from the get-go.
Operational risk is inevitable during change, and change occurs daily in the investment management space. We know because we’ve helped clients overcome it. But we’ve also seen the long-term benefits – like a firm that leveraged technology innovation to facilitate entry into a new channel and grew assets by more than $1 billion, and accounts from 0 to 4500, without adding any internal infrastructure or personnel. Or another firm that was able to unify operations across multiple investment management groups, multiple asset classes and, ultimately, across multiple regional offices
Technology is firmly rooted in business practices and processes, and can unlock growth potential in addition to streamlining operations. The so called, “Age of Information,” has transformed into an “Age of Opportunity” where investment management executives who take the time to successfully navigate the short-term complexity inherent in technology conversions are poised to reap long-term benefits.
SVP, Client Advocacy & Onboarding
Bill O’Toole, Archer Senior Vice President, Client Advocacy & Onboarding, joined the company in 2000. With more than 20 years’ experience supporting investment managers, Bill works with Client Experience and Operations to ensure an efficient and productive transition for new Archer clients. By collaborating with clients, Bill helps them meet their goals through features and services available across Archer's solution.
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