Insights from IMpower FundForum 2024: Top COOs recalibrating the operating model for the future

Generating operational leverage and managing costs, sustainably

Cost control and generating operational leverage is top of mind according to Alison Hollingshead, Investment Management Chief Operations Officer at Jupiter when it comes to the need for a new operating model in the asset management industry.

In the panel, moderated by Bill Gourlay, accompanied by panellists Alison Hollingshead, Jupiter; Michael Germano, COO and Head of North America, Newton Investment Management and Tim Goodhind, CRO of FE fundinfo, the objective of cost control, cost advantage and cost reduction quickly became core to the discussion, while also meeting fast-evolving and more demanding and sophisticated client needs with increased personalisation.

Sentiments from the two asset managers were shared and further supported by observations made by Tim from client conversations, that organisations were constantly challenged to do more with less and considerable transformation in data and technology were critical to enable and achieve asset growth and operational resilience.

Tim drew parallels from his past experience in the banking industry, where regulations forced a catalyst for change, particularly with respect to open banking. “Similarly, if regulators started asking questions about data lineage to asset managers, it would certainly spur them into action.” The fragmentation of suppliers and ongoing consolidation in the industry also proved to be a challenge, whilst also keeping up with changing regulations.

AI and solid data foundations

AI and emerging technologies were bound to be hot topics at FundForum 2024 and the panel leaned into the discussions.

Michael said AI wasn’t all new but the difference is that we are now talking about building more sophisticated models and shifting it from investment operations to delivering customisations to clients. Learning models feed off data inputs so any knowledge or insights drawn from it can only be as good as the quality of the inputs. All panellists agreed, solid data foundations need to be in place to be able to leverage AI effectively.

Tim, from a data vendor’s perspective, shared the critical need for asset managers to partner with their vendors to support their data management and deliver long term value.

In response to the question of forgoing control to outsource and gain operational efficiencies, Michael simplified the notion, “keep what’s core (to your value proposition), and outsource what’s not.”

Alison further cemented, “you can’t outsource your problems. You need to get your own house in order first.”

Asset managers are sitting on decades worth of valuable data – it’s now a matter of cleaning it, setting standards, putting the right infrastructure in place to manage it and building on layers of intelligence to extract actionable insights.

Client centricity isn’t possible without digitisation

Clients are becoming more sophisticated and more demanding, and rightly so. The industry is admittedly behind. In order to respond to client needs, asset managers need to be digital at the core, operate with an open architecture and support hybrid asset classes.

In traditional active management, clients expect service in return for paying a premium, and are seeking more personalised and tailored solutions to meet their investment needs. Delivering on these expectations require digital transformation and systems that unlock data and client insights.

Alison called out, “there’s a need for bespoke solutions, and we need to be able to tweak investment strategies to respond swiftly to meet our client needs.”