As the debate around data management outsourcing evolves, current pain points and potential solutions for asset managers are changing and should be monitored, said Stuart Gunderson, Executive Director, Chief Operating Officer, Seilern Asset Management.
"The question is: where are we now? What are the pain points for data management now?”
In a recent Clear Path Analysis report, written in collaboration with Arcesium, several industry leaders in the operations sphere – including representatives from Northern Trust, Rothschild and Co Asset Management, and Federated Hermes – discussed the trends they were seeing in data management. Pain points proved to be an important topic of discussion as well, with more consensus than disagreement.
“[It’s] a discussion that has been around for about ten years now due to the move to big data and data warehouses becoming frequently discussed in the industry,” said Gunderson. “However, the debate has evolved since, and the question is: where are we now? What are the pain points for data management now?”
The first significant pain point, he said, is client demand. “Boutique firms face multinationals that may have data management solutions while others do not – which means they’re being offered something from one supplier and not another.”
Client data can include the views of individuals being reported to or doing the reporting, including specifics as to their views on the process, he said. It might also include specific stock holding performances – particularly when looking at attribution or attribution per client – as well ways to gain portfolio listings for the investment manager.
“The pain point from that comes from the view about then releasing the crown jewels – which is your portfolio – to their client base for them to do their analysis.”
Over the past few years, the ESG data sphere has become especially relevant to these questions, given the lack of quantifiable data that has long plagued so-called sustainable investments. For example, a Morgan Stanley 2022 report said that eight in 10 asset owners were lacking ESG data to adequately measure their investments impact.
“The pain point from that comes from the view about then releasing the crown jewels – which is your portfolio – to their client base for them to do their analysis,” Gunderson said. “Once they have that, they can do whatever they want with that information, essentially, even if you put Non-disclosure Agreements into place; those don’t always preclude them from using this information responsibly.”
Other pain points Gunderson mentioned as worth monitoring included those around complicated data sources and procedures – alongside the aforementioned patchy data – which can equal time-consuming processes. “We look at our investment data so billing investment data can then be utilised by the investment team for making decisions and for ESG screening and sustainability metrics,” he said.
According to a Northern Trust survey, collecting and analysing ESG data has been identified as a central challenge for institutional investors.
The study said that 89% of asset managers and 79% of asset owners in EMEA and the Americas found "collecting and analysing data" to be one of the main difficulties when it comes to incorporating ESG into their investment processes.
The first [usage for the data] is for board and management reporting: utilising this data for staff, risk, and business management whether that’s meeting objectives and strategy.”
Another challenge was operational efficiency around data usage. “The first [usage for the data] is for board and management reporting: utilising this data for staff, risk, and business management whether that’s meeting objectives and strategy.”
As a result, data had to be presented in certain ways for compliance and ease, which could mean processes took more time and were more sensitive.
Gunderson concluded by saying that from a purely operational perspective, there needed to be a smoother link from back to front offices, with cost reductions incorporated throughout.
To see more of this interview, and read the report in full, please click here.
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