Fund Operator: What are some of the operational improvements and advancements that we’re seeing in the fund management industry?

Marty Burns: Scale is the watchword for fund industry operations right now. Fund families are looking at how they can build scale to realize efficiencies and work within the confines of the fee pressure that is currently trending to maximize their output for a reasonable price.

"Scale is the watchword for fund industry operations right now"

This includes integrating platforms and breaking down internal barriers to construct more cohesive and collaborative units, such as creating middle- and back-office systems that are working in conjunction with one another.

All of this works to the benefit of shareholders who enjoy an incredibly diverse array of fund options at competitive prices across the industry.

FO: What are some of the key changes in technology that the industry is seeing?

Marty: This is an exciting time for technology in the fund industry operations space. Advances in robotics and Artificial Intelligence (AI) align with the drive to create scale and operational efficiencies.

Robotics systems are being deployed to increase the speed and accuracy of processing, and they work 24/7.

"Cloud services have become an enterprise strategy for fund shops"

Though AI is still developing, it will be interesting to see how it could integrate with robotics to maximize the output and efficiency of organizations internally.

Cloud services have also become an enterprise strategy for fund shops because its adaptability provides much-needed flexibility, especially during peak demand times.

FO: How are the roles of the Chief Operating Officer and Chief Technology Officer intersecting?

Marty: As fund complexes develop more efficient and effective use of technology, Chief Operating Officers (COOs) and Chief Technology Officers (CTOs) must be on the same page to avoid a disconnect in the organization’s technology strategy.

More and more the use of technology solutions to improve operations is an enterprise-level conversation such as the use of cloud computing and addressing cybersecurity.

This approach is a critical component of the drive to create cohesive and collaborative units that focus on maximizing the value of fund offerings for shareholders.

FO: What types of services and infrastructure are funds of all sizes considering over the next few years in order to stay competitive?

Marty: Funds' need to understand that data—and the ability to analyze data—have become paramount. In the past, fund shops generally used data to analyze investments.

Now data are being used across organizations in a variety of ways—for both internal and external purposes—including to determine trends and user preferences.

"We’re in a better position to analyze trends, understand demands and assess impacts on products and clients"

Because of the advances in robotics and AI, and the fact that we now receive data in almost real-time and from many sources, offices can look at data in ways they couldn’t before. We’re in a better position to analyze trends, understand demands, assess impacts on products and clients, and learn where support is needed.

FO: What type of third-party technologies and services are helping smaller fund managers compete with larger funds?

Marty: Compliance work is critical, resource intensive work, and that can be challenging for smaller funds. Many small managers are turning to multi-series trust structures to help solve compliance issues and alleviate demands on advisers by providing all administrative and accounting services, letting the advisers focus on money management.

Under the trust structure, you’ve got one central organization supporting several smaller advisers, helping to achieve the operational scale that those small advisers couldn’t get on their own. This, in turn, helps smaller funds be more cost effective and to focus on the investment of assets.

This article is taken from the research report Fund Technology, Data and Operations, US 2019. To download the full report click here.

 

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