George Antonak, President, Thrift Financial.

Andrew Putwain: Smaller fund management firms are often nimbler and can find change easier – what recommendations would you give to Chief Operating Officers (COO) at larger companies for replicating this?

George Antonak: The nimblest large organisations have a close relationship with those individuals that are on the frontline, with customers or prospects. Senior leadership at a large organisation is often not involved with client relations; they might not even read sales reports. So, more senior leaders at large firms need to follow the leadership of smaller firms. They need to get more involved, listen to the prospects, and listen to their customers. I am talking about involvement like they have with sell analysts in supporting their public market’s value.

Leaders need to be more involved in client relations, but unfortunately, it is a rare day when they pick up the phone or meet with clients and prospects to get a sense of client interests.

"Small organisations have a client closeness that is challenging for larger firms to replicate. There is proximity to clients and everyone in the organisation that allows them to hear and share information, which is rarely the case in large organisations."

Large company leaders often get stuck in their ivory tower’s functional areas. That creates a detriment of not feeling the direction of the breeze in the market and knowing when to redirect the organisation or pull the plug on something that is not working, whether that is product structure, or the pricing approach not being desired by the marketplace.

Small organisations have a client closeness that is challenging for larger firms to replicate. There is proximity to clients and everyone in the organisation that allows them to hear and share information, which is rarely the case in large organisations.

Andrew: Issues of scalability are often at the top of a COO's mind – what drawbacks/benefits do you see the smaller model having in this area?

George: Over the last 25 years, the advantage of scale has been significantly diminished – that is not to say more prominent players don’t have cost and resource advantages – but the role of technology combined with the ability to outsource has significantly reduced the strategic benefits of scale. Smaller organisations can easily outsource selected areas of their operation - fund accounting, pricing services, and technology. Partnering has given small organisations the ability to scale their organisation cost-effectively and compete with the big boys.

"You can find a few large companies that insource most of their operation, but those are likely to be the extinct Woolly Mammoths over the next several decades. It is hard to successfully compete if you don't outsource and maintain a ‘Best In Breed’ approach from a technology and service vendors standpoint."

Today, most well-positioned large and small firms are taking advantage of technology and outsourcing. You can still find a few large companies that insource most of their operation, but those are likely to be the extinct Woolly Mammoths over the next several decades. It is hard to successfully compete if you don't outsource and maintain a ‘Best In Breed’ approach from a technology and service vendors standpoint.

Andrew: Are there specific benefits smaller companies can offer clients that could be lost in a larger company?

George: The benefits go to client engagement, adapting to market changes, listening to clients’, developing products, and adjusting your products to clients’ needs. 

"Investment management has proven to be a highly fluid industry, with large and small players moving up and down the industry league tables. Only a handful of the top 25 firms of 25 years ago have maintained the position today."

 Over my career, I have seen many large companies turn down work because of the challenges or concerns with customisation, a business that regularly goes to a smaller firm. If you are turning down business because it doesn’t perfectly fit your business, but it’s going to smaller companies, it is time to re-assess your business structure and client focus.

Investment management has proven to be a highly fluid industry, with large and small players moving up and down the industry league tables. Only a handful of the top 25 firms of 25 years ago have maintained the position today. Successful small firms listen closely to their clients, adapt to client feedback, and grow.

Andrew: As companies grow, which area would you recommend they focus on so as not to lose their customer service focus?

George: The focus needs to be on effectively managing your business footprint up and down as the business expands and contracts across market and business cycles. The challenging market we have now will lead too many organisations to be reactionary, scale down their business too dramatically, and do so in the wrong areas. Successful firms will manage their business footprint across these market cycles without losing their culture and client connections.

 

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