Family Office
Complexity calls more technology: asset managers
Regulatory demands, product innovation spurs increased technology
spending. Already heavily reliant on technology to keep their
keeps their businesses running in an increasingly complex and
competitive environment, asset managers are planning to spend
even more on operations- and practice-related equipment and
services through the coming year.
Last year, technology expenditures accounted for around 13.6% of
asset-management firm expenses -- an average outlay of about
$11,900 per employee, according to a survey by the Investment
Adviser Association (IAA), a Washington, D.C.-based association
of registered investment advisories and SEI , an Oaks, Pa.-based
investment processing and operations provider. Nearly two thirds
of the firms polled said they plan to increase technology
spending in 2007 in a bid to streamline operational
efficiencies.
Differentiation
"Asset managers realize that operating systems aren't simply
productivity tools, but a source of competitive advantage," says
the IAA's executive director David Tittsworth. "They are key
enablers of business success, providing the means to improve
investment performance, build relationships with clients, and
expand the range of products offered."
Spending is on the rise as managers scramble to keep up with new
legal, regulatory, and compliance requirements in addition to
increasingly stringent accounting and reporting procedures. The
move from pooled investment complexes to more personalized
investment products for well-to-do private clients such as
unified managed accounts and multiple-discipline accounts call
for many managers -- the IAA and SEI survey says 40% of them --
to have two or more distinct operational systems on the go.
Paul Schaeffer, head of strategy and innovation for SEI's
Investment Manager Services division, says that operations
infrastructure and technology generally are becoming "key levers
for competitiveness" through product innovation, improved cost
control and the ability to provide "differentiated" client
experiences. "Companies in other industries have already shown
how to win by competing on capabilities," adds Schaeffer. "Now
asset-management firms need to think about applying this
principle to their business as the back office becomes a driver
of front-office functionality." -FWR
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