Buy-side performance teams suffer distinct lack of automation

Buy-side performance teams are leaning too much on manual processes for their operations, according to the results of a recent industry survey.

Over reliance on manual processes
An IT consulting firm conducted the poll in November 2014, and then Buy-Side Technology reviewed the results before they were released by a software firm that focuses on performance, attribution and risk. The survey participants identified several areas where they rely too heavily on manual processes, including:

  • Finding and resolving issues
  • Loading and validating source data
  • Distributing performance figures to internal and external clients

“The survey participants identified several areas where they rely too heavily on manual processes.”

Scalability concerns
Buy-side firms are worried about this potential risk at a time when they are already coping with rising cost pressures stemming from the growing needs surrounding benchmark data. Many clients of asset managers are demanding that institutions use a wider range of benchmarks to evaluate their performance, in addition to ones that have been customized.The survey also revealed concerns about the scalability of the systems used to support performance, the media outlet reported. In the poll, respondents indicated their worries surrounding whether they will have the resources needed to support their data – which is constantly expanding – three years from now.

Cost pressures
Many asset managers have also been struggling with higher compliance expenses. These buy-side firms need to spend more on the appropriate staff than they did previously and must also adhere to more stringent reporting requirements.

In spite of these various cost pressures, the survey participants revealed it was not particularly challenging to budget for the systems required to support performance, according to the news source. The respondents articulated this ease at a time when there are many tales of institutions that put a substantial portion of their IT budgets toward compliance and regulatory projects.

Buy-side performance teams are overly reliant on manual processes, an industry survey found.

Uncertain compliance environment
The current regulatory environment – and its associated costs – could easily take some twists and turns in the coming years. Buy-side firms are currently operating within a complex set of rules and regulations. Lawmakers and regulators have enacted several landmark reforms in the years following the financial crisis.

The resulting increase in new rules has made the regulatory landscape more layered and complex than it was before. Additional uncertainty exists as a result of industry groups and companies challenging specific facets of the post-crisis regimes through both lobbying and legal action.

Proactive risk management
Any sharp changes in the regulatory environment could increase compliance costs and leave fewer resources available for performance teams. This development might actually place additional pressure on buy-side firms to automate the relevant processes.

To be ready for situations like this, asset managers might benefit from managing risk proactively. If they have the resources needed to do so, making the required investment to automate now instead of later might prove to be a great move in the long-run.

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