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Finding Opportunity in the Face of Regulatory Uncertainty and Investor Demand

In this special series, we’re reporting on the highlights of the RIMES II Client Conference EMEA 2018, which took place in London on May 2.

In today’s post, Steve Cheng reflects on the event’s opening panel, “The impact of key industry trends on investment management operations.” The discussion shifted focus from the traditional data function to consider what is keeping COOs up at night and how they can leverage data as a strategic KPI.

 

Navigating the Perfect Storm

 

At RIMES, we speak around the clock with data managers at our global buy-side clients and are well-versed in the challenges they face when it comes to the growing storm of regulatory requirements and demand from increasingly more savvy investors. But what about those who lead these organizations – the COOs and heads of investment management operations? What is keeping them up at night?

In a panel moderated by Victor Anderson, Editor-in-Chief of Waters Technology, we invited Lee Toms, Global Head of Investment Operations, Legal & General Investment Management, and Mike Tumilty, Director of Operations, Aberdeen Standard Investments to discuss the specific challenges keeping them up at night and how they are responding to industry change while continuing to scale. Our own Ewan Scott, Head of Sales EMEA & APAC, also joined the discussion.

The panel agreed that the impact of regulatory demand on operations is certainly a key concern. They must reconcile the need for regulatory compliance with the often-conflicting demand to support scale for business growth. Further, resources focused on regulations are often diverted from growth strategies – not to mention, as the panelists pointed out – the lost opportunity costs with spend on compliance rather than on other priorities.

One could argue, however, that focus on regulatory compliance improves transparency and greater transparency helps firms grow. After all, transparency is a big selling point in a market moving from institutional clients to retail investors. This leads to the second key point raised by the panel – the move, particularly in Europe, from institutional clients to retail investors.

 

“What You Report to the Regulators Today, Your Clients Will Want to See Tomorrow”

 

As privatization in state and large corporations are leading to a significant shift in the way pensions are provisioned, the responsibility is being pushed to the individual investor away from the state and employers. With the risk now increasingly falling on the shoulders of the end client, they are becoming more-informed and demanding transparency into investment performance and risk decisions.

As one panelist pointed out, “what you report to the regulators today, the clients will want to see tomorrow.” Just as the regulators require more information around the investment process (e.g., how and where are investments being directed? What risk measures have been taken?), so too are individual customers demanding the same level of transparency. Add to that, parallel investor/regulator demand for differentiated alternative investment products and strategies, such as ESG, plus fee pressures on fund management.

Yet, through the clouds of this perfect storm, we see strong rays of opportunity. If investment firms are approaching this creatively, the work that must be done to ensure regulatory compliance can also deliver the transparency that clients demand, ultimately helping to drive business growth.

So rather than looking at regulatory requirements as a burden, why not treat them as an opportunity to address transparency for investors too?

 

Data as a Strategic Imperative

 

With this hopeful point of view, the conversation returned to the role of data in all of the above. After all, this was a RIMES conference!

As data underpins all aspects of an investment firm’s operations, the panel agreed that management of data must be treated as an integral part of data operations strategy and planning. As one panelist noted, “data strategy is key to enabling business growth, whether it’s organic or by acquisition.”

The conversation rounded out with these senior heads of operations in agreement that data management should be considered a strategic priority, with data quality top at their list of concerns as a key KPI.

 

Assess Your Data Management Challenges

 

As the volume of data you must ingest and process just keeps growing, your need for more effective data management will keep growing too. The RIMES Managed Data Services are designed to deliver a quantifiable and sustainable improvement in business performance by relieving clients of the burden of data management. Learn more about our award-winning data management services for benchmark, reference and market data – or contact us to discuss your specific requirements.

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