The asset management industry entered 2020 with a great deal of optimism.  Sadly, the trials and tribulations of this year will have impacted this perspective.

Despite this, the smartest firms will continue to invest in their people and technology and attempt to do better than just trying to keep business as usual ticking over. 

We are already seeing a marked difference between firms that are struggling to maintain their pre-COVID status quo, and those who have forged ahead to attack the challenges 2020 offers head on.

What are the challenges?

Here, we will explore the four most pressing challenges facing the asset management industry, and provide specific examples as to how Fundipedia, a robust and flexible data management solution built specifically for asset management firms, tackles them.

Challenge 1: Achieving and demonstrating regulatory compliance

The FCA made it clear in their 2020/2021 business plan that they will take action against firms that continue to under invest in technology, particularly where this negatively impacts a firm’s ability to meet regulatory requirements.

The cost of regulatory compliance is already non-trivial, and regulatory demands are not decreasing any time soon. So it’s about working smarter rather than harder to achieve compliance.

Furthermore, any fees earned by asset managers will face increased scrutiny from both policymakers and regulators due to the ongoing push for more transparency and more comparability.  More transparency means more auditing and reporting, which unless automated costs more, and further erodes profitability.

How does Fundipedia help?

Historically firms have outsourced the oversight and distribution of data to their fund administrators. Fund administrators share data with vendors in the market (e.g. Morningstar, Refinitive etc).

While this approach is less expensive, firms who take this approach do not have control over how their data is distributed, and have no idea whether their data is being accurately disseminated across the market.

It’s usually customers that spot errors, which impacts the asset managers credibility.  Finding and fixing the root cause of the error can be incredibly time consuming, which makes for both unhappy staff and unhappy regulators.

The best long term strategy for firms to resolve this problem is take the management of data dissemination back in house.  But cost and resource is scarce, and so firms struggle to build a business case for this.

Fundipedia resolves the staff resource and associated cost issues by automating the collection of data from fund administrators, and the downstream dissemination of data. This automation ensures that firms have control over their data without an increase in headcount.  

Fundipedia flags any inaccurate or problematic data from fund administrators at the source of the problem so any incidents can be resolved quickly and efficiently.  When an issue is spotted, it is escalated via push notifications to the appropriate person in-line with the client’s unique escalation procedures. This means that problems that might have taken days or weeks to resolve can be resolved in hours.

Fundipedia also automatically reconciles the data it holds against the market, again, highlighting issues to the individuals who can take swift action to correct them.

All of this results in the control over data that firms require, without the significant headcount and cost associated with it.

Challenge 2: New competition

There is a growing body of competitors entering the asset management industry space. Due to their reach, lack of technical debt, knowledge and influence with banking alliances, several social media and technology heavyweights have the potential to provide their own compelling asset management services.

This may shake-up the structure that has been in place for several decades. If a social media giant like Facebook or Twitter team up a bank or acquire a back-office servicing firm, or payments servicing specialists like PayPal develop an operating model, their reputation among the general public could immediately make them big players in the industry.

The acquisition of Tianhong Asset Management Co. by Alipay is an early example of this trend in action. If this becomes the norm, these organisations’ resources will place further pressures on asset management firms who may not be able to provide their services at such competitive prices.

How can Fundipedia help?

Having timely access to accurate data at all levels of the business should now be the norm for those incumbent asset managers who wish to outsmart their fresh faced competitors.  

Data can be mined to produce Business Intelligence, and this in turn can help large organisations stay one step ahead of the competition.

The data itself is just one advantage, the other is workflows surrounding the management of data. 

Is your fund launch process still manual? Is the share class decommission process still a paperwork nightmare? If so, your resources are wasting time on these processes when their skills and expertise could be better used to research new products and ways to engage with customers in the hope to attract and retain existing customers.

Challenge 3: Cost pressures

Margins in 2020 are lower than in the best years of the post-financial crisis era.  This is a trend that will not change going forward.

Despite the squeeze on margins now is not the time to curb investment in technology – especially data management.  Doing so will lead to firms missing opportunities to maximise their distribution, leverage new technologies to scale and reduce overheads, and keep up with increasingly rigorous regulation and reporting needs.

How can Fundipedia help?

Fundipedia greatly reduces administrative efforts wasted on manual data processing. It cuts through the data reconciliation issues and turnaround times that emerge when Third Party Administrators (TPAs), vendors and other third parties have different systems for data provision but all need to hold identical data.

By providing a solution that integrates data across these disparate systems Fundipedia helps firms increase efficiency, reduce overheads and eliminate human error.  All of these combined dramatically reduce cost and increase control.

Challenge 4: Reliance on human resources

As well as managing increased costs, asset management firms also need to be aware of their resources being overstretched. The skills required to meet the added complexities posed by this evolving distribution landscape will test firms of all sizes.

For instance, wealth managers will now be shifting focus to dealing with the decumulation of wealth among their clients rather than accumulation, as baby boomers manage their retirements and transfer wealth to the younger generation. This will present different and increased pressures on resources in an already resource-intensive industry.

How can Fundipedia help?

With the growing pressures on asset management firms’ resource capacity, harnessing the potential of fund data management systems will be critical in minimising the impact this stretch of resources has on firms’ performance.

By streamlining and automating the collection of data and ensuring it can be seamlessly distributed in any format you can think of, be it directly into the market or externally presented in fact sheets, sales presentations and on websites, these solutions can manage all processes with minimal resource requirement.

If you would like to know more about how Fundipedia can be your first responder to ensure your data is always accurate and compliant, or how we can streamline your processes surrounding data to overcome the cost and resource obstacles in the industry right now, get in touch with our team.