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09 August 2022

What’s Next for Investment Operations?

Firms are confronting a permanently changed working world, full of new ideas about the physical workplace itself and digital collaboration. Even as variants continue to spread and health officials urge caution, much of the working world seems ready to put the pandemic in the rear-view mirror. Yet the post-pandemic business environment looks far different from the one that preceded it. The lockdown may be (mostly) over, but many of the changes in the way we work are likely to persist. In the investment arena, the disruptions of the past two years prompted many firms to rethink their operating models and explore new, more efficient ways to work.

In our new white paper, “What’s next for investment operations?” we explore one notable outcome of the pandemic – the acceleration of the trend toward managed services. Firms that were already outsourcing their technology and some operational activity found the transition to remote work fairly smooth, while many firms that were on the fence about outsourcing decided it was time to move. Now, as firms try to figure out the best way to structure their workplaces going forward, they are confronting a profound change in the employer/employee dynamic and attitudes about the value of human capital. They are questioning the need for excessive office space, much of it occupied by their on-site hardware infrastructure. They are looking for the right balance between remote work and in-person, highly focused team collaboration. 

The managed services option may be the answer. In this white paper, we identify five key drivers toward managed services in the post-pandemic environment:

  1. The Changing Workplace: Multiple industry studies have concluded the investment management workplace moving forward is a hybrid model. Managed services enable firms to accommodate any degree of remote work they desire, with greater confidence in the security of their systems.
  2. The Talent Strain: High staff turnover and a shrinking pool of qualified employees in investment management have been widely reported. These issues are especially acute in operations and IT. Managed services can alleviate much of the strain, adding depth of expertise and stability to mitigate key person risk.
  3. The need for competitive agility: Investors are looking for greater diversification and new opportunities and firms are responding by diversifying their offerings. Wealth managers offer private clients access to alternatives. Hedge fund managers are launching private equity funds. Institutional asset managers offer customized separately managed accounts to high net worth individuals. All of these efforts entail a substantial re-tooling of operations to support more varied asset classes and strategies. Managed services with a cloud-base operational infrastructure give firms the agility and scale to adapt their offering more quickly and easily.
  4. The need to reduce operational risk: As the marketplace becomes ever more dependent on advanced technology, firms face pressure from regulators and investors to demonstrate that they have strong operational controls. This task can be much easier with a managed services provider whose infrastructure undergoes regular third-party auditing and testing for both efficacy and security.
  5. The increasing flexibility of managed services: In past decades, the view of outsourcing was that it forced firms to conform to the provider’s offering and left little room for customization. Advancements in cloud technology have reversed that scenario 180 degrees. Managed services clients have more options, control, and operational visibility than ever, and the migration process is far less complex or disruptive.

    The fundamental case for managed services remains the same: firms can get out of the technology business and focus more resources on their core business. What has changed is the increasing comfort among investment professionals, employees, and clients with digital interaction and cloud-delivered services, whether at work or in their everyday lives. If your firm is navigating shifting workplace models, employee values, and competitive challenges, download our white paper for a deeper dive into the managed services option.