Boutique Asset Managers: Protect Your Business and Reputation Against Risks

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Boutique asset managers: Protect your business and reputation against risks

Transcript of Boutique Asset Managers: Protect Your Business and Reputation Against Risks

Boutique asset managers:

Protect your business and

reputation against risks

2Investor expectations – demand for greater institutional grade controls

and high standards of conduct

3Pressure on fees – increasing regulations and investor requirements,

driving operational efficiencies to scale internally

1A highly complex web of regulatory challenges – creating

increased compliance costs and complexity for product distribution

Demands for greater transparency and frequency from regulatory

and client reporting4

Boutique asset managers face…

Industry research reveals

Investment and risk

professionals say their

risk systems are

outdated

50%

Boutique asset

managers see

compliance as the top

concern

48%

Boutique asset

managers now see

operational efficiency

as second only to

stock picking

51%

Chartis, Key Trends in Buy Side Risk Management, 2015

TABB Group, Adapting for the Future: Boutique Asset Management Post-2017, 2015

How can boutique asset managers

defend themselves against

current risks?

1.

Demonstrate

control over data

and risk

Data quality

91%

Chartis, Key Trends in Buy Side Risk Management, 2015

TABB Group, Adapting for the Future: Boutique Asset Management Post-2017, 2015

What are the crucial elements of data management?

Data management gains in importance

Risk data aggregation

87%

Data coverage

81%

Boutiques must demonstrate control over data

• Mastery over data.

• Automation of the front office.

• Institutional standards of data management, control, accountability and security.

• Streamlined, scalable operations.

7TABB Group, Adapting for the Future: Boutique Asset Management Post-2017, 2015

Better transparency

and interactivity of risk

analytics for portfolio

managers

90%

Chartis, Key Trends in Buy Side Risk Management, 2015

What are the top three areas of concern for buy-side firms, and where would firms benefit most?

Boutique asset managers must protect against risk

Improved data

granularity and

on-demand risk

reporting

87%

Multi-asset class

risk systems

79%

How should boutiques prioritize risk?

• 89% of buy-side firm respondents view risk management as an integral and crucial

component of investment strategy.

• Transparency, interactivity and improved granularity are considered to be important to

managing risk.

• 50% of portfolio managers say their priority is to provide greater transparency and

interactivity with risk analytics.

9Chartis, Key Trends in Buy Side Risk Management, 2015

There is a large disparity between participants’ understanding of the importance of risk and the reality of day-to-day execution within their firms

What is the reality?

10

60%

57%

32%

32%

18%

29%

33%

29%

24%

26%

11%

10%

39%

44%

56%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

An integral and critical component ofinvestment strategy

An aspect of investment strategy andportfolio management (driven by fund

managers and analysts)

A middle office focused activity largely in response toinvestor requirements

A middle office focused activity largely in response toregulatory requirements

A reporting activity largely driven by outsourcers or internalback office with few direct linkages to investment strategy

or portfolio management

True across the firm

True for specific investment strategies

Would not accurately describe the role of risk management in any part of the firm

Chartis, Key Trends in Buy Side Risk Management, 2015

2.

Address regulatory

demands efficiently

and effectively

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Regulation has soared to being the

top concern for boutiques,

cited by 68% of managers in 2015

compared to just 17% in 2013.

TABB Group, Adapting for the Future: Boutique Asset Management Post-2017, 2015

But it can be turned into a competitive advantage

Current technology is an obstacle for some

13

have two or more

risk systems and say

siloed systems

can be a challenge

67%

cite technology as

aiding their ability to

expand both geography

and product

58%

are looking to

technology providers

for more assistance

with compliance

obligations

50%

Chartis, Key Trends in Buy Side Risk Management, 2015

TABB Group, Adapting for the Future: Boutique Asset Management Post-2017, 2015

3.

Find new ways of

working

Are you getting the whole story?

Boutiques must demonstrate operational excellence and compliance to encourage

investors – without incurring excessive cost or complexity

They need:

• A single warehouse for storing, viewing, consuming and reporting on data – which creates

a full picture of risk and performance.

• Efficient, transparent processes and a robust technology infrastructure.

• Holistic views with visualization and intelligent interrogation through streaming analytics to

provide a unique source of intelligence.

Increase institutional credibility and investor confidence for longer-term investment. Find out

more by visiting our website.

15TABB Group, Adapting for the Future: Boutique Asset Management Post-2017, 2015