Boutique Asset Managers: Protect Your Business and Reputation Against Risks
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Boutique asset managers face significant challenges from regulatory demands, investor expectations for transparency, and the need for operational efficiency. They must prioritize risk management, enhance data control, and leverage technology to improve compliance and operational excellence. A strategic focus on data management and analytics can help these firms gain a competitive advantage and increase investor confidence.
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Boutique Asset Managers: Protect Your Business and Reputation Against Risks
- 1. Boutique asset managers: Protect your business and reputation against risks
- 2. 2 Investor expectations – demand for greater institutional grade controls and high standards of conduct 3 Pressure on fees – increasing regulations and investor requirements, driving operational efficiencies to scale internally 1 A 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 reporting 4 Boutique asset managers face…
- 3. Industry research reveals Investment and risk professionals say their risk systems are outdated 50% Boutique asset managers see compliance as the top concern 48% Boutique asset managers now see operational efficiency as second only to stock picking 51%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
- 4. How can boutique asset managers defend themselves against current risks?
- 6. 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%
- 7. 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
- 8. 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%
- 9. 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
- 10. 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 of investment strategy An aspect of investment strategy and portfolio management (driven by fund managers and analysts) A middle office focused activity largely in response to investor requirements A middle office focused activity largely in response to regulatory requirements A reporting activity largely driven by outsourcers or internal back 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
- 11. 2. Address regulatory demands efficiently and effectively
- 12. 12 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
- 13. 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
- 14. 3. Find new ways of working
- 15. 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