What keeps a funds industry leader awake at night?
In the first of a series of articles, we hear from our retained adviser Phil Barker, former global head of EMEA distribution at Aberdeen Standard Life Investments Ltd., about current challenges that are being faced from both an Asset Management and Platform perspective.
Recent government guidelines recommend that we all get at least 7 hours of uninterrupted sleep a night.
For many of us, including those involved in Asset Management Distribution and Platform Administration, this isn’t easily achieved. Full on days with early starts and late nights have their impact, as do all the worry topics that can break up that deep REM sleep. Here’s a list, definitely not exhaustive (no pun intended) of subjects that could be occupying the brain of a distribution team leader in the small hours:
Sales Diversification by asset class, geography and client type, diversity of experiences and background, Brexit, recession planning (big or boutique?), pricing regulation, liquidity net sales recruitment, staff retention and development, culture, business intelligence and AI, the rise of passives, the threat of new entrants, budgets, exceeding targets, how to get direct access to the end investor, maximising partnerships with third party suppliers et cetera et cetera et cetera.
In this article I am going to focus on three areas, namely business planning, culture and Artificial Intelligence.
If there is one item that those charged with leading distribution teams think about at all times of the day and night, it is how to achieve positive net sales. A tough ask for most mature businesses in the current climate, so having a robust plan to get ‘net positive’ is critical. Summer used to be a time for client entertainment at Wimbledon, Henley and other events (those were the days!) but nowadays the summer months mean spreadsheets, SWOT plans and crystal balls, all part of building the plan that will eventually form the roadmap for at least the following calendar year.
Business planning is vital and is an opportunity for all parts of a business to contribute and buy into the common goals, as well as making sure the plan is aligned to the overall strategic direction of the organisation.
I have been fortunate enough to experience some fantastic planning sessions involving people from HR, Finance, Operations, Marketing, Product Development as well as Distribution Heads from around the globe. Those sessions held over June, July and August formed a group dynamic that provided added value to the business for months and years ahead.
It was very interesting to see in a recent report that digitally mature businesses see a net inflow of four times that of slow adopters (source: Alpha FMC Consultancy) and, as such, I would suggest there is a real discussion to be had in getting the right level of budget allocated to enhancing current capabilities.
Alternatively outsourcing to strong third-party organisations can provide a solution that allows a degree of comfort and security to get a better night’s sleep.
Paul Poletti-Gadd, Solutions Director at FundsLibrary said “We work in partnership with our clients for shared success. Our clients know that by using our solutions they can concentrate on more pressing business matters and be sure that our experience and expertise will enable them to successfully manage their digital data and regulatory needs”.
With regards to culture, a leading UK Consultant recently stated that their Due Diligence process would focus as much on corporate culture as it does on investment process. With takeovers, mergers and acquisitions prevalent in the Asset Management and Platform industries, companies who ignore or pay lip service to cultural values now do so at their peril….and to the bottom line.
Inclusivity, active listening to staff and clients, and leading by example are all good indicators of a positive culture of course, as is the link to the heritage and genuine aspirations of the businesses concerned.
I think you can get a snapshot impression of a firm’s culture when you meet individuals from that company out of office, but the real picture quickly emerges from a site visit, from which initial impressions at the reception desk, by looking around, listening to side bar conversations and talking to people from a range of departments and functions all add up to the ‘way things get done around here’.
For global businesses the culture issue brings up the question of how to balance local flavour and central vision and values. Good companies allow, encourage and understand the need for nuance and team differences within the overarching piece.
Artificial Intelligence (“AI”)
AI is often referred to as the fourth industrial revolution – The Age of Information. AI is used with success across the finance industry to facilitate personalised marketing, forecast business volumes and trading decisions.
There are a lot of buzz words associated with AI and you will no doubt have read a lot of articles on the fact that ‘AI will replace jobs’ etc. which is unfounded. In fact, the likelihood is that the ability for AI to take on mundane tasks will allow employees to complete other more crucial tasks. One key area of consideration when using AI however is the ethics of doing so. When dealing with customers and clients, companies collect millions of data points and, of course, there is a need to be responsible with how this information is used. Whilst perhaps not on the scale of Cambridge Analytica, using customer data incorrectly can not only result in fines but it will have a much larger impact on a company’s reputation.
This isn’t a new thing and the FCA have set out guidelines for the industry on how to use AI responsibly, and the use of data to inform Business Intelligence Units will offer a significant advantage to companies, but the ethics will always need to be considered.
In summary there is lots to worry about and a myriad of reasons to stay awake at night. However, and equally, there are many fantastic opportunities ahead and it is an exciting time to be involved in this ever-evolving industry.
Of course, the key point is to think of any problem, opportunity or change from the client’s perspective. None of us can go too far wrong if we put our clients first, middle and last. If we are able to do this, an unbroken night’s sleep is the reward.
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All figures correct as at 31.12.2019.