Removing the Silo Mentality in Asset Management

by | 23 Sep 2020 | Asset Management

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In more that 25 years working within the asset management industry creating and campaigning product, it would be true to say I have always aimed to build my success on processes which are tried and proven. And while some fund managers make effective use of robust and reliable processes to generate products and solutions, from original concepts through subsequent launch, the practice is by no means as rigorous as it could be.

As product development and product governance activities move across different functions, and on occasions deep silos within the organisation, processes can become disjointed, obscuring overall visibility for senior management and fund boards, at the very time they need high visibility of all process across numerous product stages.

Pitfalls of the silo mentality
For many organisations it is quite common for product ideas to be generated from either a product committee, senior sales and distribution people or fund managers. After conducting primary research, a business case is developed by the product manager and senior approval obtained. Once this has been achieved, it is handed over to the distribution and marketing teams, for launch and ultimately campaigning. All the while there is a regulatory and fund governance team working alongside the entire process to keep everything ‘legal’.

In this common scenario, organisations can easily develop a ‘silo mentality’ whereby individual departments or teams hand everything over to the next team when they consider themselves to have completed their part’. Perhaps not quite forgetting it, but certainly moving onto the next product or solution in the pipeline. The result is minimal overall visibility for senior stakeholders and little in the way of an overarching picture of the multi-functional process.

This is why, throughout my long experience of launching and campaigning products, I have always sought to find a technology platform which can not only work right across the product lifecycle, from new-concept to fund closure, but which can also go all across teams involved and pull in international jurisdictions and overseas offices.

Facing up to today’s specific product challenges
In today’s scenario, particularly with the advent of the FCA’s Senior Managers & Certification Regime and ‘assessment of value’ (AoV), there is a top-down need for a much better understanding of where the governance is around the product management/product development process – encompassing all of the functions that impact a product through its lifecycle.

The industry itself is facing an ever-increasing regulatory headwind to provide greater protection to the consumer. The regulator has stepped up its governance regulation requirements, particularly at a senior management level. and the same is true for independent directors who be feeling increasingly exposed.

After recently introduced initiatives, regulators will probably return over the next twelve months or so and ask more detailed questions pertaining to approaches relating to consumer protection and cost. All this while many managers are already struggling to produce consistent Management Information (MI) or show it in a form that is understood by the consumer and other in-house stakeholders. In this context, a platform which can generate strong MI has multiple benefits for the fund manager.

For product development teams, creating the required reports from scratch is laborious, time-consuming and fraught with potential human error. A system like Prodigy, which can automate – and provide the MI to fund boards and senior management – needs in a much quicker or a more consistent format. This would mean more time spent on actually evaluating and creating better products by the product team. This kind of rigorous process around value for money assessments would also provide greater levels of assurance for senior managers.

The system is the secret
If I was looking for a system to handle these issues, I would be looking for specific functionality. Firstly, the ability to unbundle a process across all stages, from conception to launch through to ongoing due diligence of the fund. Secondly, a capability for documenting the product definition and its literature, as a single library of reporting and governance. Thirdly, a facility for evaluating progress against a set of performance indicators so that every time a fund review comes up for either an assessment of value or an annual review, the data has been marked and automated as much as possible.

Looking back over the last 20 years, the asset management industry has been very much on a launch trajectory. There are now almost certainly more unitised vehicles in Europe than there are underlying stocks, which must mean imminent consolidation. So, when funds reach the review point of needing to be closed or merged, more and more emphasis is going to be placed on their profitability.

There may be hundreds of products out there, but are they profitable? While the life-cycle management process at the launch stage might be good, the consistency at the back end or rationalisation stage could probably improve. That’s where a CRM system like Salesforce is invaluable. When sponsorship from the top down of the organisation is strong for CRM system, the data that it is providing can be utilised by the Prodigy product governance system.

Prodigy glues together the different components of a launch or a review, providing total transparency for everybody across the whole process – as opposed to a spreadsheet in a colleague’s mail-inbox that people involved in other parts of the process cannot see.

The unique benefits of Prodigy
Although Prodigy is not the only tool on the market that has been designed to provide governance across the different stages of a product, I have never found one that quite as sector-specific, quite as tailored for the asset management and pensions servicing industries. I think the real differential is that it has been designed by people who collectively have many years experience in asset management.

A lot of the potential competing products might boast impressive features, but Prodigy’s strength for our sector is that its checklists are already geared to asset management; there is not much tailoring to be done. Buying a competing product that is not asset management specific would require time and resources to re-engineer it for this industry. Generally speaking, fund managers will look to tweak the inbuilt processes – and this is another strength of Prodigy. It allows for personalisation for fund managers, based around their preferred product management and development processes.

Prodigy can take tranches of real-time office reporting, bundled and unbundled against particular tranches of competing product. Prodigy is also multi-jurisdictional, it helps ‘join the dots’ to enable the visibility for the knowledge transfer required to open and close funds in a different jurisdiction.

This is certainly the tool that I and many of my contemporaries have been looking for a long while, and for that reason I am confident, for all the reasons I have outlined, that it will gain considerable traction in our industry.

Neil Fatharly is a highly experienced board member with in-depth knowledge of the asset and wealth management sectors, along with an impressive track record in European fund distribution, product development and marketing. He also has a long history of success in leading and delivering business critical projects, with an emphasis on product development, process improvement and governance.

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