Over the years, consulting firms have touted their knowledge and insight into the “best practice” utilized in all areas of investment management. You hire us, pick a topic, and we will tell you the best way that function should be designed, developed, deployed, and managed because that is the industry “best practice” for all investment managers. What a bunch of hooey. One-size solutions do not fit all investment management firms. In fact, that one-size solution may swamp your firm or pinch at the waist when business expands.
If your consulting partners are looking out for your firm, they should answer the “best practice” question with a series of questions so that the solution/workflow designed or system implemented is custom configured and/or tailored to your firm. The solution should be efficient, risk averse, flexible, cost effective, and work well with other systems/processes in place to create a natural flow of quality information that can be consumed by all users.
For example, the strategic solution for trade management for a firm that trades 50 derivative trades in a quarter is vastly different from the one that should be proposed for a firm that trades 2,000 derivatives in the same quarter. As the trade management owner, your consulting partner should be asking you questions about the current and future state of the following:
- Markets in which you trade
- Instrument types
- Volumes
- Publishers of the data
- Subscribers to the data
- Operational support models
- Risks
- Quality concerns
- Compliance issues
- Product development
If you and your consulting team aren’t digging into these considerations, you should be wary of any proposal that follows. While there may be a solution touted as “best in class,” that means little if you aren’t in the same class as its target users. Implementing a solution that is not rightsized can lead to a drastic increase in total cost of ownership.
Your consulting partner should also be investigating how other firms have “solved” their technology or workflow need by canvassing their consulting resources, querying their knowledgebase for similar engagements, and talking to vendors and other clients with whom they have formed relationships over the years. In this manner, all options can be reviewed, considered and tailored to fit your firm’s current needs and future growth.
Over the years, we have partnered with a wide range of investment managers and have the advantage of seeing the variety of methods and tools utilized to solve the same or similar issues. Some solutions work well and others, not so much. This perspective helps us drill down on the key questions we need to be asking to ensure the right technology fit. Time and again, we’ve heard about asset managers implementing popular solutions that demo well and but fall down either in implementation or long-term usability. Investment managers should have the confidence that their consulting partners are taking the appropriate measures to ensure a comfortable “fitting” solution that will wear well over time.
