March 14, 2016 - Results of a new survey of investment management firms reveals that senior management teams are lagging in their use of data for strategic decision-making, resulting in missed business opportunities.
The report, to be launched at the TSAM Europe conference taking place in London on 15 March, reveals that while data is widely used for performance measurement, investment decision-making, regulatory reporting and risk management, only 11% say it is being used very well for strategic decision making, with nearly one-third (31%) saying it is not being used well, if at all. It's no surprise therefore that over a quarter (27%) of respondents say their firm regularly misses out on or loses business because their intelligence and use of data is not good enough.
The overwhelming majority of companies surveyed (96%) have either introduced, or are planning to introduce, a data governance framework to improve the availability and use of data across the organisation, highlighting its growing importance to investment firms; however, a quarter of respondents (26%) still do not feel that senior management sufficiently recognises the value of data as an asset.
"Asset managers are looking hard at their organisational structures, governance and processes to improve their effectiveness in the face of a changing competitive and regulatory environment," said Jonathan Wiser, Head of Content at Osney Media, which commissioned the study and organises TSAM Europe. "As the sheer number of initiatives in progress suggests, data governance is one of the key areas firms are looking at to drive those improvements, but there's a perception that senior management don't fully engage with or understand the potential of data as an asset."
The study also explores the level of co-operation and integration between critical functions at investment management firms, such as marketing and sales, investment and performance measurement and data management and regulatory reporting. The findings reveal a high degree of alignment between the various departments at investment firms and their overall business strategy with those closest to the investment process and clients, seen as most aligned. For example, 55% of respondents describe their investment team as 'very well' aligned with the business strategy.
However, it also highlights a number of areas that can be improved upon. As well as improving the use of data, the research points towards possible improvements when it comes to meeting the needs of clients. One in five (22%) firms regularly loses or misses out on business because their products don't adequately meet the needs of their prospects and clients and a similar proportion (21%) say their marketing and communications activities aren't relevant enough.
Bill Haynes, CEO and founder of BackBay Communications, the marketing and communications consultancy that conducted the research, said, "We were surprised by the high level of collaboration and integration at these firms, particularly given their scale and size in many cases. This survey highlights some good practices but there's room for improvement through closer collaboration and communication between departments, a greater client focus and better use of data throughout the organisation. There's a feeling among a significant number of respondents that senior management could do a better job of effecting that change and that they need to lead by example."
The majority (60%) of respondents view technological disruption as an opportunity versus 27% that said it was a threat, although a number of those concede that their organisation is not yet ready to capitalise on that opportunity and that improvements are required to be able to take advantage.
Survey Methodology
BackBay Communications and Osney Media conducted an online survey of senior decision-makers at investment management companies between 16th February and 2nd March. The survey was completed by 113 respondents from across all areas of operations including client reporting, technology, marketing, investment, accounting and finance, performance measurement, risk management, senior management and product development. 17% of respondents worked at firms with less than $1bn assets under management (AUM), 38% have an AUM of between $1bn and $100bn, 29% have an AUM of between $100bn and $500bn and 16% have an AUM of over $500bn.
