Top 5 Takeaways: Exploring the Fund Firm of the Future and Next-Gen Operating Model

The rapid growth of the global alternatives market is driving fund managers to reengineer operating models and move forward with a new generation of investors and capital, data management tools, and technology. Dan McNamara, our Chief Strategy Officer and Chief Financial Officer, recently joined a panel discussion, “The Fund Firm of the Future – Building the next-generation operating model,” with industry experts at the Financial Times Future of Asset Management North American conference to describe how those operating model are taking shape and what the future holds for the industry.

Read Dan’s views here:

1. Historically, funds are human enterprises that grow organically, and often, reactively with most things done in house. There wasn’t always time or money to perfectly engineer every solution, or to optimize those solutions with other technology. With increased top-line pressure and new regulatory challenges, these systems now don’t always interact effectively and managers are ill-prepared for the new markets.
    
2. Next-generation operating models must drive two core competencies: Attracting investor inflows and generating alpha. It’s all about the allocation of limited resources—fund managers are at an inflection point and must decide how and where to invest time and money to improve efficiency and increase growth. They need to ask, “What differentiates our funds? Where do they fit in the market? Where do we want to be.”
   
   
3. Fund managers increasingly are turning to trusted partners to navigate the complexities of fund management. In our discussions with fund managers, we’re looking critically at the whole value chain and taking a holistic, nuanced approach to reengineering. By outsourcing low-value or commoditized tasks (including back-, middle-, and now front-office functions), managers can reallocate and optimize resources to fuel innovation and unlock new growth opportunities, including in the private markets.
   
   
4. Data is the key in any discussion about operating models, new technology or tools, including generative artificial intelligence. There is a lot of disaggregated data in different formats. It’s not just a manager’s own disparate data systems that need to be considered, but also the fact that they are aggregating data from numerous external parties, including parties they have outsourced to as part of their operating model.
   

Data standardization and cleansing is the first step because none of the new technology will be effective unless managers have their data in order. For some clients, we act as a data layer, taking data into a single source to allow it to be accessed to produce reports and outputs for regulators in multiple jurisdictions as well as investors. Managers can then layer on their own analytics for their internal governance and business management strategies.