FINBOURNE Technology and EY recently hosted an industry roundtable in London for the Chief Operating Officers of 11 leading asset managers. The subject of discussion was the fast-growing opportunities and challenges for asset managers operating in private markets. In this blog, we dissect some of the key findings from the event, including three key pieces of advice from the roundtable participants.
The rise of private markets has taken the asset management industry by storm. Providing a break from the traditional 60/40 portfolio split, private markets offer diversification and, in some instances, high returns. As a result, private market assets under management, as of December 2023 stood at $24.4 tn1.
To deal with the explosion in this asset class, asset managers have been tasked with sourcing and managing a vast amount of complex private asset data to be managed alongside their public market data, creating an operational challenge to contend with.
- “The rise of private assets under management over the last decade has presented asset managers with a vast opportunity to unlock, but also a technological challenge to solve.” Thomas McHugh, CEO and co-founder of FINBOURNE
The reliance on multiple proprietary, legacy technology systems is far too prevalent within asset management. A lack of flexible and scalable data management technology architecture severely limits the ability of asset managers to source and manage private asset data, amplifying the challenge.
There is also a risk systems become too fragmented between public and private market data sets, both of which are central to an asset managers’ decision making.
To make the necessary changes to your data systems and workflows, while positioning your business to capitalise on the private markets opportunities, COOs should consider taking three key steps, as identified by their peers at our recent roundtable event.
1. Identify your legacy technology issues
Before any changes can be made, it’s critical to identify what legacy technology issues you currently have within your organisation. Firms should scope out existing challenges to identify the features or functionality your organisation needs from a technology provider.
2. Reimagine the client experience
Any decision on technology changes must be made with a consideration of how it will impact your clients. Taking a holistic approach to your data architecture will create a consistent, future-proofed, branded experience across public and private asset management.
3. Find a trusted technology partner
The time, effort, resources, and expertise needed to build internally is a significant challenge for many firms which, in turn, stumps innovation. Partnering with a technology provider which prioritises efficiency, security, and collaboration can empower asset managers to modernise their data platform, integrating data across their organisations effectively to gain a competitive edge in both private and public markets.
- “Legacy technology should be a thing of the past, but traditionally the cost and risk associated with moving away from it has been the challenge. Only with a modern data infrastructure that provides a single, reliable source of truth, can firms be adaptable to evolving regulatory and client demands.” Phil Tattersall, EMEA Wealth & Asset Management Data Lead, EY
So, there is an opportunity to be realised in private markets. But to do this, asset managers must tackle their underlying technological challenges. To enhance their investment strategies, manage costs, and improve the client experience, they must be using a flexible platform that seamlessly connects via API with various data sources and internal applications.
Read more in our whitepaper, which includes insights from COOs at leading UK asset managers and industry experts from EY and FINBOURNE, to find out how to position your business for private markets expansion.
1 https://www.ey.com/en_gl/insights/private-business/are-you-harnessing-the-growth-and-resilience-of-private-capital
