Asset Management Technology & Operations Survey Results

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18 Νοε 2013 (πριν από 3 χρόνια και 6 μήνες)

54 εμφανίσεις

Asset
Management
Technology
&
Operations
Survey
Results
February
2007
Investment
Adviser
Association
and
SEI


1
Table
Of
Contents
Introduction
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2
Conclusion
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3
Survey
Findings
and
Analysis
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4
Business
Strategy
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4
Personnel
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5
Information
Technology
Budget
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7
Website
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9
Investment
Operations
Budget
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10
Investment
Operations
Outsourcing
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10
Investment
Operations
Systems
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12
Trading,
Brokerage,
and
Custody
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13
Performance
Measurement
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14
Legal
and
Regulatory
Issues
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14
Background
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15
Methodology
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15
Universe
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15
About
the
Sponsors
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17
Table
Of
Figures
Figure
1:
Measures
of
Success
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4
Figure
2:
Determinants
of
Success
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5
Figure
3:
Number
of
Employees
per
$100
million
AUM
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6
Figure
4:
Average
Headcount
by
Function
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6
Figure
5:
Focus
of
IT
Spending
in
2006
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7
Figure
6:
Percentage
Change
in
IT
Spending
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8
Figure
7:
Expected
Changes
to
IT
Expenditures
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8
Figure
8:
Website
Features
Offered
or
Under
Development
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9
Figure
9:
Percentage
Change
in
Investment
Operations
Expenditures
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10
Figure
10:
Systems
Developed
and
Maintained
In-House
or
Outsourced
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11
Figure
11:
Functions
Performed
In-House
or
Outsourced
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11
Figure
12:
Portfolio
Accounting
System(s)
Used
and
Satisfaction
Level
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12
Figure
13:
Trade
Order
Management
System(s)
Used
and
Satisfaction
Level
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13
Figure
14:
Initiatives
Undertaken
in
Response
to
Legal
and
Regulatory
Requirements
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14
Figure
15:
Investment
Products
Offered
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16
Figure
16:
Client
Types
Serviced
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16
Figure
17:
Account
Types
Serviced
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16
2

Asset
Management
Technology
and
Operations
Survey
Results
The
Investment
Adviser
Association
(IAA)
and
SEI
are
pleased

to
present
results
of
the
first
annual
IAA/SEI
Asset
Management

Technology
and
Operations
Survey.
The
IAA,
a
nonprofit
industry

association
with
about
500
members,
and
SEI,
a
leading

global
provider
of
outsourced
asset
management,
investment

processing,
and
investment
operations
solutions,
have
jointly

created
this
ongoing
survey
program
to
highlight
and
track

the
growing
importance
of
technology
to
asset
management

organizations.
This
initial
edition
of
our
survey
covered
a
diverse

group
of
traditional
mutual
fund
and
separate
account
managers

with
an
average
of
$3.8
billion
in
assets
under
management

(see

page
18
for
more
details)
.
Not
so
long
ago,
asset
managers
saw
technology
primarily

as
an
enabler
of
core
operating
functions—a
way
to
increase

operational
productivity
and
efficiency.

Now
technology
has

also
become
a
means
to
improve
investment
performance,
build

relationships
with
clients,
deliver
a
customized
and
differentiated

client
experience,
expand
the
range
of
products
provided,
tailor

product
packaging
and
distribution
to
fit
changing
demand,

and
manage
compliance.
In
short,
technology
provides
a
critical

lever
for
improving
overall
business
economics
and
increasing

quality
across
nearly
all
functional
areas.
Moreover,
we
at
the
IAA
and
SEI
believe
the
role
and
impact

of
technology
in
our
industry
can
only
continue
to
grow.
At
a

time
when
investment
products
are
becoming
increasingly

commoditized
and
size
and
scale
are
no
longer
prime
factors

in
success,
asset
managers
need
to
update
the
ways
they
think

about
competitiveness.
They
must
recognize
that
an
asset

management
business
is
much
more
than
just
a
collection

of
functions;
it
is
a
set
of
business
processes
orchestrated
to

create
capabilities
in
service
of
a
strategic
vision.
In
the
future,

the
ability
to
compete
on
capabilities
will
be
a
key
driver
of

competitive
advantage.

This
notion
of

competing
on
capabilities
is
both
the
context

for
this
survey
program
and
a
motivating
force
behind
this

survey
program.
Clearly,
asset
managers
cannot
develop
their

competitive
capabilities
without
first
building
the
necessary

infrastructure.
For
that
reason,
we
believe
the
industry
is

entering
an
era
in
which
technology
will
be
the
focus
of
even

greater
attention
and
investment
than
in
the
past.

Our
survey,
which
was
conducted
at
the
end
of
2006,
is
our

initial
effort
to
capture
these
trends,
and
will
provide
a
baseline

for
similar
efforts
in
the
future.
In
order
to
elicit
candid
and

accurate
responses,
the
survey
was
conducted
online
and

respondents
were
anonymous.

The
questionnaire
was
designed

to
identify
key
trends,
show
how
organizations
are
allocating

resources,
and
highlight
best
practices.

Our
thanks
to
all
of
the
investment
management
organizations

and
individual
respondents
who
participated.
Their
contribution

of
time,
effort,
and
data
is
greatly
appreciated.
Thanks
are
also

due
to
those
who
participated
in
designing
and
conducting
the

survey,
analyzing
responses,
and
presenting
results:



David
Tittsworth,
Executive
Director,
Investment
Adviser

Association


Paul
Schaeffer,

Managing
Director
for
Strategy
and

Innovation,
Investment
Manager
Services
division,
SEI
Steven

Unzicker,
Director,
Langham
Capital
Ltd.


Ava
Lala
,
Marketing
Director,
Investment
Manager
Services

division,
SEI


Erika
McDaniel,
Marketing
Associate,
Investment
Manager

Services
division,
SEI

We
hope
this
survey
will
spark
further
discussion
of
technology

trends
and
issues,
and
we
look
forward
to
the
next
update

commencing
in
late
2007.

Introduction

Investment
Adviser
Association
and
SEI


3
Survey
results
paint
a
picture
of
an
asset
management
industry

that
is
increasingly
reliant
on
operational
and
technology

capabilities.

Because
respondents
have
come
to
see
these

capabilities
as
critical
to
their
success,
they
are
continuing

to
increase
their
investment
in
technology
and
are
willing

to
deal
with
the
complexities
accompanying
technological

advancement.

Operational
and
technology
capabilities
are
viewed
as

important
enablers,
rather
than
indicators,
of
business

success.


Survey
respondents
rank
client
service
capability—a

function
highly
dependent
on
operational
quality
and
technology

infrastructure—as
the
number
one
determinant
of
success,

followed
by
investment
performance
and
employee
retention.


Interestingly,
operational
and
IT
capabilities
are
seen
as
more

important
success
factors
than
sales,
marketing,
or
distribution.


Not
surprisingly,
the
top-ranked
measures
of
success
focused

on
financial
results,
asset
growth,
and
employee
retention.


Most
respondents
say
their
IT
budgets
are
currently
focused

on
maintaining
and
upgrading
existing
systems
and
operating

infrastructure.

Only
13%
report
a
focus
on
developing
new

systems.
This
illustrates
how
deeply
ingrained
technology
has

become
in
the
operations
of
the
average
firm.
Whereas
IT
used

to
be
seen
as
a
cost
of
doing
business,
it
is
now
simply
the
way

business
is
done.

IT
spending
continues
to
grow,
with
60%
of
firms
expecting
to

increase
their
2007
budgets
over
2006
amounts.
Key
factors

driving
higher
spending
include:


Regulatory
and
compliance
concerns.



Increasingly
complex
accounting
and
reporting
resulting

from
growing
product
diversity
and
demands
for

customization.



Rising
compensation
for
IT
professionals
as
the
competition

for
talent
heats
up
once
again.

All
of
these
present
significant
operational
challenges
to

managers.

Asset
managers
are
dealing
with
growing
operational

complexities.

Survey
responses
indicate
that:



Many
managers
are
struggling
to
manage
proliferating

outsourcing
relationships.




Outsourcing
of
systems
development
and
maintenance

is
ubiquitous,
but
many
managers
still
perform
some

functions
in-house,
most
notably
portfolio
accounting,

trading/order
management,
and
client
reporting.

This

is
particularly
true
outside
of
the
mutual
fund
arena.

Managers
are
generally
satisfied
with
the
quality
of
their

outsourced
products
and
services.


Forty
percent
of
managers
report
using
more
than
one

portfolio
accounting
system.



It
is
not
uncommon
for
a
manager
to
deal
with
eight
or
more

external
data
vendors,
presenting
a
multitude
of
integration

and
budgetary
challenges.



Trading
environments
are
also
subject
to
complications

and
inefficiencies,
including
the
use
of
multiple
brokers

and
custodians,
use
of
multiple
trade
order
management

systems
(reported
by
38%
of
respondents),
and
the

persistence
of
manual
communication
methods
(e-mail,

fax,
phone).

Legal,
regulatory,
and
compliance
concerns
continue
to

drive
IT
spending
higher;
84%
of
firms
said
such
issues
have

had
an
impact
on
technology
spending.
The
most
commonly

cited
initiatives
undertaken
in
response
to
legal
and
regulatory

requirements
include
e-mail
retention,
disaster
recovery,
and

best
execution
monitoring.
Responses
point
to
continued
growth
in
IT
spending,
due
to

continued
demands
by
customers
and
intermediaries
for
new

and
more
customized
products,
as
well
as
ongoing
compliance

demands.
In
the
absence
of
any
external
shocks
such
as
Y2K

or
the
Era
of
Spitzer,
however,
IT
spending
may
grow
more

slowly
than
in
the
past.

Asset
managers
nevertheless
expect

technology
and
operations
to
represent
a
growing
share
of

overall
budgets
as
they
aim
to
differentiate
themselves
in
an

increasingly
crowded
and
competitive
marketplace.
Conclusion
4

Asset
Management
Technology
and
Operations
Survey
Results
Survey
Findings
and
Analysis

Business
strategy
When
survey
participants
were
asked
to
name
their
three
primary
long-term
business

objectives,
asset
growth
was
most
commonly
cited
as
the
top
priority.
Improving
client

service
was
a
close
second,
and
improving
operational
efficiency
through
the
use
of

technology
was
also
named
by
a
number
of
firms
as
an
important
goal.
When
asked
how
they
measured
the
success
of
their
firms,
financial
considerations
led

the
way,
with
shareholder
return
most
commonly
cited
as
being
very
important.
The
only

measures
commonly
seen
as
unimportant
are
firm
size
and
market
share.

(See
Figure
1)
There
is
little
debate
over
what
determines
success.
Asset
managers
unanimously
say
that

client
service
capability
is
either
important
or,
more
commonly,
very
important.
Investment

performance
and
employee
satisfaction
also
rank
highly.
Less
importance
is
attached
to

technology
and
operations
capability,
although
these
are
viewed
as
more
critical
than
sales

and
marketing
in
determining
overall
firm
success.

(See
Figure
2,
next
page)
Shareholder
Return
Profitability
Net
Asset
Growth
Employee
Retention
Productivity
Capability
Operational
Capability
Technology
Capability
Firm
Size
Overall
Market
Share
0%
20%
40%
80%
100%
60%
Very
Important
Important
Not
Important
Figure
1:
Measures
of
Success
(percentage
of
firms)
Investment
Adviser
Association
and
SEI


5
Client
Service
Capability
Investment
Performance
Employee
Satisfaction
/
Retention
Operations
Capability
IT
Capability
Sales
Capability
Marketing
&
Distribution
Capability
Investment
Product
Diversity
20%
40%
80%
100%
60%
Very
Important
(percentage

of
firms)
Important
Not
Important
Figure
2:
Determinants
of
Success
0%
Personnel
Total
firm
headcount
is
very
closely
correlated
to
AUM
size

(See
Figure
3,
next
page.
AUM

on
the
Y
axis
is
shown
on
a
logarithmic
scale
in
order
to
better
illustrate
the
correlation)
.

There
are
some
scale
efficiencies
when
it
comes
to
personnel,
with
larger
firms
requiring

less
than
one
FTE
per
$100
million
under
management,
while
smaller
firms
typically
require

two
to
five.

Only
39%
of
firms
have
an
employee
whose
primary
responsibility
is
overseeing
firm-wide

systems
and
technology.
Among
those
that
do,
this
employee
most
often
reports
to
the
CEO

/
President
and
sits
on
the
management
committee
more
than
half
of
the
time
(58%).
Most

firms
with
over
$1
billion
AUM
have
at
least
one
full
time
employee
dedicated
to
systems

and
technology.
Smaller
firms
generally
utilize
someone
on
a
part
time
basis
or
(in
the

case
of
the
smallest
firms)
do
without.

The
average
number
of
systems
and
technology

employees
is
3.3

(see
Figure
4,
next
page)
.
Much
more
unusual
are
employees
dedicated

to
web-related
and
e-commerce
activities.
Only
one
participating
firm
reported
having
such

a
person
employed.
6

Asset
Management
Technology
and
Operations
Survey
Results
Figure
3:
Number
of
Full
Time
Employees
(FTEs)





per
$100
million
AUM
0 1
FTEs
per
$100
million
AUM
(number
of
FTEs)
AUM
(logarithmic
scale)
2 3 4 5
100,000
10,000
1,000
100
10
Investment
Mgmt
Sales
&
Marketing
Client
Service
Investment
Ops
and
Portfolio
Acct
System
&
Technology
Trading
Positions
Administrative
Legal
&
Compliance
Executive
Management
Finance
&
Accounting
Strategic
Planning
Human
Resources
(number
of
FTEs)
Figure
4:
Average
Headcount
by
Function
10.8
5.0
4.6
3.3
.6
1.6
2.1
2.3
2.7
2.6
.4
5.2
Investment
Adviser
Association
and
SEI


7
Information
technology
budget
Information
technology
(IT)
expenses
account
for
a
significant
portion
of
overall
costs
at
the

typical
asset
management
firm.


IT
spending
as
a
percentage
of
total
expenses



Average:
13.6%



Median:
4.8%


IT
spending
per
employee



Average:
$11,900



Median:
$7,300
Given
the
time,
complexity,
and
expense
of
evaluating,
purchasing,
and
installing
new

systems,
it
is
not
surprising
that
many
companies
(45%)
are
focused
on
maintenance.

Another
third
are
focused
on
upgrading
existing
systems.
Only
13%
of
respondents
are

focused
on
buying
new
systems.

(See
Figure
5)
A
growing
number
of
managers
are
enlarging
their
technology
budgets

(see
Figure
6)
.

Average
annual
IT
spending
in
2005
(including
personnel,
hardware,
software,
systems

and
outsourcing)
totaled
$652,000.
This
rose
to
an
average
of
$657,000
in
2006.

Median
spending
rose
from
$135,000
to
$148,000.
Just
over
half
of
the
managers

surveyed
increased
IT
spending
during
2006,
while
60%
expect
to
do
so
in
2007.
The

increased
investment
cannot
be
attributed
to
any
one
area,
but
regulatory
and
compliance

management
is
leading
the
way

(see
Figure
7)
.
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
(number
of
firms)
Figure
5:
Focus
of
IT
Spending
in
2006
Other
6.5%
Buy
new

systems
and

expand
existing

operating

infrastructure
12.9%
Upgrading

existing
system

and
operating

infrastructure
35.5%
Maintain

existing

systems
and

operating

infrastructure
45.2%
8

Asset
Management
Technology
and
Operations
Survey
Results
Figure
6:
Percentage
Change
in
IT
Spending
Greater
than
2005
53.3%
Lower
than
2005
16.7%
Change
in
IT
Spending
in
2006
(percentage
of
firms)
Same
as
2005
30.0%
Greater
than
2006
60.0%
Lower
than
2006
3.3%
Expected
Change
in
IT
Spending
in
2007
(percentage
of
firms)
Same
as
2006
36.7%
Figure
7:
Expected
Changes
to
IT
Expenditures
0%
20%
40%
80%
100%
60%
Increase
No
Change
Decrease
(
percentage

of
firms)
Regulatory
/
compliance
management
Portfolio
accounting
and
client
reporting
IT
salaries
and
bonuses
Client
service
contact
management
/
database
Network
/
LAN
/
WAN
hardware
Website
software,
develop-
ment,
maintenance
Marketing
/
sales
contact

management
/
database
Disaster
recovery
Consulting
/
outsourcing
Investment
research
/

database
Network
/
systems
security
Remote
access
/
VPN
Workgroup
and

knowledge
mgmt.
Call
center
technology
Investment
Adviser
Association
and
SEI


9
Website
The
vast
majority
(84%)
of
firms
have
websites.
The
few
exceptions
tend
to
be
smaller
firms.

Many
websites
could
be
characterized
as
brochure-ware,
offering
little
more
than
general

firm
information
and
marketing
material.
Not
surprisingly,
websites
are
seen
as
an
important

platform
to
showcase
a
firm’s
personnel
in
the
form
of
biographies.
Few
managers
offer

client
reporting
via
their
websites,
and
even
fewer
(12%)
offer
transactional
capability.

(See

Figure
8)
Targeted
content
for
specific
client
or
intermediary
segments
is
very
rare,
with
only

three
firms
reporting
that
they
offer
this
type
of
content
on
their
sites.

Websites
are
often
works
in
progress.
Among
firms
that
do
not
currently
offer
extensive

online
features,
a
number
are
focused
on
making
product
performance
data,
client
account

information,
and
original
research
available.
0%
20%
40%
80%
100%
60%
Currently
Available
Under
Development
Figure
8:
Website
Features
Offered
or
Under
Development
(percentage
of
firms)
Biographies
of
key

professionals
Product
performance
Client
account
info.
ADV
and
other
filings
Prospectuses
Job
openings
Original
research
Calculators
(retirement,

college,
etc.)
Real-time
account
/

fund
info.
Portfolio
allocation
tools
Web
conferencing
10

Asset
Management
Technology
and
Operations
Survey
Results
Investment
operations
budget
When
asked
to
name
the
top
operational
issues
facing
their
firms,
managers
listed
a
wide

range
of
priorities.
Common
threads
included:


Compliance


Customized
reporting


Managing
and
integrating
outsourced
relationships


Improving
resource
allocation
and
efficiency


Improving
reconciliation
process


Recruiting
and
training


Cross-functional
coordination
Spending
on
investment
operations
is
accelerating.
Not
a
single
manager
plans
to
decrease

spending
in
this
area
next
year.

(See
Figure
9)


The
average
spending
increase
on

operations
is
higher
than
IT
generally.


Investment
operations
outsourcing
Outsourcing
in
investment
operations
continues
to
grow.

The
development
of
fund

accounting
and
custody
systems,
for
example,
is
outsourced
by
all
companies
in
the
survey.

Systems
developed
in-house
continue
to
be
used
in
potentially
idiosyncratic
areas
with

more
customized
features
such
as
client
reporting
and
partnership
accounting.

(See
Figure

10,
next
page)
When
it
comes
to
actually
performing
investment
operations,
managers
are

generally
comfortable
outsourcing
functions
such
as
transfer
agency
and
fund
accounting.

Outsourcing
is
viewed
as
more
difficult
or
less
desirable
for
other
functions
such
as
portfolio

accounting
and
trade
order
management.


(See
Figure
11,
next
page)
Figure
9:
Percentage
Change
in
Investment
Operations
Expenditures
Greater
than
2005
50.0%
Lower
than
2005
3.6%
Change
in
Spending

on
Operations
in
2006
(percentage
of
firms)
Same
as
2005
46.4%
Greater
than
2006
60.0%
Lower
than
2006
0.0%
Expected
Change
in
Spending

on
Operations
in
2007
(percentage
of
firms)
Same
as
2006
40.0%
Investment
Adviser
Association
and
SEI


11
Figure
10:
Systems
Developed
and
Maintained








In-House
or
Outsourced
0%
20%
40%
80%
100%
60%
Outsourced
In-house
(
percentage

of
firms)
Fund
accounting
Custody
Shareholder
services
Portfolio
accounting
Partnership
accounting
Client
statement
&
reporting
Trading
/
Order
Mgmt.
Figure
11:
Functions
Performed
In-House
or
Outsourced
0%
20%
40%
80%
100%
60%
Outsourced
In-house
(
percentage

of
firms)
Custody
Transfer
agency
Fund
accounting
Fund
administration
Shareholder
services
Trust
accounting
&
admin.
Tax
preparation
&
compliance
Partnership
accounting
Email
retention
Client
statement
&
reporting
Trading
/
order
management
Portfolio
accounting
/

reconciliation
12

Asset
Management
Technology
and
Operations
Survey
Results
Investment
operations
systems
Most
firms
use
a
single
portfolio
accounting
system
for
all
accounts,
though
several
reported


using
multiple
systems.
The
use
of
multiple
systems
is
positively
correlated
to
firm
size
and

in
all
cases
reflected
distribution
platform
requirements
associated
with
offering
separately

managed
accounts.
Half
of
all
firms
have
portfolio
accounting
systems
that
feed
data
to
their
front-office

application’s
risk
and/or
portfolio
attribution
tools.
Sixty-eight
percent
utilize
a
portfolio

management
system
of
some
type
to
create
and
review
proposed
changes
to
a
portfolio.

Sixty
percent
of
firms
report
using
a
single
portfolio
management
system
across
all

products.
Most
others
use
two
systems,
although
one
firm
reported
using
four.
Shadowing
is

very
common,
with
83%
of
firms
reporting
that
they
complete
all
back-office
processing
for

all
accounts
for
which
investment
decisions
or
recommendations
are
made.
The
use
of
third-party
data
vendors
(for
pricing,
corporate
actions,
security
master,
index

returns,
etc.)
varies
considerably
from
one
firm
to
the
next.
The
average
firm
relies
on
four

data
vendors
(median
=
3),
though
the
use
of
eight
or
ten
is
not
uncommon.
When
it
comes

to
clients
receiving
third-party
data,
half
are
supplied
directly
from
the
firm
while
the
other

half
receives
it
from
the
portfolio
accounting
partner.
Less
than
half
of
all
firms
(46%)
said

that
the
third-party
data
process
is
managed
by
their
investment
accounting
system
vendor.
Advent
Axys
is
the
most
commonly
used
system,
followed
by
SunGard
and
Checkfree
APL.

Among
the
commercially
available
systems
in
use,
Schwab
Centerpiece
provided
the
most

satisfaction,
followed
by
CheckFree
APL
and
Advent
Axys.


(See
Figure
12)
Figure
12:

Portfolio
Accounting
System(s)
Used

and
Satisfaction
Level
(percentage
of
firms)

System
Used

Meets
Needs
/
Satisfied
Advent
Axys

52%

71%
SunGard
29%

67%
CheckFree
APL

23%

83%
Other
13%

100%
Schwab
Centerpiece

10%

100%
Thomson
Portia

10%

67%
In-house
developed

10%

67%
Note:
Other
systems
given
as
answer
option
but
not
reported
being
used
include
Eagle
Starr,
FMC

Pacer,
and
Princeton
Financial
PAM
Investment
Adviser
Association
and
SEI


13
Trading,
brokerage,
and
custody
Managers
use
a
variety
of
trade
order
management
systems,
and
no
single
vendor
claims
a

dominant
market
share.
Some
firms
(38%)
use
multiple
systems
(usually
two
but
occasionally

as
many
as
four).
Satisfaction
levels
are
generally
higher
than
is
the
case
with
portfolio

management
systems:
most
systems
received
100%
satisfaction
ratings.

(See
Figure
13)
Used
by
three
quarters
of
firms,
trading
applications
remain
the
most
common
way
to
notify

brokers
of
allocations.
Firms
often
use
multiple
modes
of
communication,
with
more
than
a

third
relying
on
faxes,
phones,
and
emails
to
some
extent.
Notifying
custodians
is
different.

While
65%
rely
on
trading
systems,
faxes
are
still
used
by
61%
of
firms
and
emails
by
45%.

Phones
are
not
used
often.
Faxes
are
most
commonly
used
when
notifying
brokers
of
settle-
ment
instructions
for
held
away
accounts.
Trading
systems
are
rarely
employed
for
this
purpose.
Other
findings
related
to
trading
and
custody:


55%
of
firms
report
that
some
trades
are
not
executed
electronically.
Among
these
firms,

an
average
of
38%
of
trades
are
executed
manually
(median
=
30%).


Directed
brokerage
is
becoming
more
rare:
only
23%
of
firms
reported
that
they
choose

to
direct
their
trades
to
brokers.


The
number
of
trades
executed
on
a
monthly
basis
varies
wildly,
but
the
median
is
325

trades,
with
an
average
of
33%
of
these
being
block
trades
(median
=
10%).


Among
firms
on
wrap
platforms
the
average
number
of
platforms
used
is
4.6

(median
=
3.5).


The
median
number
of
brokerage
houses
dealt
with
regularly
is
10.
The
median
number

of
custodians
dealt
with
regularly
is
6.
Figure
13:

Trade
Order
Management
System(s)
Used
and

Satisfaction
Level
(percentage
of
firms)

System
Used

Meets
Needs
/
Satisfied
Advent
Moxy

42%

75%
Bloomberg
29%

100%
CheckFree
APL

21%

75%
Customized
system

21%

100%
Other
21%

100%
Charles
River

13%

100%
Eze
Castle

4%

100%
Linedata
Longview

4%

100%
Note:
Other
system
given
as
answer
option
but
not
reported
being
used
included
Macgregor
XIP
14

Asset
Management
Technology
and
Operations
Survey
Results
Performance
measurement
Less
than
half
of
all
participating
firms
(45%)
state
that
they
are
AIMR/GIPS
compliant.

Most
(87%)
utilize
a
single
performance
system
for
all
accounts
and
account
types
and

77%
of
the
time
it
is
a
component
of
the
firm’s
existing
accounting
system.

The
vast
majority
(93%)
of
firms
surveyed
calculate
performance
for
individual
accounts.

A
third
of
them
also
calculate
sector
performance.
Performance
is
calculated
daily
by
two

thirds
of
firms,
with
the
remainder
calculating
monthly.
A
small
minority
(16%)
also
review

performance
calculations
daily,
although
the
majority
(84%)
prefers
to
review
monthly.

Very
few
firms
(6%)
utilize
a
data
warehouse
for
data
management.
Four
out
of
five

companies
have
a
periodic
reconciliation
process
to
verify
the
accuracy
of
performance
data

against
internal
systems.
Legal
and
regulatory
issues
Legal,
regulatory,
and
compliance
concerns
drive
organizational
change
and
increased

spending

(See
Figure
14)
.
When
asked
whether
recent
legal,
regulatory
and
compliance

requirements
had
impacted
technology
spending:


83.9%
said
YES


16.1%
said
NO
Reported
increases
in
spending
range
from
5%
to
40%.


Average
increase:
17.6%


Median
increase:
20.0%
Figure
14:
Initiatives
Undertaken
in
Response
to
Legal
and






Regulatory
Requirements
0%
20%
40%
80%
100%
60%
(percentage
of
firms)
Email
retention
Disaster
recovery
Best
execution
monitoring
Personal
trading
monitoring
Compliance
training
Customer
data
security
Proxy
voting
Anti-money
laundering
100.0%
93.5%
74.2%
71.0%
67.7%
54.8%
54.8%
41.9%
Investment
Adviser
Association
and
SEI


15
Methodology
Investment
advisory
firms
filled
out
an
online
survey
consisting
of
98
questions
about

technology
and
operations.
The
survey
data
was
validated
and
outliers
removed
as

necessary.
The
quantitative
analysis
and
written
report
were
each
reviewed
extensively
prior

to
publication.
The
resulting
report
is
believed
to
be
a
fair
reflection
of
the
survey
responses

provided
by
IAA
members,
but
neither
SEI
nor
the
IAA
can
claim
responsibility
for
the

accuracy
or
reliability
of
the
data
provided.
Universe
Following
are
some
key
characteristics
of
the
survey
universe

(see
also
Figures
15-17,

next
page)
:


31
managers
with
AUM
ranging
from
under
$100
million
to
almost
$40
billion



Average
AUM:
$3.8
billion



Median
AUM:
$937
million


Total
firm
headcount
ranging
from
low
single
digits
to
almost
200



Average
headcount:
29



Median
headcount:
15


Assets
per
employee
ranging
from
$22
million
to
$250
million



Average
AUM
per
employee:
$76
million



Median
AUM
per
employee:
$67
million


Revenue
per
employee
ranging
from
$115,000
to
$840,000



Average
revenue
per
employee:
$334,000



Median
revenue
per
employee:
$249,000


Fee
realization
ranging
from
approximately
20
bps
to
more
than
110
bps



Average
fee
realization:
54.7
bps



Median
fee
realization:
51.0
bps
Background


16

Asset
Management
Technology
and
Operations
Survey
Results
Figure
15:
Investment
Products
Offered
0%
20%
40%
80%
100%
60%
(
percentage

of
firms)
Domestic
Equity
Domestic
Fixed
Income
Balanced
International
Equity
Alternative
and
Hedge
International
Fixed
Other
94%
74%
58%
39%
26%
19%
10%
Figure
16:
Client
Types
Serviced
0%
20%
40%
80%
100%
60%
(
percentage

of
firms)
Individual
HNW
Institutions
DC
/
401k
Individual
Retail
90%
68%
35%
23%
Figure
17:
Account
Types
Serviced
0%
20%
40%
80%
100%
60%
(
percentage

of
firms)
Individual
HNW
SMAs
Institutional
Sep.
Accts.
Mutual
Funds
ETFs
Partnerships
Retail
Sep.
Acct.
Common
&
Collective
Funds
72%
62%
47%
23%
23%
19%
10%
Investment
Adviser
Association
and
SEI


17
Investment
Adviser
Association
The
Investment
Adviser
Association
is
a
national
not-for-profit
organization
that
exclusively

represents
the
interests
of
federally
registered
investment
adviser
firms.
The
Association

was
founded
in
1937
and
played
a
major
role
in
the
enactment
of
the
Investment
Advisers

Act
of
1940.
The
IAA
consists
of
about
500
investment
adviser
firms
that
collectively

manage
in
excess
of
$8
trillion
for
a
variety
of
institutional
and
individual
clients.


SEI
SEI
(NASDAQ:
SEIC)
is
a
leading
global
provider
of
outsourced
asset
management,

investment
processing
and
investment
operations
solutions.
The
company’s
innovative

solutions
help
corporations,
financial
institutions,
financial
advisors,
and
affluent
families

create
and
manage
wealth.
As
of
the
period
ending
December
31,
2006,
through
its

subsidiaries
and
partnerships
in
which
the
company
has
a
significant
interest,
SEI

administers
$366.6
billion
in
mutual
fund
and
pooled
assets
and
manages
$181.5
billion
in

assets.
SEI
serves
clients,
conducts
or
is
registered
to
conduct
business
and/or
operations,

from
more
than
20
offices
in
over
a
dozen
countries.
SEI’s
Investment
Manager
Services
division
provides
total
operations
outsourcing
solutions

to
investment
managers
focused
on
mutual
funds,
hedge
and
private
equity
funds,

separately
managed
accounts
and
institutional
client
services.

The
division
applies

operating
services,
technologies,
and
business
and
regulatory
knowledge
to
each
client’s

business
objectives.

Its
resources
enable
clients
to
meet
the
demands
of
the
marketplace

and
sharpen
business
strategies
by
focusing
on
their
core
competencies.
For
more
information
on
this
report,
please
contact:
David
Tittsworth

Paul
Schaeffer
Investment
Adviser
Association

SEI
1050
17th
Street,
N.W.,
Suite
725

343
Sansome
St.,
Suite
425
Washington,
D.C.

20036-5503

San
Francisco,
CA
94104
(202)
293-4222

415-293-6507
david.tittsworth@investmentadviser.org


pschaeffer@seic.com

This
information
is
provided
for
educational
purposes
only
and
is
not
intended
to
provide

legal
advice.
Neither
SEI
nor
the
Investment
Adviser
Association
claim
responsibility
for
the

accuracy
or
reliability
of
the
data
provided.
Information
provided
by
SEI
Global
Services,
Inc.
©
2007
SEI
Investments
Developments,
Inc.
About
the
Sponsors