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Investment Firms Embrace Outsourcing
In their 2024 Investment Management Outlook survey, Deloitte found that around 27 percent of respondents plan to pursue outsourcing for front-, middle-, and back-office processes, compared to only about 5 percent of respondents building in-house strategies.
In my experience leading client service teams, I have seen this increased demand for outsourcing firsthand. But my experience shows a more nuanced picture of this trend. Today, firms are not just looking for an inexpensive way to get work done. Instead, they seek to leverage the functional and industry expertise of managed services to manage specific operations or functions on an ongoing basis.
This post highlights real-world use cases of how and why firms engage with managed services to improve their processes and gain a competitive advantage.
Onboarding a New System
Investment firms regularly evaluate and update their technology to stay competitive, compliant, and efficient. However, adopting a new solution – and ensuring its optimal performance – can be daunting. Fear of disruption prevents some firms from implementing new software even when they know it will add value to their operation.
For one investment manager I worked with, that fear kept them from moving forward with a new accounting system. The firm wanted to onboard a new system but didn't have the in-house expertise needed to implement and maintain this new technology.
Leveraging the expertise and bandwidth of SS&C Managed Services, the firm was able to move forward with a new accounting system. After the implementation was completed, the firm continued to use managed services to operate the system, including handling third-party reconciliation, pricing and valuation, and investor and shadow accounting.
SS&C Managed Services provided the time and know-how the firm needed to take on the tasks associated with implementing and utilizing a new accounting system. In doing so, we alleviated the need to hire or train people in-house, eliminated key person risk, and ensured a successful transition to the new system.
Enhancing Trade Break Resolution
Trade breaks are a common challenge for investment firms, often resulting from human error, system discrepancies, miscommunication with counterparties, or events like corporate actions and market fluctuations.
When trade breaks occur, they can disrupt daily operations. As back-office teams work to manually reconcile discrepancies, settlement delays and processing backlogs become inevitable, increasing the potential for operational risks and increased costs.
To mitigate the time and expense associated with trade breaks, our client leveraged SS&C Managed Services to monitor and resolve breaks in coordination with their brokers.
By utilizing SS&C Managed Services to oversee trade matching, our client's operations team could reallocate their efforts toward more strategic, high-value internal tasks. Additionally, since many trade breaks occur between 6:00 and 9:00 p.m. Eastern Time, managed services provided coverage during hours when the client’s internal staff would be unavailable.
By leveraging managed services for trade matching, investment firms can enhance operational efficiency, reduce costs, and minimize the risk associated with trade settlement delays.
Filling Front-Office Gaps
In today’s fast-paced investment landscape, it is essential that investment firms have confidence in their front-office teams' ability to execute orders both quickly and accurately. But for one Eze OMS client, ongoing short- and long-term staffing challenges were preventing them from meeting this critical goal.
Facing employee turnover and the need to recruit new talent, the firm turned to SS&C Managed Services to bridge the staffing gap. The managed services team seamlessly backfilled key front-office tasks, including trade allocation, new security creation, security maintenance, and manual trade entry support.
The firm eventually filled these roles, and this client used the managed services team to train its front-office staff in operations and ensure they were fully educated in OEMS processes and procedures.
Keeping Compliant
In 2024, the investment and wealth management industries continue to face a period of significant regulatory and operational change.
For one firm, the challenge of keeping up with these numerous compliance updates was exacerbated by employee turnover.
To maintain compliance and avoid costly penalties, the firm turned to SS&C Managed Services. The compliance specialists from the managed services team collaborated closely with the investment manager and compliance officer to review and test the firm’s internal rules, ensuring compliance with current regulations.
As regulations evolve, the managed services team continues to perform regular rule audits and implement rule updates, ensuring the firm remains compliant. These recurring reviews are based on the latest regulatory changes, providing the firm with ongoing compliance assurance.
Managed Services to Meet the Specific Needs of Your Investment Firm
Managed services can help investment firms gain a competitive edge in today’s dynamic marketplace.
Our managed services experts act as an extension of your team, seamlessly handling essential daily and monthly processes within your existing SS&C technology platform.
With a flexible range of front-, middle-, and back-office operational services, you can configure a solution that meets your current needs and easily scales as your firm grows.
What challenges can we help you solve? Contact us to learn how SS&C Managed Services can support your investment firm’s success.
