Dive Deeper in This New Guide The investment management industry is facing no shortage of challenges.
Rising fee pressure, intensifying competition from low-cost ETFs, and an increasingly complex regulatory environment are squeezing profit margins and causing demand for increased operational efficiency.
To stay competitive, firms are diversifying their strategies and expanding their asset classes. However, this diversification introduces new operational complexities and compliance burdens. Simultaneously, the industry is grappling with finding and keeping quality talent, making it difficult to resource these growing demands.
To address these challenges, many investment firms are turning to outsourcing as a strategic solution. By leveraging the expertise of third-party providers, firms can reduce costs, enhance operational efficiency, mitigate risks, and improve employee satisfaction.
In this blog post, we explore the challenges facing the investment management industry and how outsourcing can help solve these problems and more.
The Challenges Facing Firms in 2025
Fee and Profitability Pressures
Despite growing assets under management in 2023, Deloitte reports in their 2025 Investment Management Outlook survey, that both revenue and profit margin expansion remain elusive for the investment management industry.
Firm profitability is also impacted by mounting fee pressure from investors brought on by competition from low-cost ETFs.
Increasing Operational and Regulatory Complexity
To differentiate themselves in this increasingly competitive industry, firms are diversifying assets and strategies. In doing so, they face new operational challenges. Diversification also introduces added hurdles to an already challenging and ever-changing regulatory landscape. As these regulatory frameworks become increasingly complex, firms face growing compliance burdens and operational risks.
Challenges Finding and Keeping Talent
As organizations work to address these added operational and regulatory burdens, they seek to resource their teams with technical talent. As demand for these resources increases, firms are experiencing a shortage of this type of professionals.
Additionally, employee engagement, a significant measure of employee well-being, is declining, Gallup reports. Lacking adequate and engaged resources, firms face significant risks to their operations.
Addressing These Challenges with Outsourcing
To address these challenges, firms are choosing to enlist third-party providers to support their operations. This move toward outsourcing creates several benefits for investment firms that help solve these problems and more:
Outsourcing in Practice
To give you a better idea of ways firms can take advantage of these benefits through outsourcing, here are some examples of how SS&C users apply outsourcing at their firms.
Trade breaks can disrupt daily operations. To mitigate the time and expense associated with trade breaks, firms leverage SS&C Managed Operations to monitor and resolve breaks in coordination with their brokers.
By employing managed operations for trade matching, investment firms can enhance operational efficiency, reduce costs, and minimize the risk associated with trade settlement delays.
Firms also use SS&C Managed Operations to help maintain their accounting systems, including handling third-party reconciliation, pricing and valuation, and investor and shadow accounting.
Leveraging managed operations alleviates the need for these firms to hire or train people to complete these tasks in-house, removes key person risk, and allows internal staff to focus on higher-impact activities.
SS&C’s Managed Applications offering lets firms tap into our technical expertise to provide peace of mind about how their firms’ infrastructures are hosted and managed.
With managed applications, we handle both hosting architecture and management, including the services firms need to feel confident in their infrastructure: Testing disaster recovery and security protocols, fully replicated data, and issue resolution.
Another perk of leveraging managed applications is the option of Zero-Lift Upgrades (ZLUs), automatic, non-disruptive updates to technology deployed by a managed applications provider.
One of the greatest benefits of leveraging managed operations and applications from SS&C is the flexibility that accompanies our solutions. By working with these teams, your firm can design an outsourcing infrastructure tailored to your firm’s unique strategies and challenges and scale up or down as your needs evolve.
Dive Deeper in This New Guide
Dive deeper into investment industry headwinds, how outsourcing can help address these challenges, as well as everything you need to know about building a successful outsourcing strategy in this guide, Partnering for Success: The Art of Strategic Outsourcing.
Ready to get started? Speak to an outsourcing expert today.