Web 2.0 Tools Could Complicate Efforts
February 18, 2008
IT practitioners and other tech types will kick off this week's 26th Annual NICSA conference and expo in Miami by addressing how fund companies will manage the industry's international expansion.
The conference's first panel, to be moderated by Gary Palmer, chief executive of the Irish Funds Industry Association, will cover how the investment management industry will administer its international growth. Last year was the first time that more than 50% of global fund investment came from non-U.S. domiciles.
"I'll be asking panel members about how globalization and the need to operate in numerous jurisdictions are affecting fund companies and the IT staff that support these operations," Palmer said.
Another panel member, Neil Holsteen, vice president of information technology operations at Janus Capital Group, said he expects the discussion to focus on how operations and tech personnel can best support the IT infrastructure at multi-national fund companies.
Among the questions he expects to raise is how CIOs can synchronize various levels of data centers remotely. This question matters, he said, because managers are being asked to integrate data centers in foreign offices that can range from sophisticated operations to ones that are little more than a closet stuffed with basic equipment.
The challenges that go hand-in-hand with these situations include negotiating cultural barriers, language barriers and adherence to differing compliance regimes.
Holsteen added that if you then consider the parallel responsibilities for mangers of meeting data privacy and security concerns, it is easy to see the complexity of supporting far-flung operations.
"It can be difficult to support offices populated by people with widely differing levels of tech saviness," he said.
Palmer touched on this topic in a pre-conference discussion with MME when he said that fund companies have to choose between a decentralized model of multi-office administration, what he called the "follow the sun" method in which each national office takes responsibility for its own data administration, and a model in which regional centers take responsibility for their jurisdictions.
Another likely topic that the panel will consider will be the appropriateness of outsourcing and how to choose among the various outsourcing options that fund management companies have.
Two Complementary Concerns
Drilling down a little further, William Salos, executive vice president and head of global business development at PFPC Inc., said he expected the panel to look into how fund mangers can balance two paramount concerns.
PFPC, a member of The PNC Financial Services Group, is one of the nations largest full-service mutual fund transfer agents and a leading provider of processing, technology and business solutions to the global investment industry. PFPC offers fund accounting and administration, transfer agency, custody and subaccounting services for 68 million shareholder accounts representing $2.2 trillion in total assets.
The first half of the equation, according to Salos, will be to investigate how the industry can best integrate post-Spitzer compliance and regulatory responsibilities. He described the changed climate for reporting as one that now has to deliver the right kind of data to both internal managers and to the board. He said fund managers must coordinate multiple providers who are all gathering information and data and bring all these data flows together.
"I call it the green-eyeshade-on-steroids approach in which IT personnel integrate their 47 realms of data in such a way it can be understood by multiple audiences," he said.
The second concern that goes along with the compliance initiative is the process by which fund company managers can get sales information about what products are doing well across a number of regional markets and fund categories. Part of this data package would be what Salos calls the next level of detail about which funds are being marketed most effectively by various outlets including fund supermarkets and wire houses.
"It is no longer enough to just churn product out, that doesn't work," he said.
Touching on the globalization issues facing the industry, Salos said that there are two motivations driving fund companies to look abroad.
Distribution strategies are increasingly focused on foreign markets on the one hand for marketing, and also because investors are trying to successfully generate alpha returns from foreign holdings.