In the Americas, Europe, and the emerging markets of Asia, a wave of regulations is placing unprecedented demands to asset managers. To meet such requirements, firms are now on the lookout for support, and they have since been receiving it from middle and back office outsourcing providers.
The following is a list of the benefits of availing such support from third party firms:
Enabling operational excellence. As they grapple with the stricter regulations, firms are forced to improve their operational procedures, strengthen their accountability and transparency mechanisms, and ensure the performance of the assets under their management. Outsourcing the middle and back office solutions enables this as the third party firms offer their specialized services honed by years of practice on particular tasks in fund administration and asset management.
Boosting resource efficiency. Asset management firms strive for operational excellence while allocating their resources ever more efficiently. Outsourcing becomes a viable option because it relieves them of the many costs and tedious functions associated with maintaining an in-house middle and back office operation: From the procurement and upkeep of the technology and office space, to the recruitment and training of staff. The service providers are the ones that instead invest money and time towards finding and maintaining the latest solutions as well as a pool of professionals.
Promoting a focus on core functions. Since outsourcing frees asset managers of the rigorous responsibilities linked with such tasks as tax reporting, compliance management, data warehousing, accounting, and managing the day-to-day transactions, they can then focus on strategic and front office functions such as building the investment policies, executing core management decisions, and exploring new markets. That is, while drawing support from the data and infrastructure provided by the middle and back office.
Facilitating better client relations. Much of asset management involves relating with client investors – presenting investment proposals to them, getting them on board the firm’s investment direction, and updating them about the performance of their fund. Through the help of a competent outsourcing partner, asset managers will be able to deftly take on client relations. They can easily monitor trends and find investors whose interests are compatible with the firms, pull out data to support their pitches, communicate to them regarding the fund, and most importantly, deliver on the promises of growth.
In the end, outsourcing is not simply about finding an additional pair of hands to do a particular job, but receiving a kind of help that creates a domino effect on the entire firm’s operations.