London
20 December 2016
Reporter: Stephanie Palmer
Wealth managers considering outsourced utilities
The regulatory environment is still considered the biggest challenge facing wealth managers, however they are also focused on improving operational efficiency and considering integrated and outsourced clearing and settlement solutions, according to a survey from Clearstream and Goodacre.

The regulatory landscape was named as the biggest challenge by 31 percent of respondents. However the second-most popular category was ‘other’, selected by 21 percent, followed by competition and winning new business, named as the main obstacle for 13 percent.

When facing regulation, the biggest challenges emerged as ‘keeping on top of regulation’, named as the biggest issue by 36 percent, and the cost of regulation, named by 32 percent.

The survey report said: “Compliance is obviously an essential element of running a regulated business. In addition to charges levied by regulators, additional costs incurred through professional advisers were major factors.”

However, respondents also said there are business opportunities in sight within the next three years, particularly in new business development—highlighted as an opportunity by 29 percent.

Improving technology was seen as an opportunity by 14 percent, while the new generation of clients and market volatility were each seen as providing opportunities by 11 percent.

According to the report, those that highlighted new product development as an opportunity named things like improving client reports and online delivery of services, generally focusing on improving customer services.

The report said: “Many companies felt that improved technology would be a major factor in reducing costs, lowering operational headcount and improving efficiencies.”

A majority of respondents, 69 percent, said they see value in using a custodian or service provider. Of these, 68 percent said this benefit lies mainly in reducing operational costs and improving efficiency.

A further 21 percent said using a service provider could improve customer security, and 11 percent said the main benefit would be risk mitigation.

The report said: “Apart from improving efficiency and automation in the funds sector, clients are increasingly looking to bolster the security of their financial infrastructure.”

When asked whether implementing an integrated execution, settlement and custody service across all asset classes would be of benefit, the results were more evenly split.

Although 35 percent said their firm would not benefit from such a system, 33 percent said they believe theirs would, and a further 32 percent said they already have such a process in place.

According to the report, those opposed to an integrated system cited “reasons that range from a perceived lack of control, through to the fear of poor quality of service”.

It added, however: “Economically, outsourcing operations has the benefit of a significant reduction of cost overheads. The level of operation staff and IT support can be reduced and replaced by a charging structure geared towards business volumes, assets under management, or both.”

“Over time, it is fair to predict that post-trade settlement activity will become an outsourced utility.”

Indeed, improving operational efficiency did emerge as the most pressing factor that wealth managers feel they should improve over the next 12 months, with 30 percent naming it as the single most critical point.

This was followed by improving technological interactions, named as the priority for 20 percent, and improving customer service levels, considered the most critical concern by 17 percent.

Commissioned by Clearstream and conducted by Goodacre, the survey included senior directors of wealth management firms. The results were compiled using the most comprehensive responses from 100 participants.

More Industry news
The latest news from Asset Servicing Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Northern Trust commits to EU hub
19 July 2017 | Luxembourg | Reporter: Stephanie Palmer
Northern Trust is set to establish a banking presence in Luxembourg, and has appointed a new head of continental Europe, in a move that it says is “further establishing its commitment to the region”
NSE goes live with Nasdaq surveillance solution
17 July 2017 | Lagos | Reporter: Stephanie Palmer
Nigerian Stock Exchange has gone live with a new market surveillance platform powered by the Nasdaq SMARTS solution
Multifonds: Asset management industry to innovate from the inside
11 July 2017 | London | Reporter: Stephanie Palmer
Innovation in asset management will come from within the industry, rather than from start-ups or disruptors, according to a survey from Multifonds
AxiomSL sees boost from strategic investment
06 July 2017 | New York | Reporter: Stephanie Palmer
Data management and regulatory reporting technology provider AxiomSL has received its first institutional financing, with a strategic investment from TCV
Harmonisation will mean success for T2S
29 June 2017 | Warsaw | Reporter: Stephanie Palmer
More harmonisation and standardisation is required for the market to fully realise the intended benefits of the Target2-Securities platform
70 percent say cyber crime will lead to financial crisis
28 June 2017 | Warsaw | Reporter: Stephanie Palmer
The next financial crisis is ‘highly likely’ to be caused by cyber crime, and the only way to manage this is for the industry to come together, according to a panel session at The Network Forum in Warsaw
ECB calls time on struggling Italian banks
26 June 2017 | Vicenza | Reporter: Stephanie Palmer
Two Italian banks have been deemed ‘failing or likely to fail’ by the European Central Bank, and will be wound up under Italian insolvency procedures
More Industry news