Investment manager

The investment manager of the future – TechCrunch

What is an investment What does a management company look like when it is redesigned on the basis of first principles and on the basis of the real “job to do” of an investment manager?

“Even millennial-friendly platforms like Betterment, RobinHood and Wealthfront only approach their businesses in a one-dimensional way,” said Suzanne Ley, formerly head of financial institutions at Westpac.

“We need to focus on how China is leading the way with its complete reinvention of the way we think about money and investing.

For example, in just four years, Alibaba’s Yu’e Bao fund has grown to be the largest in the world. The walls between shopping, banking, investing and social media are quickly evaporating.

The only name I can think of in the United States that comes close is SoFi – a full-service lending, money management, and social networking platform is where we’re headed.

Below we outline the five characteristics that will set the successful investment management firm of the future apart:

Investment firms today
Investment firms of the future
Technology
  • Correlation models / predictive analyzes based on observable historical data.
  • Data / data management as a competitive advantage.
  • Big data, AI and social media are fueling investment decisions.
Transparency
  • A post-crisis regulatory environment focused on the problems of past crises.
  • CIO communicating with clients / regulators.
  • Regulatory oversight with external advice.
  • Due diligence as a systematic and ongoing oversight and governance process.
Risk mmanagement
  • Asset class silo risk systems with enterprise-wide static risk systems (e.g. counterparty risk).
  • Operational risk silos.
  • Based on the risk of leading indicators that are not lagging behind.
  • Integrated and dynamic risk management in public and private / illiquid asset classes.
Alpha creation
  • Individual stock selection, active fund selection and asset allocation with passive funds.
  • Investment theses expressed in all asset classes, including public and private / illiquid.
  • Influence the results / activist investment.
Culture / talent
  • Focus on cohesive culture.
  • Little real talent management.
  • Professionalize human capital management – workforce planning and leadership development.
  • Corporate leadership as a professional CEO – not CIO / part-time sales.

Using technology to rebalance value for investors

Internally, fund managers are investing in artificial intelligence and big data capabilities, as well as more seamless integration of front and back office processes. Externally, executives are building mobile and tablet apps and expanding their use of social media.

In the future, innovative models, especially in the retail space, will integrate the investment with elements of social media, interactive games and education. For institutional investors, technology will enable more proactive and fully customizable risk management and governance. Companies like DE Shaw, Two Sigma and Renaissance Technologies have validated this quantitative model in public procurement. We are now seeing companies like Versatile VC, Signalfire and GV using the technology to produce better returns in the private markets.

Create and maintain trust through transparency

As the opacity recedes, money holders will see who has worked in their best interests. We expect less interest in the black box hedge fund model.

According to Amanda Tepper, CEO of Chestnut Advisory Group, investors increasingly demand clear, concise and consistent communication from their asset managers. In a recent Chestnut Investor Survey, 92% of respondents said they saw investor communication as part of an asset manager’s mission. In addition to investor requirements, fund managers must comply with a growing array of regulatory requirements.


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