The Changing Landscape of Investment Operations – 2022
It was a pleasure to host the Investment Operations Round Table in Sydney this week with a number of leaders within the industry. The agenda traversed People – Retention and Attraction, Operational Alpha and Adapting to Regulatory Changes.
Growth of Private Markets: Skills, Systems and Processes
One of the key insights gleaned from the discussion was the increasing growth within private markets is giving rise to challenges across how to build and set up the ecosystem of processes and also secure the right talent for the roles. There is a shallow pool of candidates with in-depth experience within alternative asset classes in Australia, and the current challenge of insufficient onshore resources is acute. Furthermore, this conversation highlighted the challenge of offshoring owing to cost reduction initiatives has led to more Australian tax and risk specialists being located overseas.
Insourcing vs Outsourcing, and Investment Data Evolution
Finding the right balance of insourcing versus outsourcing is a continuous battle that funds of all sizes are going through and will be going through for the foreseeable future. Many funds rely on outsourced partners or offshored talent within their own organisation to support the local business onshore.
As businesses continue to go on the journey of achieving operational alpha, the implementation of data warehouses was discussed. Large superfunds are tending to consider leaning on external consultants for bringing industrial strength to their workflows for robust outcomes on complex structures and higher data quality, governance, and control. Leaders highlighted the importance of quality and control frameworks being key to nail down correctly before embarking on the implementation. Some boutique fund managers on the other hand are looking to build the capability inhouse to aid upskilling of existing staff to retain the intellectual property inhouse and help keep staff on deck as well by offering them a learning and development opportunity for their careers.
Future Skill Sets of Investment Operations
This has led to broadening the scope of investment operations positions to include investment data as a skillset. Data skills are presently not as complementary to investment operations, with a shallow pool of talent. Large swathes of candidates will need to upskill themselves to meet the requirements of the future. The added layer of uniqueness of systems being implemented reduces the availability of talent with the exact experience as Kaizen has recently recruited for such positions, wherein hiring managers need to be amenable to training up based on transferable skills into the role.
Employee Value Proposition and Retention
While there was no specific employee value proposition as a silver bullet to be offered, there was alignment on career development opportunities to help retain staff, and acknowledgement of offering flexible working arrangements as largely a norm. Leaders did emphasize on the length of overseas leave and ability to work remotely for periods of time to visit family this year having increased, and while managers are supportive of this on a continued basis, question the long term viability and sustainability of this given timezone differences staff would need to work through, impacting wellbeing and productivity.
One of the smaller superannuation funds, in particular, offered one day every fortnight as flexible leave, that the staff member could take if and when needed on any particular day that suited them. They have seen benefits in productivity and also loyalty from their current staff members. Although, this may not be applicable to a larger fund.
Adapting to Regulatory Change
Superannuation, global and domestic fund managers are all adapting to constant regulatory change and leaders highlighted which gives rise to its own challenges. For example, the introduction of portfolio holdings disclosure (PHD), mandating superannuation funds to disclose the value and weighting of underlying assets within each of its investment options has been challenging especially for unlisted assets as access to data and real-time valuations can be difficult to obtain. With staff handling added regulatory reporting responsibilities on top of their business-as-usual activities, there has been an increased focus on workloads, albeit providing greater exposure. The scope for hiring additional talent to ease regulatory workload pressure is limited owing to the current employment market conditions, and scarcity of onshore talent.
We look forward to continuing to observe how the industry solves for the present challenges they face and supporting them in finding the optimal solutions for their unique businesses.
We thank our clients from ABRDN, Active Super, AIA Australia, AMP Capital, ATLAS Infrastructure, Auscap Asset Management, Aware Super, Hub 24, MA Financial Group, Pengana Capital, PIMCO, ROC Partners, T. Rowe Price, EISS Super and REST Super who contributed valuable insights to the discussion. We look forward to hosting you again.
For inquiries related to investment operations, please reach out to Darragh Cleary below.
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Based in Melbourne and Sydney, Kaizen Recruitment specialises in financial services recruitment across funds management, wealth management, superannuation, investment consulting and insurance. If you’d like to discuss candidate career drivers and the current state of the market within the financial services recruitment landscape, feel free to reach out to us with your details below.
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