With the constant evolution of new products, technologies, regulations, operations and processes, staying up-to-date can be a daunting task. The 2014 NICSA General Membership Meeting that took place in Boston last week provided attendees with the tools and knowledge they need to effectively manage these changes, evolve with the industry and succeed within their professional careers. Each year, Money Management Executive and NICSA conduct a call for nominations for companies and people succeeding in operational innovation. Entries are submitted to an independent panel of industry experts recruited by NICSA who select the winners.
Based on the agenda, remarks made by winners and points discussed during the conference, attendees and others in the industry discuss how they're coping with some of the biggest shifts going on in the mutual fund and ETF provider world.
Mutual funds are looking more and more like hedge funds and vice versa. Describe the blurring of the lines between registered and private funds -- and what the investment industry of the future will look like.
Matthew Fronczke, director at kasina
"Advisors thought their portfolios were well-diversified prior the financial crisis, however due to tightening correlations amongst various tradition asset classes . Since then there has been an effort to provide financial advisors with a new set of tools to more effectively protect client portfolios against adverse market events. Those tools are liquid alternative funds. Managers see opportunity to diversify products and to provide new new investment strategies that weren't there before. From a product development perspective there are trends toward liquid alt asset classes and strategies.
We're seeing a lot of interest in the multi-alternative asset category - an alternative fund of fund - a one stop shop for advisors to allocate their alternative assets into a single product. Providers right now are approaching this in a number of ways. They see they don't have expertise to get into this space so they sub-advise with traditional hedge fund managers. They have distribution relationships and staff. It's mutually beneficial to both firms. "
How are firms managing new products from an operational perspective?
Matthew Fronczke, director at kasina
"From a product development standpoint firms are working more closely with investment managers and third party research managers - they're more proactive with product research and development. There's been increased needs for analytics and advanced training so wholesalers can communicate to clients on how it will fit into portfolios and replace or compliment other traditional portfolio holdings. The need for training wholesaling staff is more than ever.
We're seeing more and more building out collateral to support wholesaling staff around alts - around thought leadership and being more consultative on how to protect against market volatility and enhance returns."
Identity theft is front of mind for the investment industry, and impacts just about everything fund firms do. The SEC has taken on a more active oversight role into this issue, and fund firms are feeling the pressure. How are fund firms getting ready?
Jaime Kahan, principal of advisory services at Ernst & Young
"The SEC has made cybersecurity a priority and expects firms to meet a very high standard going forward. Cyber-attacks can usually be detected with the proper safeguards in place and an educated workforce. Cybersecurity is everyone's responsibility and C-level involvement is critical.
Because firms generally outsource many of their middle and back-office functions, it is important to establish ongoing vendor oversight programs. Firms should also create a "playbook" that clearly spells out how to detect, respond, recover and report cyber-attacks. Early detection is important in the protection of your organization. Firms should test their entire security ecosystem for internal and external threats and regularly develop new scenarios for potential threats."
Brandon N. Robinson, attorney of data privacy/security, Balch & Bingham
"As part of its published Examination Priorities for 2014, the SEC stated that "[t]he [examination] staff will focus on market access controls related to information leakage and cyber security " We expect that SEC examiners will be reviewing whether mutual fund and ETF providers have policies and procedures in place to prevent and detect cyber-attacks and whether they are properly safeguarding their systems against security risks.
In light of this, fund providers may wish to review and revise their current policies and procedures, beginning with an assessment of how their current policies and procedures match up with the cybersecurity framework issued by the National Institute of Standards and Technology."
What can Big Data do to help us measure and improve customer experience? This session will share what to look for, and how to use the myriad data to make a difference for your customers.
Dan Cwenar, president and general manager of Access Data, a Broadridge company
"Big Data can be used in four areas to improve the customer experience including product development, delivery, education, and support. Data sets including sales activity and customer sentiment can help firms understand and predict market trends, and guide product development and delivery processes.
Even if the right product is offered at the right time, the market must be aware and understand the offering, if not, sales will falter. Education and promotion can be tailored to meet specific client preferences if they are measured. Lastly, data collected from call centers, blog posts, and news articles, coupled with sales activity data, can help measure results and facilitate fine tuning of the customer experience."