“You move to where the puck is going, not where it is” – Wayne Gretzky
Heading into 2025, there is much talk in the Asset Management industry regarding “Futureproofing”, whether managing investments and assets, or supporting the industry as a service or software provider. To seize the opportunity to proactively think and strategize on the future. About how best not only to adapt to change, but better yet, anticipate it; to best prepare for what may be coming. Thus, the term “Futureproofing” has evolved and taken hold. Anyone in the Asset Management industry would be hard pressed to avoid the topic, as it has been the focus of so many conferences, webinars and roundtables throughout 2024. But what does this mean in terms of concrete steps in the real world of asset management? What are the primary use cases where Futureproofing is being exercised today?
The concept of Futureproofing can have many iterations. At Alpha, we look to Futureproofing where firms must be FAAST: Flexible, Adaptable, Agile, Scalable, and having Total buy-in from all stakeholders. Real, targeted, strategic approaches. We believe it means that they must ensure their Operating Model adheres to being FAAST, taking the basic concept of Futureproofing to this much deeper, specific and detailed level to set themselves up for future growth and success in a highly competitive and shifting industry.
Wayne Gretzky, the Hall of Fame Hockey player and the creator of the above quote, was FAAST! What is often lost in the Gretzky quote is what, beyond his amazing anticipation, Gretzky had that led him to achieve his great success. He had vision! He SAW the entire rink, to anticipate where the puck was going. Combined with the right skillsets of flexibility, speed, agility, plus complete trust from his teammates, Gretzky had all the tools necessary to execute to become the greatest player in hockey history.
Like Gretzky, in the Asset Management industry, effective leaders must go beyond simple anticipation to effectively prepare, see where things are going, and then to execute to those ends with complete alignment. To go deeper than just Futureproofing, to be FAAST:
As we look at the Hot Trends in the Asset Management industry today, we can see how these FAAST concepts are being applied in the real world.
The first trend is the expansion of Public and Private Assets into a Total Portfolio view. Asset managers have been broadening their product lines and expanding into private assets for many years now. But the technologies employed in the industry to “bring it all together”, in areas of risk management, portfolio management and trading, compliance, and reporting were until recently, slow to respond to market demands. Now, Enterprise vendors and major service providers are building out offerings to support the additional, oftentimes disparate asset classes across the platform due to demand from the end-investors. Asset managers must therefore strive for a flexible, agile and scalable operating model to tap into this trend.
Another trend we’re seeing in the industry is the Rise of Retail. There is a clear shift taking place from more restrictive mutual products to open retail SMAs providing more personalization and flexibility for the end client. New ways of accessing the market through private market ownership, fractional ownerships or tokenization will open unprecedented access to investors; asset managers need to be ready to serve these clients and partner with vendors accordingly. Adaptable, scalable and total buy-in would be key to respond to this trend.
There are very few conversations these days that don’t mention the term Artificial Intelligence (AI). This is a buzz word not only in the asset management industry but across the marketplace and is therefore a trend everyone wants to adopt. AI technologies, be it traditional chatbots, conversational AI or generative AI, can all have good use cases in asset management, but all have an underlying requirement of streamlined enterprise data. Once this baseline is set, the right vendors and an agile operating model can easily enable the AI journey.
While a FAAST operating model is useful to futureproof your organization and enable it to respond to the hot trends in the industry, striving for a leaner operating model is also critical. Continued push to look for outsourcing opportunities to focus internal resources on high value-add activities will enable focus on adapting to change, modernizing data and technology and maintaining commoditized activities with market leaders in the area. But to do this, once again a firm needs to be flexible, adaptable and agile.
For those firms that struggle to be FAAST, the outcomes can be disastrous. Losses will accrue in key areas that a FAAST firm would be able to navigate or avoid. This includes growth in AUM, ability to expand to new Products and offerings as markets adapt, leveraging cutting edge ideas, strategies and methods for portfolio management, the usage and management of data to drive business decisions, the retention of top talent to competitors, and adoption of new technology aligned to the business objectives.
As the calendar turns to 2025, and a new season of conferences, roundtables, and seminars is lined up for market participants, there will undoubtedly be new themes and slogans championed towards market players, much like Futureproofing was in 2024. Alpha will continue to skate to where the puck is going on behalf of our clients, anticipating these industry trends, identifying patterns and using our vision, along with our unique skillsets, to help our clients be FAAST, and best be prepared for the next challenges in the industry.
About the Authors
Pat Eldridge
Director, NA West Coast Investments Practice Lead
Pat Eldridge is a Director with Alpha FMC, based in Southern California. Pat has spent more than 25 years in the Financial Services and Technology space, focusing on Investment Platform and Front Office technology and solutions. He leads Alpha's West Coast Investments practice, working with Asset Managers focused on Enterprise level transformation initiatives, ensuring they have the correct approach, strategy, and focus with regards to their technical and operational models for Front Office, including Risk and Analytics, Portfolio Construction, Optimizations and Management, Order and Execution Management Systems, Investment Compliance, and Trade Management. His experiences include Global Head of Buyside Product Development for a major Financial Data provider, and before moving the vendor space, as a Fixed Income trader. He holds a Bachelor of Arts in Finance with a minor in Economics.
Stuti Churiwala
Senior Manager, Investments Practice
Stuti is a Senior Manager based out of Alpha FMC's New York office specializing in operating model design and technology transformations for global asset managers. Stuti has spent several years in the asset management industry and has relevant experience with front office, middle office and data platform design, vendor selections and implementations. Stuti holds a Master of Science in Enterprise Risk Management from Columbia University, New York, and a Bachelor's in business management.