Linedata Services: The ‘great resignation’ and the transformation of asset classes are triggering new thinking.

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Asset managers say, “We’ll build, partner, or outsource.”

Strong Market Drives Operating Decisions

Given the current state of the industry, asset management has done very well. Ultimately, asset values ​​can reach $100 billion with healthy growth despite current volatility.

Now the goal is to operationalize, streamline and future-proof processes and technology. Let’s be clear – we learned a lot. Managers make tough decisions about technology and operations: “We’ll do it in-house, for these we’ll partner, and for these we’ll outsource.” These decisions were triggered by necessity because companies are challenged to find expertise and human resources at their cost – both changes are happening.

The position that business leaders are taking as a result is: We believe someone else can do it or we’ll partner up. This type of specialization and the resulting decisions drive core business strategy.

Innovation and Workforce Evolution

Companies have struggled to keep innovation on track during remote work. Innovation often comes about by chance or creation by accident. It has indeed been difficult because those indefinable elements that develop when people physically work together are harder to find. That’s the reason asset managers push beyond the standards of how to drive innovation.

New types of relationships between employers and employees have developed. We are less tied to work family with remote work. A distributed workforce empowers CEOs to make more outsourcing decisions: it’s clearer that “the work doesn’t always have to be under my roof” to achieve quality results with a quality vendor.

The labor market is dislocated; it’s hard to find people at any cost. Asset growth has enabled and driven this challenge. To add to this, the mix of assets companies manage continues to change and specialize – take, for example, crypto assets. Thus, the type of work expertise required has also changed. There is currently an imbalance, but it will not last. Supply and demand will eventually align, but that cannot be changed overnight.

We surveyed 200 asset managers to find out what keeps them up at night. Find out what they are planning for 2022.

New asset classes drive activity

Private Markets are hot right now – jaw-dropping in debt and equity. Operationally, this is a challenge for most companies. Private markets mean a lot of paperwork, lawyers, additional facilitators, lack of price definition, control and service. Asset owners have always been involved in private markets; and now more traditional asset managers become active as they identify opportunities for diversification and growth.

We are all experiencing the evolution of crypto – a $2 billion market approaching the global hedge fund market and in the hands of just a few movers. Crypto 2.0, blockchain, smart contracts and more are becoming more functional, now shifting to web 3.0. The opportunity is here and it’s exciting for the asset management industry – a new platform offering all the same things in a different way. People want to invest in this ecosystem. For Asset managers, it’s a growing part of the global economy. Services that allow this ecosystem to sustain and grow – digital transactions and smart contracts, for example, will produce a new batch of economically viable businesses to invest in.

From an operational perspective, the way investors participate now is straightforward. Private currencies, high fees, based on technology. The SEC has not yet cleared asset managers create products for institutional investors and individuals. It’s a fascinating operational challenge for asset managers – how to invest, how to value companies, how to get in on the action? Asset managers invest directly in companies such as Coinbase. It is a quasi-custodial bank and an exchange heavily marketed to asset managers. They aim to launch crypto-focused funds amid growing regulatory activity. Traditional service providers will likely get a “digital asset” license.

Traditional asset managers and traditional private equity firms will use outside providers for work, like asset pricing, which will help them report to investors and regulators. This is how they will solve non-standard and complex markets. Workflow tools will be key in determining which steps can be automated and manual processes reduced. Finally, they will need effective alerts.

Global ESG standards are still ‘apples to alligators’

Finally, ESG will continue to be a strength this year. Asset managers want 2022 to be the year investors are comfortable with how the industry and individual managers are progressing – the company itself, and then how it implements ESG as a credible and sustainable part of its investment process. That’s the way – but it’s unclear how far we’ll get from standard approaches. It’s still an “apples to alligators” problem on a global scale. While the EU is ahead of standardization and a framework with SFDR, actions are not at crisis level. It’s not like MiFID – more in the realm of ‘crisis in the queue’.

About the Author, Philitsa Hanson

Philitsa Hanson is the Global Head of Product of Linedata Asset Management. During her 18 years at Linedata, Philitsa has worked closely with different types of asset managers including institutional investors, private wealth managers and hedge funds to improve their operations.

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Linedata Services AG published this content on February 21, 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unmodified, on February 22, 2022 21:53:52 UTC.

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Sales 2021 161M
183M
183M
Net income 2021 23.3 million
26.4M
26.4M
Net debt 2021 57.8 million
65.5 million
65.5 million
PER 2021 ratio 12.9x
2021 performance 2.72%
Capitalization 281M
318M
318M
EV / Sales 2021 2.10x
EV / Sales 2022 1.93x
# of employees 1,082
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