Compliance Tops Buy-Side Concerns

Terry Flanagan

Regulation continues to be a major focus for the asset management industry, and buy-side firms will continue to be diligent in assessing adherence to regulations during the coming year, according to Linedata’s 2015 Global Asset Management Survey.

With various states of maturity for so many of the regulations, effective compliance programs to address the developments will position firms to manage the burden of compliance.

As the compliance function evolves and compliance staffing levels increase, financial services organizations continue to address the volume of regulation and the risk it poses for the business.

“The industry continues to realize clarity around regulators’ expectations regarding Basel III, Solvency II, Dodd-Frank, FATCA, AIFMD etc.,” Linedata said in a report. “We can expect to see firms further analyze and implement regulations during 2015.”

The survey was conducted during the second half of 2014 during Linedata Exchange events in Paris, London and New York, as well as through an online survey, with respondents from asset managers, hedge funds, fund administrators, banks, wealth managers and custodians

In addition to managing compliance, firms are embedding their appetite for risk into business decisions. Understanding and defining the appropriate levels of risk will better align decision-making and incorporate effective monitoring and governance.

While 48% of all survey respondents cited deploying regulation as their top current priority, 40% claimed optimizing operating models as their main challenge. Firms continue to address the volume of regulation and the risk it poses for their business. As the industry continues to realize clarity around countless regulations, it can be expected that firms will further analyze and implement regulations during 2015.

“While buy-side firms continue to address numerous regulations, enforced over time, they must also deal with operational and associated reputational risks. They must effectively manage these risks without compromising their competitiveness in challenging environments,” said Mike de Verteuil, business development director at Linedata, in a release.

Investor/client demands, distribution channel challenges and investor/client confidence were other challenges faced by firms during the past year.

When asked to name the key IT priorities for their firms in 2015, improving existing systems, data management and risk management came out on top for all respondents.

When asked what would set them apart from their competition, many firms cited client service as a differentiator. Firms can distinguish themselves by the quality and expertise of the staff they have building relationships with clients. Client retention and client base growth can be found by providing an experience that aligns service with offerings valued by the client.

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