Is your organisation resource-intensive or resource-effective? The vendor management challenge facing fund managers is an unintended consequence of the continuous onslaught of regulatory change in fund management. FE fundinfo analyses this area of expertise.
For anyone who was involved in the implementation of PRIIPs and MiFID II, now more than two years ago, you’d be hard pressed to conjure up any fond memories. It was a mammoth task for European fund managers and fund distributors to meet the January 2018 deadline considering the scale of data requirements of the (original) MiFID template and PRIIPs KIDS.
The onslaught of regulatory change has been consistent since and the pressure has mounted on fund managers and distributors to find suitable vendors to help support in house operations teams and meet regulatory obligations. Add to that the upward pressure on costs, changing investor demands, and the need to focus on your core expertise, you end up with a growing list of solution providers, from data vendors, to fund administrators, compliance consultants, and IT/technology vendors just to keep the business rolling.
Be resource-effective, not resource-intensive
Organisations often end up with a mix and match approach, both running some operational activity in house and outsourcing others. Indeed, you may have an active vendor management program in which you deliberately diversify supplier selection to mitigate risk, despite overlapping vendor capabilities. On the contrary, you may not have made these decisions strategically and have therefore ended up with a muddled network of vendors who only add to someone’s headache in your operations, technology or data teams as they try to patch the gaps between siloed systems and solutions.
The current environment has highlighted the critical dependencies of fund managers on their vendors and the need for a robust vetting process. Business continuity planning extends far beyond the inner workings of an organisation to any vendor or partner playing a part in the value chain. Whether they are connected by technology or a business relationship, there is a link between vendors and your bottom line.
If you’re constantly patching data gaps with manual workarounds and spreadsheets being passed from one department to another, or from one vendor to another, are you really optimising the use of your internal resources and gaining the operational efficiencies that you had intended?
Conducting initial due diligence is mainstream but how often are you reviewing your vendors? Yes, you may have gone to tender and selected the best vendor based on what you deemed as the key criteria at the time. But things change.
Transparent online tracking tools that allow you to monitor service metrics, SLA’s, active engagement in quarterly business reviews are just some of the ways you can ensure your objectives not only align with your vendors, but to ensure their capabilities continue to match your expectations and needs going forward.
Quite simply, it’s important to continuously monitor and assess your vendor ecosystem as your business evolves.
Is less, more?
The vendor management challenge in fund management is real and likely to stay. It’s a matter of mitigating risk and ensuring your vendors facilitate growth, rather than prohibit it.There are some key benefits to consolidating your vendor list and partnering with your suppliers at a more strategic level.
If you’re facing tough budget cuts and need to save time, your resources are better placed in managing a few strategic vendors than many. Vendors may offer capabilities that extend further than those you have already entrusted to them. A pre-existing understanding of your business also plays a crucial part in forming a strong foundation to help you extend that relationship into other areas.
By doing so, you also increase your buying power. The interdependency between both parties opens the door to more strategic discussions that play to your requirements and the development of your vendor’s capabilities as they support your business objectives.
With the next version of the European MiFID Template looming and further PRIIPS changes on the horizon, are you confident you have the right vendor ecosystem in place today to support you?
If your organisation does not already have a file data arrangement in place with FE fundinfo and you need help with EMT V3 file data validation and migration, contact us now.