Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a703651
Loss of back office control is biggest concern for wealth managers
by Elsa Buchanan on Sep 17, 2013 at 13:52
A report by Equiniti Investment Services, the share registrar and financial services outsourcing firm, has found that 60% of wealth managers consider the loss of control as the biggest drawback of middle and back outsourcing.
The survey, which gathered responses from 70 senior level executives within the UK wealth management sector, also found that security issues (38%), loss of service (37%) and lack of flexibility (32%) were among their biggest worries.
When asked what their attitude was towards outsourcing, wealth managers said they were positive at 31%, while 13% remained negative, with the aggregate view suggesting that wealth managers are open to outsourcing but perhaps cautiously so.
Indeed, the survey also found that more than half of wealth managers said they would never outsource settlement, corporate actions, and dividend processing, while they were between 65% and 78% to say they would never consider outsourcing client reporting, CRM and dealing processes.
Meanwhile 30% believed large firms would keep their own operations departments and never outsource any aspects to third parties.
‘This is despite the fact that the requirement for reporting will increase from annually to monthly, and is perhaps linked to the concerns over security and control as raised in [the survey],’ explained Mark Taylor, managing director at Equiniti Investment Services.
Yet, the inevitable pressure that regulation will have on middle and back office functions, most notably from the change to monthly client reporting, has led to 38% of senior executives changing their view of outsourcing.
Taylor explained: ‘In reality it is expected that due to past under-investment in legacy systems, many wealth managers have not been and will not be able to make the necessary investment, monetary and management time, in their in-house systems to meet the regulatory requirements.’
Additionally, 78% of wealth managers surveyed were ‘entirely satisfied’ with their current systems/service provider.
News sponsored by: