Staff in asset management firms are under renewed pressure to do more with less, yet they already had almost no spare bandwidth. Here are some real-world examples of 2022 efficiency initiatives that do not involve further cuts to bandwidth. This is the second blog in Accomplish’s two-part series on the ROI of business intelligence (BI).
Asset management staff are under renewed pressure
Volatile investment markets have cut asset managers’ revenues, and staff are under renewed pressure to do more with less, yet they already had almost no spare bandwidth.
For sure, firms should re-consider non-essential current-year costs, with the usual suspects being hiring freezes, scrutiny of unsigned contracts, and reduced renewals of industry memberships and events. Will it be enough? Probably not. This is because if all you do is focus on ‘having less’, you may not also be able to ‘do more’.
Focusing on the former is a good short-term response, but on its own it risks a vicious circle because it assumes that what is happening now is a one-off, rather than part of a longer-term trend. But what if you face the same situation next year, and the year after? How would you stay competitive?
Do more with less
In recent years, new capabilities have helped asset managers make the most of comparative inefficiencies. For Accomplish’s part, the Behavioral Benchmark has enabled firms to measure and compare their effect on key client behaviors like buying, buying more, and staying – along with leading indicators.
This caused us to take a step back and assess the ROI of the business intelligence we provide, which we have summarized in this blog series.
As a contribution to the search for efficiency savings, therefore, here are some real-world examples that could help asset managers avoid the trap of just ‘having less’. They all took place in 2022 across different firms after they had analysed various combinations of metrics in the institutional version of the benchmark. The first example explores ‘buying’ behaviors, the second looks at ‘buying more’, and the third is about ‘staying’.
Reduce your net cost of sale by making your sales funnel more efficient
Industry-wide, the sales funnel is hugely inefficient. Over the last two years as Accomplish has mapped its contours with data, we have seen marketing, sales, and service teams view their activities as part of a single coherent funnel, rather than as discrete team-level responsibilities. By the numbers, here is how some firms have responded to and exploited this.
- RFP success rates – some now succeed consistently at up to 60% of RFPs, while others average around a less-efficient 16%.
- Sales conversions – some convert between 60% and 80% of RFP successes into fee-paying assets, while others yield 20% or even <10%.
- Onboarding durations – across asset classes, some start billing in half, one-third, and even one-quarter the median duration. The fastest firms have increased their revenue by months multiplied by all onboardings, while others pay more in the headcount needed to support less financially efficient onboarding projects.
How are the efficient firms doing this? They will have done many things that Accomplish may not be aware of, but from our vantage point they have, firstly, become rigorous in selecting the RFPs they respond to. This immediately reduces the hidden but real cost of unnecessary RFP volumes. Another output of this control is decreased variety in their pipelines and increased win rates because, frankly, they got better at pitching fewer products.
As a result, we are seeing firms setting and monitoring targets for the metrics listed above, while also measuring onboarding in revenue terms (financial efficiency) as well as in business days (operational efficiency).
Reduce your costs of sale and ongoing service
In some very different cases, we have observed firms ‘doing more’ by setting relationship depth targets.
At one end of the scale, a firm analysed its sales conversion rates (buying) in combination with its product per client ratio (buying more). An unwelcome finding was that other firms’ client relationships were, on average, twice as deep. It was a top performer at converting sales so, from the perspective of efficiency, their hypothesis was that they were leaving a lot of money on the table by focusing their sales too much on new clients and not enough on existing ones.
In response, they have re-balanced their distribution strategy to increase their focus on client retention and cross-selling, and they have set their different regions product per client targets with the aim of reducing their overall costs of both sale and ongoing service.
Respond fast and minimise damage to revenues
Lastly, sometimes things do not go your way and we have noticed that it can take time for large asset management firms to digest and respond to known information.
In this example, we were concerned about the steepness of the quarterly change in a firm’s client tenure statistics. A big jump in average tenure (measured in months) over a short period implied to Accomplish’s data analyst that they had lost the diluting effect of a material number of younger client relationships. We raised the early warning and three days later received a thank you and confirmation that, on aggregate, this was indeed what had happened, and they had initiated a plan to mitigate further damage.
How does this relate to efficiency? Sometimes you do not get what you wanted, but if you remain attentive you can respond fast to early warnings and minimise lost revenues.
The ROI of business intelligence
We hope you found it useful to explore these examples of the ROI of business intelligence. Let us know if you want to learn more about them or check out the Behavioral Benchmark if you would like to know more about how it works.
This concludes our blog series on the ROI of BI and aims to complement the initial article on cost-effectiveness. Because the benchmark fuses industry utility pricing, with user-governed best practices, and returns like the ones mentioned above, we refer to high-ROI BI and we believe this criterion should be commonplace.
To finish, as we argued in the first blog, now is a time to use business intelligence to inform your business planning: “like ships in a storm, asset managers have no choice but to navigate the peaks and troughs … and your business intelligence is your SatNav.” Here’s wishing you fair winds and following seas.