Proper systems implementations always require a complete review of the relevant operational workflows. Likewise, effective systems training will focus on those same workflows. Yet all too often, investment management firms pay inadequate attention to designing and optimizing their operational flows and fail to harness the full capabilities of expensive, best-in-class applications.
These days, when it is critical to squeeze every last drop of value out of limited resources, firms cannot afford to ignore their processing efficiency any longer. And with all the heightened attention to operational risk, firms that fail to take a fresh look at workflows do so at their own peril. The good news is that re-examination of an organization’s operational efficiency usually has a very short payback period.
A story about my 85-year-old mother provides a great example. Mom still works hard as a very talented interior designer andartist. She has a smartphone with some terrific features, such as an address book, voicemail, a calendar, a calculator and the ability to send text messages and access the internet. Mom explains to anyone who listens that the phone is terrificand allows her to stay in touch like never before. Mom prefers to keep a physical address book, so she did not invest the time to store any numbers in the phone. (“I’ve always done it that way.”) Training has been problematic. She received no guidance from the store clerk when she purchased the phone, did not read the instruction book, and was not in the mood to learn when her grandchildren offered to teach her. (“I don’t have time for all that.”) And she did not consider the future when updating her physical address book.
The result? Mom cannot hear the phone ring half the time because she has not set the ringer volume to its highest setting (much less customized the ring tone so she would know it was her phone). Callers think they have left her messages, but Mom does not know how to retrieve voicemails. She calls me periodically to see if I know whose call she just missed since she cannot recognize the number of the last caller but hopes I might know to whom the 
number might belong. And now she is implementing even newer technology (yep – Mom has an iPad and a brand-new gmail account to go with it!) and she cannot email her friends or clients because she never captured anyone’s email address. (“Well I never thought I would need them!”)
Mom has no time for training because she is too busy trying to figure out who called, explaining to friends (and clients!) that she never actually got their message and trying to clear the phone’s main screen of the text messages from her grandchildren so she can make an outgoing call – often attempting to discover what the grandchildren were trying to tell her in those messages since she can only view the first few words.
Unfortunately, like Mom, many investment management firms have failed to harness their technology either. Too often we see firms that have great pre-trade compliance systems, but still allow order creation and execution based on skeleton securities, usually undermining the effectiveness of any pre-trade compliance checks (e.g., if the security has not been assigned to the correct industry or sector, any limits based on that data cannot be evaluated). Client relationship management (CRM) systems become critical tools to track physical and/or electronic addresses for client reporting, but controls are not established to ensure proper updates of address changes, so institutional client reports continue to be sent to people after they change jobs. Features to track security location within an investment accounting application are never utilized because no one really understood what such features were for or how they could be used (such as effective collateral management!). Automated reconciliation is implemented without consideration of any management oversight of the size, aging or cause of breaks.
In the best case, the potential to save money has been squandered. In the worst case, operational risk has increased, money is lost and gaps are identified during annual audits, operational due diligence reviews or regulatory examinations.
Don’t be like Mom. She’s great. But she is losing potential client opportunities. She has articles and photos she found on the internet that she cannot forward to people since she doesn’t have their emails. Others have left voicemails she never heard.
Are you losing opportunities, too?
Author’s Note: This article was emailed to Mom for review and approval. Its publication was delayed because she had not replied. Apparently, she was busy looking for my cell number.
Stone House Consulting, LLC 