An investment operations manager is like the industry equivalent of a train conductor.
You won't hear an ops manager shout "All aboard!", but you'll see how they keep their firm on track.
Operational success is dependent on leadership, organizational, and decision-making abilities. Any failure, through their own doing or a result of their staff (crew), falls back on them.
A conductor makes sure the train reaches its destination by a certain time. Routine tasks before the next departure must be done in a timely manner to reach the next stop on time.
Likewise, operations managers ensure daily reports are done on time and other deadlines are met.
They are responsible for all systems functioning properly. That includes the portfolio accounting system taking in custodian data properly, as well as interacting and integrating with additional software.
A breakdown of systems and failure for things run on time hurts the reputation of both a conductor and operations manager.
Train conductors help their crew with connecting cars, operating switches, and making repairs. Good conductors demonstrate expertise and pass their know-how along to subordinates, empowering and entrusting them to do the job with minimal assistance in the future.
Operations managers do similarly. When their staff has trouble executing a corporate action or reconciling a trade break, a good manager will show staff how to fix the issue and without future assistance.
One way to help staff in their daily procedures is by creating good procedural documentation. Check out one of our recent articles on the importance of documentation for operations.
A train malfunction or derailment will prevent freight and passengers from getting to their destinations (on time).
Conductors must be vigilant, keeping an eye out for obstructions on the tracks and paying attention to train route signals. Pre-departure safety checks, speed monitoring, and awareness of weather conditions are other ways to minimize risk.
Likewise, operations managers must reduce risk.
External factors, like fee compression and market volatility in a COVID world, threaten cash flows.
Internal factors are also at play:
In either case, ops managers are to mitigate the impact.
In a nutshell, these risk-mitigating actions are exactly the responsibilities of an investment operations manager who does his or her job well.
Operational risks threaten a firm's ability to deliver service in a timely and consistent manner, which could hurt bottom lines.
As an example, turnover threatens an investment firm continuity, which we mentioned in one of our posts on the risk of losing key employees.
If employees constantly come and go, taking their know-how with them, how will the work get done? This not only means operations managers have to expend resources hiring a replacement, it means dealing with poorly equipped backups producing sub-standard reports. It's even worse if the technology in use is old and cumbersome.
Clients will lose trust in a firm that produces erroneous reports, and they'll move their assets to rival investment management firms. The results are reduced assets under management and fewer fees to collect. Inefficient practices and misuse of resources will chip away at profit margins as well.
If not bad reporting, then what about a data breach? Failure to address security could result in a response from the SEC.
While train conductors and investment operations managers have different hard skill sets, they still share similar duties as it relates to keeping things running on time, fixing issues, and avoiding risks for the well-being of everyone involved.
Operations managers will be judged by how they handle these challenges. Fortunately, there are resources to help.
Empaxis has been helping investment firms improve operational efficiency through middle- and back-office outsourcing services, automation solutions, and our cloud-based portfolio accounting platform, TAMP1. These offerings can mitigate risk by reducing errors, cutting costs, and increasing scale.