How To Be a Great Investment Operations Manager

Being a talented investment operations manager, one must continuously improve and evolve. With so much change and disruption in the industry, staying stagnant will not cut it.

As costs continue to rise and many investment firms struggle to keep operating expenses down, there is a pressing need to run a more efficient operation.

In fact, investment managers are most about creating efficiencies across their operations in the next two years, followed closely by a focus on cost and enhanced quality and accuracy, according to one Yahoo! survey.

Operational success and greatness depends on many factors, including these tips and best practices below.

5 Successful Investment Operations Manager: Responsibilities and Best Practices

1. Build a Strong Foundation

To be truly great in investment operations, you must invest in the foundation:

  • Develop a solid understanding of financial markets, investment products, and regulatory frameworks
  • Understand the fundamentals of trade settlements, reconciliation, performance measurement, and other required reporting.
  • Familiarize yourself with industry-standard software and systems used in investment operations.
  • Acquire the relevant experience in investment operations, having performed the work as an analyst.

2. Embrace Technology

See up to 20 workflows investment operations teams can automate. Download our Automation Guide.

For wealth and asset managers to truly succeed from here going forward, they have to embrace technology and digital transformation.

The rapid advancement of automation and AI tools allow for huge operating efficiency gains to be had, including for better organization and quality of data.

Such improvements lead to fewer errors in client and internal reports, as well as much faster turnaround times.

In short, let technology do as much of the work it can for you.

3. Focus on Data

In this digital age, data is everything... good data, that is.

Reliable data allows for faster and more informed decision-making, and it helps build trust with the clients.

Better analysis of investment portfolio performance, as well as better understanding of your clients, can lead to better outcomes that relate to investment decisions and client satisfaction.

Viewing all information in one place via data warehousing is a good place to start. The benefits of data warehousing are many, as described in one of our earlier posts.

John Beatty, the chief operating officer at Schwab Advisory Services, share his thoughts:

“Data and automation could be the rocket fuel that launches the RIA industry into the next stage of growth. Advisors are leaning into the opportunities around data and what it could mean to them in terms of growing their businesses.”

4. Develop Communication and Relationship-Building Skills

It's not all just about technical skills. Being a great investment operations manager is about mastering the art of communication. This includes verbal and written (digital) communication.

In this role, you must feel comfortable and confident in collaborating with various stakeholders, including portfolio managers, traders, compliance officers, and clients. Additionally, you should maintain good communication and relations with other internal teams, including risk management and IT. Externally, you will need to work well with software providers, custodians, brokers, and other third-party vendors.

Learn how to communicate with these audiences in ways they understand and in an efficient manner. Explain complex ideas in simplified ways, and explain everything clearly and concisely, as others' time is often limited.

Additionally, learn how to communicate with tact. Understand the importance of tone, context, and word choice. These small nuances make a big difference in how others receive your messages. Do so properly, and others will respond more positively and act in more favorably to you.

5. Make Sure Everything Gets Done On Time

A top-notch operations manager ensures daily reports are done on time and 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.

6. Provide Support to Your Team

Investment operations managers must demonstrate expertise and pass their know-how along to subordinates, empowering and entrusting them to do the job with minimal assistance in the future.

When operations staff have trouble executing a corporate action or reconciling a trade break, you should them 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 our recent articles on the importance of documentation for operations, as well as investment performance reporting best practices.

Also, relating to good communication and relationship-building, always control your emotions. Do not show staff that you get flustered and frustrated easily when team members struggle with the reconciliation or performance.

Be patient with those who work under you. After all, there was a time you had questions, and others patiently helped you.

The investment operations staff will likely perform better when their manager shows support and confidence in them.

7. Mitigate Operational Risk

No industry is fully immune from risk, be it internal or external.

While there is nothing an investment operations manager can do to prevent the external risk (market volatility --> threatened cash flows), they can minimize the internal risks as a way to lessen the full impact from external sources.

Consider all these threats:

  1. manual, repetitive, and inefficient processes
  2. increasing costs
  3. reconciliation and performance reporting errors
  4. use of legacy technology
  5. key personnel risk
  6. high turnover in the middle office and back office
  7. cybersecurity threats

Ways to Reduce Risk:

  1. Improve hiring practices
  2. Determine appropriate staffing levels
  3. Train primary role leaders and backups well
  4. Document processes
  5. Eliminate errors and inefficiency
  6. Expedite processes; automate tasks
  7. Implement quality control checks
  8. Eliminate unnecessary spending
  9. Upgrade technology; move away from locally stored systems and go cloud-based
  10. Take advantage of AI (though moni
  11. Leverage third-parties; outsource non-core functions
  12. Promote compliance and transparent practices
  13. Follow cybersecurity best practices
  14. When working remotely, ensure devices and connections are secure for all team members.
  15. Make sure staff follow reconciliation and performance reporting best practices
  16. Treat staff well; retain your staff for longer periods
  17. Build continuity by training well, keeping morale high and staff enjoying their work

In a nutshell, these risk-mitigating actions are exactly the responsibilities of an investment operations manager who does their job well.

Don't Let Your Investment Operations Derail

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Operational risks threaten a firm's ability to deliver service in a timely and consistent manner, which hurt bottom lines.

As an example, turnover threatens an investment firm's 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 deliverables. 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.

Partner with an Investment Outsourcing Services Provider to Reduce Risk

As an investment operations manager, you will discover that in many cases, there is not enough time, talent, or resources available to get everything done.

In those cases, partnering with an outsourced operations provider is a great way to get the support you need.

With outsourcing, you can access a greater quality and quantity of talent, as the outsourced partner has developed the efficiencies to do the work more effectively and at a lower cost.

At Empaxis, we have an experienced team that streamlines and automates the daily reports and data management, allowing investment managers to said benefits.

Another benefit of partnering with an outsourcing provider is you no longer have to worry about the hiring, training, and replacing of staff. The investment operations vendor handles all that so you don't have to.

In turn, you and your team can focus on higher-value activities for your organization that ultimately lead to greater revenues and lower costs.

Keep Investment Management Operations On Track

In today's world of investment operations, increasing complexity and costs requires a highly skilled leader to manage the ever-changing and evolving landscape.

Operations managers must know how to adapt, pivot, and proceed with a plan.

By focusing on the fundamentals of operations, in addition to data, technology, communication, timely deliverables, reducing risk, leveraging third parties, and being a helpful leader to your team, you will run a solid middle and back office that is built to last.

For nearly two decades, Empaxis has helped investment operations managers run a highly efficient and dependable by leveraging our middle- and back-office outsourcing services, automation solutions, and cloud-based financial technology. These offerings can mitigate risk by reducing errors, cutting costs, and increasing scale.

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