Institutional investor operational and due diligence survey results

Institutional investors play multiple roles in the investment process. As portfolios have increased in complexity, investment teams face a growing set of challenges. In 2021, we surveyed investors across 38 investment offices in the U.S. and UK and learned that they face issues that include strategic investment decisions, risk management, technology, security and compliance.

We recently interviewed 38 organisations ranging in size from £300 million to more than £5 billion. None of the participants are current SEI clients. Read on for some fascinating findings.

About the organisations surveyed 

Which of the following best describes your organisation and its invested assets?

What is the size of your organisation's investable assets?

Staff sizes vary significantly across organisations 

More than two thirds (69%) said they have six or fewer full-time employees dedicated to overseeing investments

How many full-time employees does your organisation have dedicated to overseeing investments?

The survey respondents were mostly large organisations, but the size of their staff varied and did not appear correlated to size:

• Of the organisations surveyed with £5 billion or more in assets — 53% had staff of seven or more full-time employees while the other 37% had staff of three or fewer people.
• Of the organisations surveyed with between £1 billion and £5 billion in assets — Only 13% of this group had staff of seven or more full-time employees while 50% had staff of three or fewer people.

As portfolios have grown more complex, offices have cobbled together multiple systems and data sources over the years to solve specific challenges.

Less than one in ten (5%) of the organisations have a single source data repository including all asset types that the investment office uses for report generation

• Nearly half (47%) use multiple systems for investment processing and their staffs use offline spreadsheets for some manual processes. Not surprisingly, more than half (74%) feel there is value in using financial analytics software to aggregate data and measure risk.

Organisations might not even have a formal process for managing some components of their investment infrastructure 

Enhanced reporting — such as dashboards, risk analytics, regulatory and compliance oversight — was the one component identified by the most respondents (11%) as lacking a formal process. 

More than a third (38%) said there are some components of the investment infrastructure for which they did not have a formal process. Of that group, the primary reasons were “no need for a formal process” or “the skill does not exist within internal resources.” 

Of those without a formal process for the following components, which of the following best describes the reason?

In some instances, organisations are not actively looking for certain support because they do not believe it is available. In regards to having no formal process for investment data administration and back/middle office services, 5% said it was because “those services are not offered by external service providers."

Organisations feel there are ways to better synthesise the process and make it more efficient. 

Data aggregation and automation

• Nearly half (47%) use multiple systems for investment processing and their staff uses offline spreadsheets for some manual processes. 
• Not surprisingly, more than three-quarters (74%) feel there is value in using financial analytics software to aggregate data and measure risk.

Multiple accounts of record

• Nearly half (42%) said their custodians provide the data that they use in reporting and analytics. 
• Nearly two-thirds (59%) believe there is risk associated with not establishing an investment book of record (IBOR) separate from the custodian.

Better access to data

• Nearly two-thirds (65%) feel that better access to the portfolio data would help in making better investment decisions.
• More than half (56%) feel there is a need in the marketplace for tools that provide more transparency into account information and data. 

Summary

Institutional investment staff agree that better use of technology to aggregate data can improve overall efficiency moving forward. Using systems to transform that data into insight, investors can reduce risks and better understand their portfolios.

If you would like to discuss your organisation's specific challenges or find out more about our solutions for investment offices, contact us for an introductory meeting. 

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