Fund Management
Navigating Bewildering Funds Landscape – How Tech "Democratises" The Journey

The business processes outlined in this article are essential to advisors, private bankers and others for putting clients’ ideas into practice and cutting through complexity.
It’s hard to avoid noticing how many new funds and investment
products exist. The number of mutual funds globally increased
from about 66,400 in 2009 to 137,892 in 2022 (source: Statista).
Trying to sift through these to put clients’ portfolios together
can only really be done with tech tools.
The process of scrutinising what funds are available, their track
records, goals, fees, managers and locations is a herculean task.
Firms such as LSEG
Lipper (renamed from Refinitiv) and Morningstar, for example,
provide immense amounts of data. And technology businesses are
understandably keen to work with them.
One such business, Instinct Digital, a
cloud-based platform firm, headquartered in London, redefines how
asset managers engage clients, delivering streamlined and
automated fund and investor reporting in the EMEA region and
North America. It became part of the Morningstar Service
Delivery Partner Program in October 2023. ID provides interactive
fund information pages for investors, an automated print
production service so that client reporting teams can create and
schedule production cycles of pdf reports at scale, as well as
providing investment dashboards and reports via a
portal.
In December, Morningstar said it launched Direct Web Services, a
collection of application programming interfaces (APIs) which
package Morningstar’s data, research, and calculation
engines for financial services firms to use in their own digital
solutions.
“We are democratising and demystifying this [process of quickly
finding out what information is needed about funds],” Cassian
Scott, CEO of Instinct Global, told this news service. “We
provide a sort of mini-Bloomberg in your pocket for the
man in the street.”
“We can quickly stand up a Funds Centre – a portal for funds
information for asset managers to communicate with their
clients,” Scott said. “We provide an out-of-the-box product that
creates factsheets and aligns all other information. It allows
massive operational cost savings and speed of production.”
The sort of processes that Scott describes are essential to
advisors, private bankers and others for putting clients’ ideas
into practice and cutting through complexity.
“People want data to be available in a timely manner, to their
desired needs and to be reliable. There is a new onus on firms as
regulation plays an ever-more important role in requiring
appropriate communications and the management of brand assets to
create great outcomes for end-Investors,” Scott said.
And the arrival in late July 2023 of the new Consumer Duty
regulatory regime in the UK – already producing consequences as
firms such as St James’s Place change
their fees – means that wealth sector players need even
clearer, faster and more comprehensive data on funds.
Scott is in no doubt about where the UK wealth sector is
heading.
“The direction of travel is definitely towards more regulation
and, overall, the defence of clients’ best interests – we see
this as a positive and an inevitable for the industry. Data, of
course, can be the asset manager’s best friend in responding to
these regulatory challenges,” he continued. “Regulatory
challenges in asset and investment management are multifaceted,
involving considerations related to global coordination, risk
management, technology, sustainability, client interests, and
market integrity.”
The business
Scott said Instinct Digital moved into the new solutions it
offers 18 months ago, seeing the need to provide better, faster
and cheaper data for asset management.
“We were born out of the recognition that investment and asset managers are increasingly under pressure to provide great client outcomes at less cost, whilst improving the client experience and meeting, and where possible, exceeding, regulatory expectations,” Scott said.
“We work with asset and investment managers of all sizes. We are
especially appreciated by those firms saddled with legacy
technology that has come to rely upon multiple manual
interventions. We take the manual out, allowing resources to be
deployed on more valuable and engaging activity, and we make
reporting simple. And fast,” Scott said.
Artificial intelligence is getting lots of attention in wealth
management. WealthBriefing asked Scott how AI affects
his firm and wealth management more broadly.
“AI clearly offers wealth managers the ability to leverage
advanced analytics, machine learning, and automation to enhance
various aspects of their operations. The technology can help in
tracking not only existing funds but also in identifying new
opportunities and flagging potential risks or flaws in a more
timely and efficient manner,” he said.
“This can lead to more informed decision-making, improved client
outcomes, and increased overall efficiency in wealth management
processes. We are optimistic that a data-first culture will limit
the voodoo and improve the transparency and value for investors.
Certainly, all the firms and providers we work with are committed
to this approach,” he added.
“Firms in the financial services sector face significant
challenges and resistance to digital transformation. Legacy
systems, complex regulatory landscapes, and a risk-averse culture
contribute to the hesitancy in adopting new technologies. The
financial industry's emphasis on security and the high costs
associated with technological investments further slow down the
pace of digital transformation,” he said.
“Additionally, lengthy decision-making processes, cultural
resistance to change, and a lack of understanding about the
potential benefits hinder the adoption of innovative solutions,”
Scott continued.
Data need
A lack of data can be a headache for wealth managers. In talking
to LSEG Lipper,
for example, this news service was told that one big task that
fund managers have is providing “back tests” to demonstrate how a
strategy would have delivered over a specific period. Without
such a test, a fund is unlikely to make it through the door.
The rise of fund networks and markets such as Calastone and Allfunds, for example, shows
how the business of buying and selling funds has become more
technologically advanced. Always, however, the potential grit in
the wheels is a lack of quality data. Another factor to
consider is ensuring total clarity on fees and costs – a
point that regulators such as the UK’s Financial Conduct
Authority keep a close eye on. Groups such as Calastone, for
example, can use their collective purchasing power to obtain the
kind of institutional buying muscle once the preserve of pension
funds and life insurance schemes.
As one figure in the industry told this publication, the
challenge of finding out information to choose funds is
formidable, but the rise of AI will be important. “AI will really
shape the future for investment advisors,” the figure said,
noting the ability of AI tools to work through performance
analysis, risk and volatility.