The first half of 2021 saw several significant mergers and acquisitions in asset and wealth management, and the activity shows no signs of slowing. According to a recent PwC 2021 Midyear Outlook report, there were 145 transactions in the space in the first six months of the year. PwC anticipates the trend will continue amid ongoing diversification, innovation and transformation trends. SS&C recently sat down with several of our clients to discuss what M&A means for operations—and how technology providers can help their clients succeed.
When Janus Henderson became a newly merged entity in 2017, it found it used nine different service providers globally. Since then, the firm embarked on a multi-year campaign to reduce its stack to three key global strategic service provider relationships. First, the firm sought a strengthened framework and streamlined service, including the onboarding, KYC and AML functions supported through its strategic partner, SS&C Global Investor and Distribution Solutions (GIDS). As a result, the firm ended up with a smoother process, with a single touchpoint for clients and executing across markets and jurisdictions while meeting each market's relevant rules and regulations.
Abrdn a large global asset manager, for its part, needed consistency in its custody, fund accounting, depository and transfer agency functions. Since 2017, the firm has had three subsidiaries—with a different transfer agent for each. As a result, clients had different experiences depending on the funds they had invested in and the original creator of that fund.
Abrdn ended up consolidating the transfer agency under SS&C GIDS to ensure a cohesive service experience. The firm also worked with its distribution partners and investment partners to build an operating model to benefit all. The firm consolidated middle office functions on a single investment management platform and simplified custody and fund accounting operations.
"For merging firms, working with a third party helps effectively consolidate business operations and makes your relationship with the chosen provider deeper and more meaningful," says Abrdn's COO, Mike Tumilty. "Scale and the ability to improve client service should drive such decisions."
Royal London Asset Management has grown consistently in the past two decades through organic growth and acquisitions, most recently with The Co-Operative Asset Management (TCAM) in 2013. With service providers, including SS&C, the firm has sought to plan for various events, such as extreme weather or other factors that can interrupt client service. Providers with global reach and local expertise profiles can help inform the plans.
COOs are increasingly looking for transparency or "look-through" capabilities from their third-party service providers. Providers must demonstrate operational resilience and show asset managers and their clients what is happening in their holdings in real-time. Additionally, many asset managers seek service providers whose ESG (environmental, social and governance) principles and practices align with their values.
Firms that have been through or are going through M&A in this COVID-19 environment will want to determine and retain elite suppliers and providers. Providers who can demonstrate their ability to be partners will stand out from the pack.
To learn more about what asset management COOs are thinking, visit SS&C's Fireside Chat series. Or download our “A New Model in Transfer Agency Services” whitepaper to learn the must-haves” asset managers should look for in a TA in order to derive the optimal strategic value from the relationship.
Alternative Investments, Asset Management, EMEA, Wealth Management