2020 Investor Survey - Investment News · Total: 100 Long-Only: 65 Long/Short: 35 ≤25 ppl: 28 >25...

2020 Investor SurveyModernizing Research Management

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2020 Investor Survey • Modernizing Research Management

Improved team efficiency, better data security and work-from-anywhere capability driving large-scale implementation to date

Research management technology is quickly becoming a ubiquitous part of the asset manager investment process, according to results of an asset management industry survey we recently conducted. Nearly all asset managers currently not using a dedicated, third- party platform today say their firms are likely to extremely likely to adopt one in the next 24 months.

When reviewing these survey results, it’s clear that growing demand for vendor research management platforms aligns with broader efforts to adopt modern, SaaS-based technologies across the investment enterprise. Furthermore, the move to third-party solutions is consistent with the long-held view that outsourcing enables organizations to gain cost-effective access to better technology features and support at scale.

While research management applications have been available for nearly two decades, most platforms have been heavily focused on desktop usage. These applications do what they were designed to do—store investment research—but they have fallen short in addressing the evolving needs of investment teams in the mobile age.

Platforms that lack mobile capabilities not only hinder productivity and collaboration, they also leave organizations exposed to business continuity risk during times of disruption. The embrace of cloud and mobile computing has shifted user expectations of what a research management platform should be. More than just a depository for research content, modern platforms have to enable individual users and teams to publish, share and act on research information in real- time from anywhere, using any device.

Research Management Platforms Poised for 100% Adoption Among Asset Managers in Next Two Years





In fact, of the larger asset managers that participated in our survey, 39 percent tell us that their firm implemented a modern, third-party research management platform to enable their team to work from anywhere. Only improved workflow efficiency (50%) and better data security (44%) ranked higher. Similarly, 32 percent of respondents from firms managing more than $20 billion said the need for full-featured mobile usability was a major trigger for implementing a third-party platform.

Yet while adoption of third-party platforms seems to be moving toward 100 percent, there is still a lack of consensus on which platform features asset managers value most. Are integrations with portfolio management systems more important or will ensuring better control over investment IP deliver more value to the organization? Will flexibility to support different workflows drive demand, or should systems emphasize greater transparency for regulatory risk management?

We hope this report — which presents the opinions of 100 asset management professionals — helps you, your team, and your investment organization better understand how your peers are using modern technology to transform their research management process and take control of their most valuable asset — good investment ideas and the work that goes into identifying them. We also hope it will factor into your game plan for improving your research management process.

57% of asset managers use a third-party research management platform today

50% of investment professionals using a SaaS-based research management platform use it daily

14% of investment professionals using a desktop research management system use it daily

According to survey respondents, 74 percent of asset managers report their firm is using a dedicated research management platform





Current Research Management Platform Usage TrendsQ: How does your investment research team primarily capture and share its research?

Base: Total respondents

Long-Only: 65 Long/Short: 35 ≤25 ppl: 28 >25 ppl: 29 ≤$20B AUM: 66 >$20B AUM: 34Total: 100

Generic or off-the-shelf productivity tools (Shared drives, Microsoft Word)

No formal system

In-house or custom research management solution built internally

Generic or off-the-shelf note taking applications (Microsoft OneNote, Evernote)

Purpose-built research management solution from a third-party vendor

57%60%51%61%62%58%56%

12%11%14%11%

3%11%15%

12%12%11%14%14%15%6%

17%17%17%14%21%15%21%

2%0%6%

2%3%

0%0%

More than half (57%) of the investment professionals we asked said their firm has implemented a third-party platform for capturing and sharing investment research. Among long-only asset managers, a slightly larger percentage have opted to go with the vendor platform (60%) compared to 51 percent of long/short asset managers. Seventeen percent of respondents reported their firm opted to build a system in-house, while 26 percent said their firm uses generic tools or no formal system at all.





Appetite for ChangeQ: On a scale of 1-5, with 5 being ‘Extremely likely’ and 1 being ‘Not at all likely’, how likely is your firm to evaluate adopting a third-party research management software in the next two years?

5Extremely likely

4Very likely

3Likely

2Not very likely

1Not at all likely

Base: Internal system

Long-Only: 11 Long/Short: 6Total: 17

0%18% 27% 0% 47% 45% 50% 35% 27% 50% 0% 0% 0% 0% 0% 0%

25%

50%

75%

5Extremely likely

4Very likely

3Likely

2Not very likely

1Not at all likely

0%0%

50% 53% 45% 46% 40% 55% 0% 0% 0% 0% 0% 0% 4% 7%25%

50%

75%

Base: Productivity suite/no RMS


Nearly all (96%) of firms who said they don’t currently use a dedicated research management system indicated their firm was likely to evaluate adopting a third-party system in the next two years. All respondents (100%) from firms who built an in-house system said they were likely to evaluate adopting a third-party vendor platform in the next two years.





Q: When did you adopt research management software?

Less than 2 years ago 2-4 years ago 4+ years ago0%

25%

50%

75%

Base: Use RMS from a vendor


33% 28% 44% 49% 54% 39% 18% 18% 17%

Of the respondents who said their firm uses a third-party research management platform, 33 percent said the technology had been implemented in the last two years. About half of respondents (49%) said their firm implemented a vendor research management solution two-to-four years ago. And only 18 percent of firms using a third-party solution said that the platform was in place more than four years ago.

100% of asset managers using proprietary systems are likely to evaluate adopting a vendor solution in the next two years

96% of asset managers not using a research management tool are likely to evaluate adopting a vendor platform in the next two years

33% of asset managers using a third-party research management platform implemented it within the last two years





Research Management Improvement Priorities for Firms with no RMSQ: What are your top priorities for improving your research management program today? (Select all that apply.)


Long-Only: 15 Long/Short: 11 ≤25 ppl: 7 >25 ppl: 5Total: 26

Improved compliance tracking of investment decisions

Better data security for proprietary research

Greater efficiency in how research is captured and consumed

Better integration of research with other investment processes and systems

More flexibility on where research is captured

Increase collaboration on research ideas

42%40%45%14%60%

42%40%45%43%60%

38%47%27%29%20%

38%40%36%29%40%

35%33%36%43%60%

35%47%18%71%20%

Of the respondents who are not currently using a dedicated research management platform, nearly half (42%) said improving compliance tracking of investment ideas was a top priority for their firm’s research management process. The same percentage of respondents (42%) cited the need to increase collaboration on research ideas as a top priority. And 38 percent of respondents said that improved data security and the need for greater efficiency in how research is captured and consumed is a top priority for their firm.





Long-only managers more focused on process efficiency and work-from-anywhere capabilityLong-only asset managers not currently using a dedicated research management platform are much more focused on improving process efficiency and work-from-anywhere flexibility. Nearly half of long-only asset managers (47%) said improving flexibility for where research is captured is a top priority for their firm, compared to 18 percent of long/short managers. About half (47%) of long-only managers also said that being more efficient in how they capture and consume research is their top priority. Only 27 percent of long/short asset managers listed improved flexibility as a top priority.

Research management goals vary widely across functional rolesThe two core consumers of research management technology, “primary users” (portfolio managers, analysts, compliance teams) and “technical users” (technology, operations, business analyst professionals), generally agree on the need to improve compliance tracking of research content. Beyond that, there’s little consensus about what the goals for improving the research management process should be.

More than half of primary users (53%) of research management technology said improving collaboration on research ideas is their top priority, while only 27 percent of the technical users said improved collaboration was a priority. In addition, nearly half of primary users (40%) said integrating research with other investment processes and systems is a top priority. The same percentage also listed improved flexibility on where and how research is captured is a top priority. Only 27 percent of technical users listed these two goals as a top priority.

Conversely, 64 percent of technical users said improving efficiency in how research is captured is a top priority, compared to only 20 percent of primary users. Almost half (45%) of technical users said improving data security for proprietary research is a top priority, compared to 33 percent of primary users.

42% of asset managers not using a dedicated RMSsay improving team collaboration is their top priority

42% of asset managers not using a dedicated RMSsay improving compliance tracking is their top priority

38% of asset managers not using a dedicated RMSsay their top priority is improving efficiency in how research is captured and consumed





Why Do Asset Managers License Third-Party Platforms? Q: What were the primary pain points that caused you to adopt research management software? (Select all that apply.)

Among asset managers who have implemented a third-party research management platform, the three most common reasons for doing so were to improve data security for proprietary research (47%), improve workflow efficiency (46%), and eliminate the time spent looking for investment research (46%).

Among long-only managers, 54 percent said eliminating time spent looking for investment research was the primary pain point for implementing a third-party platform.

Only 28 percent of long/short asset managers said reducing time spent looking for research was a driver for implementation.

About half (44%) of respondents from long/short funds said the need to integrate with other investment processes and systems was the goal for implementing a third-party platform, compared with 31 percent of long-only asset managers.

≤20B AUM: 38 >20B AUM: 19


Total: 57 Long/Short: 18 Tech User: 20 >25 ppl: 18Prime User: 37 ≤25ppl: 17Long-Only: 39

45%59%44%53%37%

Need to streamline workflow, improve efficiency

Need to improve research integration with other investment processes and systems

Need to reduce the time it takes portfolio managers and analysts to find existing research

Need to have greater data security for proprietary research

47%49%44%49%

45%47%50%45%47%

46%49%39%46%

50%41%39%53%32%

46%54%28%43%

20%47%39%32%42%

35%31%44%43%

≤20B AUM: 38 >20B AUM: 19



45%59%44%53%37%





47%49%44%49%

45%47%50%45%47%

46%49%39%46%

50%41%39%53%32%

46%54%28%43%

20%47%39%32%42%

35%31%44%43%





Need to improve collaboration on research ideas

Need to automatically log, version research for compliance

Need to enter, consume research from any location

Need to demonstrate research process to investors, limited partners

Need to prevent leakage of proprietary research when analysts leave firm

35%35%28%37%26%

33%33%33%32%

30%24%11%24%21%

23%23%22%19%

20%6%39%16%32%

21%18%28%22%

20%24%17%16%26%

19%23%11%19%

20%6%17%21%5%

16%10%28%14%

≤20B AUM: 38 >20B AUM: 19



45%59%44%53%37%





47%49%44%49%

45%47%50%45%47%

46%49%39%46%

50%41%39%53%32%

46%54%28%43%

20%47%39%32%42%

35%31%44%43%

Q: What were the primary pain points that caused you to adopt research management software? (Select all that apply.)

47% of asset managers say they implemented a third- party system to improve data security for proprietary research

46% of asset managers say streamlining workflow and improving efficiency was the reason they chose a vendor RMS

39% of larger asset managers say ensuring their teams could work from anywhere was the primary reason they opted to use a third-party platform





Does firm size have an impact on why managers implement a third-party platform?Yes. For larger firms with investment teams with more than 25 people, 39 percent of respondents said the need to work from any location was a major pain point that led to implementation of a research management platform. Only 6 percent of respondents on teams of 25 people or fewer listed this as a driver.

Similarly, 32 percent of respondents for funds managing $20 billion or more said the need for full-featured mobile usability was a major driver for implementing a third-party platform, compared to 16 percent of respondents from funds managing less than $20 billion.

Vendor platform usage SaaS-based vs. desktop app

Q: How often do you access research (either to add or consume) within your research management system today?

Daily Weekly Monthly Quarterly


Desktop user: 22 SaaS user: 34Total: 57

50%

25%

0%37% 14% 50% 42% 50% 38% 14% 27% 6% 7% 9% 6%

For firms who have implemented a third-party solution, frequency of platform usage — an important indicator of whether the platform implementation will deliver sustained value to the organization — varied greatly based on whether their firm had implemented a desktop application or SaaS-based research management platform.

Less than two-thirds (64%) of respondents who use a desktop application said they log into the platform on a daily or weekly basis, compared to 88 percent of respondents who use a modern, SaaS-based platform.

Most notably, only 14 percent of respondents using a desktop research management application say they log in daily, compared with 50 percent of respondents using a SaaS-based platform. Of respondents using a desktop application, 27 percent said they only use the platform on a monthly basis, while 9 percent responded that they log in just once a quarter.





Why Do Asset Managers Build Their Own Research Management Platforms?Q: What are the reasons that your organization chose to build its research management solution internally? (Select all that apply.)

≤20B AUM: 10 >20B AUM: 7

Base: Internal


Better ROI building internally

No third-party solution meets requirements

Poor experience with a previous research management solution

Better support with an internal solution 33%100%33%50%57%

53%36%83%64%

50%50%33%50%43%

47%64%17%45%

50%25%33%40%43%

41%36%50%36%

50%25%17%40%14%

29%18%50%18%

Of the asset managers that opted to build their own research management system, the top reason for that decision was the belief that a proprietary system would ensure better support for the technology (53%) and deliver better ROI (47%).





Desire to control roadmap, development priorities

No third-party system meets compliance requirements

No third-party system meets workflow requirements

No third-party system meets data security requirements

17%25%33%30%29%

29%36%17%36%

33%0%33%20%29%

24%36%0%18%

17%25%17%10%29%

18%9%33%18%

17%0%17%10%14%

12%9%17%9%

A much larger percentage of long/short asset managers said they built an internal system to ensure better platform support (83% versus 36%), and long-only managers were much more interested in the system delivering ROI (64% versus 17%).

These response rates, however, run counter to the historical view that outsourcing enables organizations to gain cost-effective access to better technology features and support at scale.

Firms with less than $20 billion AUM more frequently reported their firm built an in-house system because no external system met their requirements (40%) compared with only 14 percent of respondents from firms with more than $20 billion in AUM.

≤20B AUM: 10 >20B AUM: 7

Base: Internal


Better ROI building internally

No third-party solution meets requirements

Poor experience with a previous research management solution

Better support with an internal solution 33%100%33%50%57%

53%36%83%64%

50%50%33%50%43%

47%64%17%45%

50%25%33%40%43%

41%36%50%36%

50%25%17%40%14%

29%18%50%18%

Q: What are the reasons that your organization chose to build its Research Management solution internally? (Select all that apply.)





Regulatory Response: Vendor Vs. in-HouseQ: What statement below best describes the impact your current RMS has in responding to regulatory audits?

Base: Internal


Our RMS improves (speeds) our response to regulatory inquires

Our RMS hinders (slows) our response to regulatory inquires

Our RMS has no impact on how quickly we respond to regulatory inquires



Our RMS improves (speeds) our response to regulatory inquires

Our RMS hinders (slows) our response to regulatory inquires

Our RMS has no impact on how quickly we respond to regulatory inquires

88%87%89%82%94%

2%3%

0%

0%

11%10%11%12%6%

6%

59%73%33%25%83%

24%18%33%25%

18%9%33%50%17%

0%

Respondents’ opinions of their regulatory responsiveness varied meaningfully based on whether their firm bought or built their research management platform. The vast majority of respondents whose firm implemented a third-party platform (88%) said the system sped up their response times to regulatory inquiries, compared to 59 percent of respondents whose firm built a proprietary system.





While that gap shrunk among respondents who work on investment teams of 25 people or more, the difference remained meaningful. Almost all (94%) of respondents using a third-party platform said the system helped speed up regulatory response, compared to 83 percent of respondents using an internally built system. Still, 17 percent of respondents on teams of 25 people or more who also use a proprietary research management system said the platform slowed regulatory response. No one using a third-party system on a team of more than 25 people said the system hurt their regulatory responsiveness.

Q: What is the average response time for a regulatory inquiry into research conducted on a specific investment in your portfolios?

0%

25%

50%

Same day 1-2 days 3-7 days 7-14 days Greater than 14 days

15% 27% 45% 31% 40% 18%0% 18%27% 20% 36% 15% 7% 27% 12% 7%



Among respondents whose firms are not using a dedicated research management tool, 54 percent said their firm was unable to respond to regulatory requests within three days, and 27 percent said responding to regulatory requests can take up to two weeks or longer.

88% of asset managers using a third-party research management system say it speeds up their response to regulatory inquiries

59% of asset managers using a proprietary research management tool say their platform speeds up their regulatory responsiveness, and 18% say it slows down their response times

54% of asset managers not using any research management system say they are unable to respond to regulatory requests within three days, and 27% say responding can take up to or more than two weeks





Conclusion

It is clear that asset managers are investing to modernize their research management process. Today, 74 percent of asset managers say they use a dedicated research management platform. For firms that chose to implement a third-party platform, only 18 percent say that platform was in place four years ago, and 33 percent say their system was deployed in the last 24 months. For asset managers with no dedicated research management platform today, they almost unanimously said their organization will likely implement a third-party system in the next two years.

The driver behind this trend is the push to adopt more flexible and accessible SaaS-based platforms as investment organizations continue to modernize their operating models. Based on usage rates alone, it’s easy to see why firms are making this transition. More than half (50%) of firms using a SaaS-based platform say they use the system daily, compared to only 14 percent of managers who use a desktop application. That’s a striking contrast.

Still, among asset managers who use a vendor platform today, 40 percent say their tool is a desktop application. We anticipate that number will rapidly drop over the next two years, especially in light of market disruptions that have underscored the need for work-from-anywhere technology platforms. We also anticipate a consensus view to emerge on the core benefits a modern research management platform can deliver to improve individual productivity, tighten investment team collaboration, and give transparency and control over research content to the investment enterprise.

Several platform features are likely to gain the most attention: seamless integration with other applications and data sources, streamlines team workflows, work from anywhere capability, and best-in-class support. Most importantly, these systems need to be easy to use.

As the leading modern research management platform provider, it is our obligation to deliver an easy to use system that enables investment teams do more of what they do best — generate great investment ideas.





Survey Participant Demographics

Total survey respondents 100

Long-only asset managers 65

Long/short asset managers 35

Primary users 63

Technical users 37

Team ≤ 25 ppl 28

Team > 25 ppl 29

Managing ≤ $20 Billion AUM 66

Managing > $20 Billion AUM 34

Third-party vender RMS users 57

In-house built RMS users 17

Generic tools/applications 24

No formal tools 2

Desktop RMS users 22

SaaS-based RMS users 34



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mackeyrms.com | [email protected]

Survey Methodology

MackeyRMS worked with Market Measurement, an independent market research provider, to conduct its 2020 Investor Survey.

A total of 100 interviews were conducted with investing, technology, operations and compliance professionals in the asset management industry during the first quarter of 2020 to assess industry views and plans for automation and modernization of proprietary research management.

About MackeyRMSMackeyRMS is a provider of SaaS-delivered research management software engineered to optimize the way analysts and portfolio managers generate, share, debate and act on investment research conducted for actively managed portfolios.

Relied upon as a single system of record for research supporting the investment process, MackeyRMS is used by many of the world’s leading investment managers to organize key investment workflows, engender trust from investors, and streamline regulatory and compliance oversight. MackeyRMS is used by institutional asset managers and asset owners across the Americas, EMEA and APAC regions.

For more information, please visit: www.mackeyrms.com

© 2020 by Mackey LLC. All Rights Reserved.





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2020 Investor Survey - Investment News · Total: 100 Long-Only: 65 Long/Short: 35 ≤25 ppl: 28 >25...

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