Author: Jen Gambarini
While it’s easy to blame a sub-standard job on inadequate equipment rather than admit a skills deficiency, the old adage ‘a bad workman always blames his tools’ grossly overlooks the difference that having the right tools for the job can have on the outcome (if you’ve ever attempted any DIY, you’ll know exactly what I mean).
Forget bad workmen, in our industry it’s actually when you’re working with talent that good tools really matter.
Someone lacking investment talent may well prove more resourceful with higher-quality tools, but long-term that’s not a great use of anyone’s time or money. A skilled and talented analyst, however, will be skilled and talented regardless of the tools you give him.
But he won’t meet his potential.
Hedge Fund Technology and Talent
Your people – and their ability to perform and generate ideas for the fund – are your biggest asset. So when the employees your hedge fund attracts and retains play such a key role in success or failure, under-utilizing that top talent or not enabling them to perform at their best simply doesn’t make financial sense.
A recent report from Barclays’ Strategic Consulting team entitled “The Right Stuff: Trends and practices in talent management at Hedge Funds” found the average expense for hedge funds to replace employees was between $100,000 and $250,000, not accounting for any productivity loss. So if you’re investing in talent, it also makes sense to invest in the tools and technology that talent needs to perform and prosper at the fund.
The ‘War on Talent’ is now a well-coined term to indicate the increasingly competitive nature of attracting these top performers. Whether it’s fintech poaching big Wall Street names or the smaller candidate pool as students are lured to Silicon Valley over investment banks, everyone would agree it’s tougher than ever.
While IT won’t seal the deal, a hedge fund’s technology can have an impact. For example, a poor – or dated – technology environment can prove a turn-off in attracting talent and ongoing retention strategies. This is especially true when trying to attract the more tech-savvy Millennials now entering the market, or if a seasoned candidate has had bad experiences with systems in a prior role where frustration at productivity and inefficient platforms limited their ability to perform.
You see part of what makes an analyst good at their job is the knowledge that the tools they use matter.
Hedge fund research analysts are driven by performance; measured on it; paychecks are based on it. With the need to make the right decision at the right time, and deliver quantifiable results, those analysts looking to technology for ways to be faster, more productive, more informed, have more capacity – are the ones that drive forward performance, higher productivity, and differentiation for the fund.
Research Management and The Right Tools for the Job
Using the right tool for the job is common sense. Yet when it comes to research management tools in hedge funds it’s surprisingly uncommon.
A lack of integrated systems still plagues the investment management industry. The majority of funds we speak with are yet to formalize their research process or the tools that enable them. This means research data often exists in silos, analysts use their own consumer tools for productivity, compliance and reporting is often out of sync, standardized research processes are few and far between, data storage is often unstructured, and analyst time is wasted searching for information and data rather than creating and analyzing it.
Facing increased regulatory compliance, the ongoing war on talent and tough market conditions, hedge funds can’t afford to ignore any sort of inefficient pre-investment processes anymore, especially not at the research level.
Whether stuck in the past with slow, cumbersome legacy Research Management Systems or kicking around an informal approach to research management, savvy hedge funds are now taking steps to get their research management technology to catch up with other key operational processes, so it can start working harder for their analysts and for the fund.
What can a modern Research Management System do for these hedge funds? Give them, and their analysts, the right tools for the job. Here’s are just a few ways:
- Centralize your data assets: All the fund’s research notes, updates, ideas and assets organized in one place; findable, searchable and trackable.
- Remove unauthorized silos: An integrated productivity environment designed for research analyst workflows and ease of use, will eliminate the need for siloed note-taking tools or supplementary mobile apps that can compromise security and compliance, and make analyst’s lives easier.
- Automate tedious analyst tasks: Automating the admin tasks that frustrate analysts lets them focus on their core research activity and idea generation, rather than searching for information, organizing data, and tracking pipelines and projects. A solution that takes care of logging and versioning automatically will also remove one of the most tedious tasks for research analysts, compliance, and eliminate the worry around accidental data loss.
- Enable fund-wide mobility and enhance collaboration: If research analysts are mobile, so should their data be. A modern RMS enables research to be available everywhere and easy to access, work on and collaborate from. More than a fund-wide VPN, modern mobile Research Management Software will securely push a consistent, intuitive user experience wherever analyst productivity needs it; anytime, anywhere.
- Integrate with analyst workflows and systems: Use APIs to push and pull data into the RMS, configure for your fund, and integrate existing analyst workflows, such as Excel or email, with the RMS so that your analysts and their data are always connected.
- Standardize the research process, normalize the research workflow: Build a systematic research process by standardizing stages to measure progress, organize tasks and projects, scoring to prioritize ideas, and deliverables to improve research consistency.
We all know it’s the combination of a fund’s operational efficiency and investment performance that yields results, attracts more capital, drives growth. But it’s a mistake not to consider how operations can also positively impact, influence and drive performance.
The right software and tools are vital to the smooth running of almost every research practice in the fund. And it works at its best in conjunction with real talent. After all, it stands to reason that the talented analyst with the best tools and processes will, more often than not, beat the talented analyst with lesser ones.
So yes, a bad workman may blame his tools, but a good one does well to know what tools he needs to meet optimum performance levels. Don’t just take my word for it. Here’s what Bob the Builder says about it: