How to align data, people and processes

Executive Summary

Against a backdrop of heightened regulatory scrutiny, market volatility and evolved remote and digital working practices, it’s process management and operational best practice where small changes can produce big gains.

Regardless of asset class or investment strategy, one of the most effective places to seek operational efficiencies today is the research process. It comes before every investment begins, and influences decisions throughout the entire investment lifecycle.

This paper looks at the building blocks of an effective research management process, helping you find the route to a consistent, rigorous and repeatable approach to decisions, showing how you can optimize your entire research process from idea to investment.

A New Methodology For Research Management

The practice of organizing and optimizing the investment research process breaks down into three key areas. We call these the three phases of effective research management:

1. Data
   • Organize your research assets
2. People
   • Coordinate consistent research practices
3. Process
   • Standardize and integrate research workflows end-to-end

The degree to which you choose to progress through these phases will depend on a number of factors, including your strategy, size, style and starting point. In every case you’ll expect to achieve smarter, more consistent and compliant research operations that help generate returns.

The Building Blocks of an Effective Research Management Process

A successful research management strategy is one where your data, people and processes are working together. When that happens, you can track the entire investment lifecycle from inception to execution and drive insight to guide future decisions. In describing each phase, we’ll break down the core delivery elements. We found six elements to be central to all successful investment research management operations. How you build and apply these elements, determines the phase of research management in play at your organization.

Phase 1: Organize your research assets

Also known as the ‘get your research in order’ phase. The research management staple of ensuring a system of record: a centralized research repository that’s organized correctly with all your data accurately tagged; connected, searchable and accessible.

Here, you’re focused on your research data; the process by which information is compiled and stored. A central hub of all research files, models, contacts, meeting notes and reports organized by relevant entity, topic and geography etc. might seem blindingly obvious. But even if it is well-understood best practice, this level of effective knowledge management still remains an elusive goal for many investment and operations teams. If you’re still battling data silos or disparate systems, this is your starting point for unlocking efficiencies in your investment research operations.

The Goal

An easy user interface to search and browse research information from across the organization; a single place to go and find content easily, quickly and with the confidence that data is accurate and up to date.

Critical Components

1. Capture

   • Accurately capture the information that matters at source

     • The way investment professionals discover and capture research information and store it in a system of record is the foundation of any research management process.

     • Make it as frictionless as possible; capture information at source, via email, web article, PDF and Excel (and on mobile, at the office, online and offline) to sync with productivity workflows and produce efficiencies not frustrations.

     • Simple, easy-to-use methods of data capture at this stage are critical to your ability to maintain a system – and process – where all data is in one place and easily accessible, and can’t be damaged or removed.

2. Organize

   • Index and structure rich research information for accessibility and findability

     • Structure is key to your ability to get value from research data once captured. Make the mistake of introducing silos here with personal organizational hierarchies and you’re back to square one.

     • A central organizational system, classified across multiple dimensions that matter the most to you and your organization or fund, delivers greater research context, insight and less duplication.

     • Build-in a rich network of metadata – company, industry, geography, author, contact, date and custom schemes- to increase findability, consistency and add meaning to your content. The ability to filter content allows you to slice and dice research in a way you can’t do in email or IM, and will make it fast and painless to track down exactly what you need, when you need it.

The Outcome

Well-implemented technology at this stage actually makes life easier for everyone. Industry estimates suggest that knowledge workers such as research analysts can waste up to 40%* of their time retrieving, compiling and formatting information. For all the simplicity in the concept of centralizing and categorizing research assets, when approached correctly there are significant efficiencies to be made. Reach this stage, and you have laid the foundation for introducing more sophisticated research management functions.

Phase 2: Coordinate consistent research practices

Start to accelerate research productivity workflows; introduce more sophisticated functions for collaboration and standardized research practices across your organization or fund.

Here, you’re focused on people; the process by which information is shared and used across the organization.

Once you’ve successfully removed data silos and implemented a well-structured and accessible system of record for your research data, the next step is to equip your team with the tools both to work smarter individually, and to work together more efficiently, in order to extract more insight.

The Goal

Increased consistency and repeatability in research practices and documentation (i.e. standardized templates, activity timelines and sharing) to optimize team productivity and idea generation, and accelerate informed comparison and prioritization of investment decisions.

Critical Components

1. Coordinate

   • Build consistency and speed into research documentation and workflows

     • Add structure that makes it easy to produce (and review) recommendations that have underlying similarities to build consistency and speed into everyday research practices and documentation.

     • Apply automation to pull research and format data into standardized deliverables (i.e. for an earnings call, quarterly review, tearsheet, thesis). This ensures documentation can be produced quickly, systematically and accurately, and when coupled with coordinated productivity workflows (tasks, checklists, calendars) research teams can focus on analyzing information rather than the admin and formatting behind it.

     • Ultimately, your investment professionals are working smarter and faster, and their research is made more consistent for review, comparison and analysis – no matter who takes it, how they take it, or when.

2. Collaborate

   • Optimize team productivity and empower analysts

     • Collaboration allows multiple people to gather evidence more quickly, identify supporting and conflicting information, crosscheck for accuracy, and add context during discussion.

     • Harness the power of a centralized, organized and accessible research database (Phase 1) and more coordinated workflows, to drive valuable peer interactions and move beyond recording research data to actively engaging with it.

     • Sharing models and targeted communication for research and due diligence activity across teams, strategies and individuals, lets everyone stay informed on what they need when they need it. This serves to speed up investment decisions, and identify macro trends and patterns that would otherwise be missed.

The Outcome

Well-implemented technology here surfaces clean, consistent research data that speeds up the comparison and prioritization of investment decisions and is the first step toward a systematic research process that’s integrated and measurable.

Get a consolidated view (tasks and projects by analyst/timelines) to stay informed on team activity, maintain high-levels of productivity across teams and successfully institutionalize knowledge across the firm. Those already at this stage attest that when it’s made easy for analysts to work together towards a common goal, they produce better collective decisions than those same analysts working individually or in silos. Those that have introduced collaborative approaches report more productive processes for cutting through large volumes of data and identifying the information that matters, when it matters most.

Phase 3: Standardize and integrate the research process

This is ‘linking it all up’. Research stages and diligence are defined and enforced, ideas scored, and outcomes measured. This lays the foundation to integrate research with external data sources, sync portfolio positions and aggregate all the data you need to manage everything in one place.

Here, you’re focused on process; the way in which ideas are progressed, prioritized, measured, with portfolio positions and external data synced to your research.

Every organization has its own unique research process mapped out; on a whiteboard, documented in the depths of an intranet, ingrained in people’s heads. This phase sees that process embedded into a shared protocol.

By normalizing the research workflow (with rules, pipelines, automations and unified dashboards) you can ensure that protocol and best practice is in play at every stage of the investment cycle. And, when you integrate your research management system with external data sources, internal systems and portfolio positions, best practice and visibility can be linked right from idea generation to portfolio risk/reward analysis, and back again.

The Goal

Link standardized research inputs both quantitative (price targets, estimates, scoring terms, etc.) and qualitative (“thesis”, “sentiment”, “conviction” etc.) that are continuously updated directly to portfolio positions to stay informed with all the data required to proactively monitor and manage every idea and investment.

Critical Components

1. Standardize

   • Build a systematic research process across defined stages

     • Define research stages, and standardize scoring systems, rules and deliverables across each, to optimize the way you progress, monitor and measure your research from idea to investment decision.

     • This stage is the key to a robust, repeatable research process where investment professionals know “what’s next” for each idea – across qualification stages through diligence and recommendation – and management gets a window into the effectiveness of each stage to uncover latent opportunities, discover new trends and identify bottlenecks and efficiencies. Doing so provides a consistent measuring stick for applying, monitoring and demonstrating a thorough research process, visibility to know what does and doesn’t work (and when), and insights that drive future efficiencies.

2. Integrate

   • Integrate systems, monitor research and diligence efforts as they relate to your investments universe

     • Often considered the Holy Grail in investment research management, when you synchronize portfolio and external data sources with your centralized research information, your system of record takes on a whole other dimension.

     • A modern RMS aggregates, normalizes and expose data and information from multiple sources for ease of reference to the end-user – this minimizes app switching and increases productivity across teams. Ready and accessible for key inputs (e.g. price targets) this is the killer app for delivering access to all past and present content in the appropriate context.

     • Search and find accurate, up-to-date data on a position, plus every memo, model and tearsheet ever associated with it. Add automated alert systems to stay informed as positions change, push and pull data from other sources (i.e. ESG, market data, sell-side reports) and configure your view, so you and the data you need to proactively manage the portfolio is always connected and current.

The Outcome

An efficient research management process emphasizes the strategic value of your people and the power of the group, not the narrow tactical tasks of managing data.

This approach provides an accessible birds-eye view of investments and the data processes that surround them, a window into who is working on what, when, and where at any given time. And you can deep-dive into the details too, as well as alleviating the cognitive overhead of worrying “are we missing anything?”.

Enhanced collaboration, oversight, pattern recognition and the automation of time-consuming tasks all point to an upswing in performance and productivity. And, when you add this level of integration across your entire process, your investment research is made tangible for the first time, improving oversight and measurement, and enabling performance to be continuously monitored, analyzed and enhanced.

Critical success factors

Whether you’re embarking upon on Phase 1, or moving toward full integration, there’s far more to effective research management than just indexing information and ideas.

Research data must be discoverable, meaningful and actionable across the organization. When assessing your research management operations or evaluating new systems, be sure to take the following five key considerations into account across the three phases to maximize adoption, efficiency and due diligence:

1. Usability 

   • Usability is non-negotiable. If your people cannot use the systems, or buy-in to the process, they’ll find alternatives. And that will undo any goodwill up to that point. A system’s usability should be effortless from the outset.

2. Configuration

   • Your research and due diligence is your IP and your research process should be unique to you. It’s consistency you’re looking for, not uniformity. How you configure your proprietary research stages, score them, integrate workflows and operations, prioritize teams and collaborate internally and externally is bespoke, and any worthy research management system or technology will deliver high levels of configuration to ensure that remains the case.

3. Compliance 

   • Compliance is the cornerstone of every effective research management strategy and needs to be demonstrated across every phase. At a minimum your research operations must adhere to regulations for electronic recordkeeping, data management, and communications monitoring and controls. The processes and systems you choose to implement should act as the effective digital record of all your data assets and activities relating to investment research in order to support pre- and post-investment compliance and security programs.

4. Reporting & Analytics

   • With a consolidated system of record, anything in that repository should be able to be queried and reported on, no matter how you want to slice and dice it. You need the flexibility in a system to generate custom reports to answer questions of interest to you at any given time. This insight at your fingertips is critical to your ability to finesse, refine and continually improve your processes, productivity and performance.

5. Automation

   • Automation introduces efficiencies across each phase, however it’s a vital ingredient in accelerating your end-to-end, integrated research process. To do so, you need a system with the flexibility to automate important actions from idea to investment. When you harness automation to manage and structure research data, and streamline and standardize workflows, you get to focus on the important stuff; reducing complex tasks that distract investment professionals and limit consistency. Automated dashboards help you analyze research trends, automated methods for easy data capture, while automated workflows progress, trigger and measure investment ideas across stages. The objective is simple: make it easier to apply reasoning, make good judgements and smart decisions.

Conclusion

Not everyone is able to perform above average in today’s climate of global macro-uncertainty and difficult market conditions.

Wherever you are in building out your research management strategy, those with an eye on creating a systematic research process that’s scored, measurable and informs future efficiencies and differentiation, will be those best placed for long-term success.

To start building a research management process that supports a consistent, rigorous and repeatable approach to investment decisions, configured to your needs, get in touch.