Regardless of the size of your firm, it is important to build a strong “operations team” to lead your middle- and back-office functions. Just as the exact definition of “mutual fund operations” varies from fund to fund and from year to year, so does the composition of this important team. As you consider your operations strategy, you may find it useful to examine five key roles within the operation and consider how they can work together as a unified whole.
To round out their operations team, some fund complexes—particularly those offered by small to mid-size managers who may have limited manpower or infrastructure—turn to operations outsourcing, leveraging an external service provider to supply scalable technology infrastructure and operations experience. Here are five crucial roles that must be filled whether with in-house talent or outsourced:
Chief Compliance Officer (CCO) – We live in a regulated age. Agencies and industry groups have the power to significantly affect the fund manager’s business goals and ultimately the long-term viability of their funds. That’s why it is paramount that your CCO have a handle on new regulatory processes and how they will affect each fund. The CCO needs to understand how things are changing, what is relevant and—more importantly—must synthesize that information so it can be understood by the wider group. The CCO should be able to address not only what is happening, but what it means for your funds.
General Counsel – Whether working independently or with outside counsel, the general counsel must be well-versed in the legal and regulatory framework for operations. They must understand and oversee the application of current regulatory requirements and also be aware of how pending regulatory changes may affect the funds. Arguably, a strong culture of compliance and adherence to regulation begins with the general counsel.
Client Relationship Specialist – This person, who can be known by various titles, serves as the primary face of the organization to your investors. Even though investors are obviously crucial to the success of a fund, an operations team can easily slip into a mode of internal focus and only concentrate on changes that need to be made within the firm. The client relationship executive gathers data and informs the team about the ways in which proposed changes may affect investors. They can also provide valuable feedback about how to improve the client experience.
Technologist – Whether holding the title of chief technology officer or serving in this role in a functional capacity, the technologist holds the key to solving many problems. The technologist should be able to take situations described by the general counsel and the CCO and move the discussion into the realm of solutions. Can something be done in house? How can a third party source handle this issue for the firm? Does this cause disruption for clients or internal teams? Taking all these factors into account, the technologist offers recommendations about the best course of action for your funds.
Chief Operations Officer (COO) – For many companies, a COO is second only to the chief executive officer in importance. As a key player in the organization, the COO pulls together the opinions, views and efforts of multiple people across the team to build consensus. In order to understand the concerns of team members, the COO must be an active listener and be unafraid to ask for additional information or alternative solutions when there are gaps. The COO then makes tough decisions about the way forward, balancing outside pressure and available resources, all while designing a blueprint for your funds to grow.
It is important to recognize that each of these positions is vital to your fund’s long-term success, remembering that no one person can do it alone. Perhaps the key is making sure that each position has a clearly delineated role while providing opportunities for regular interaction and discussion.
Whether leveraging outsourced expertise or relying on in house resources, a successful operations team works openly and collaboratively towards building a better fund offering for your investors.