Client lifecycle management (CLM) solutions provider Fenergo is taking an ambitious jump into asset management with the launch of a strategic new buy-side division.
Headed up by Kevin O’Neill, formerly the head of the US asset manager segment for the Royal Bank of Canada’s Investor & Treasury Services, the new team will focus on leveraging the firm’s existing client base to expand to the buyside as part of its growth strategy.
Fenergo initially plans to build on its existing relationships with global financial institutions, many of which already incorporate asset and wealth management and/or fund administration entities. However, the firm is also in discussions with a number of larger European and US asset managers, and eventually expects a trickle-down effect into mid-size and boutique asset managers over the next few years as the digital agenda gains traction.
“What we are seeing to date is strong demand from our existing clients, and the feedback has been truly positive,” says O’Neill. “The buy-side represents a substantial opportunity for us.”
Fenergo believes that extending its onboarding and compliance capabilities to asset managers will enhance their end-client experience, reduce regulatory risk, and increase speed to market, making the buy-side more efficient.
But what new challenges will the buy-side represent, compared to the corporate and institutional base on which the firm has built its business? Apparently, surprisingly few. “Comparing the CLM demand aspect on both the buy-side and sell-side we in fact found many similarities, so extending our solutions to address onboarding and regulatory compliance requirements on the buy-side was a logical next step,” says O’Neill. “We don’t see a huge difference between the two sets of requirements, although there are of course some subtle distinctions, such as the need to meet different regulatory requirements.”
He identifies a number of key themes that Fenergo believes will be important for asset managers in the current environment: including continued market volatility, shifting centres of wealth towards emerging markets, and the importance of delivering high quality performance with the right risk levels at the right price. “Given the intense competition in the financial services marketplace, the customer experience has to be seamless right from the onboarding process through to the complete lifecycle; we feel we have the technology and functionality to completely transform that experience for buy-side managers today.”
In the asset management space there is an ongoing shift towards alternatives, with more and more asset managers today looking towards private equity, liquid alternatives, real estate and infrastructure offerings. In these alternative segments, the underlying investments and fund structures can typically be extremely complex, involving multiple legal entities across numerous jurisdictions.
Having the ability to deal with this complexity, both at an entity level and at an investor level, is one of the key elements that Fenergo is keen to address with its new platform. “The complexity involved in distributing financial products to multiple jurisdictions can generate numerous administrative and regulatory challenges. Buy-side firms are struggling with that administrative burden. We want to ensure that their regulatory journey is aligned to their distribution strategy, and we are exploring how we can digitalize that journey to give clients access to the information through a simplified front door,” says O’Neill.
Although the firm will initially provide the same suite of CLM, onboarding, due diligence and regulatory compliance solutions to its buy-side clients, there are also plans afoot to eventually develop tailored products based on customer need.
To achieve this, Fenergo hopes to leverage its Regulatory and Technology Forums, where existing and potential clients gather to develop best practices and create new processes around client onboarding. “From an investment management perspective, what we are seeing is that managers are more willing to collaborate around those areas and that is a key part of our initiative,” notes O’Neill.