By Sam Idle, Solutions Consultant at Clearwater Analytics.
**The latest results of the surprising snap French election are a timely reminder for asset managers to always expect the unexpected. The knock-on effects on their investments can create a metaphorical line at the door from anxious investors with a million questions on how their portfolios have been impacted.
Going into the run-off, the RN was widely expected to have a reasonable chance at gaining a majority. Instead, the leftist Nouveau Front Populaire bloc won the most seats in this most strange of elections, with Le Pen’s RN coming in third place. While the reaction from markets wasn’t as significant as it could have been, it still had impact on the French sovereign long-term borrowing rate against the German equivalent – a barometer of market sentiment towards French fiscal fortunes.
A major market event is often when an investment manager’s reporting and client servicing capabilities are tested to the limit. In the wake of election results, investors are desperate to get clarity on their portfolios, and how they are impacted. They are often on the phone, calling up their asset managers, requesting information on risk exposures, price impacts, and a plethora of other bespoke inquiries.
Outdate Data Systems
This is not just something that happens in isolation when market-affecting events occur though, it is part of a general trend for investors to become more demanding of the people managing their money. Perhaps this is reflective of the relatively easier access that they have to news in 2024 than they did 20 years ago.
As the news cycle intensifies, asset managers are struggling with outdated systems. Reliance on legacy infrastructure, combined with the piecemeal addition of new products, has made managing the growing volume and variety of data increasingly difficult. This information often isn’t centralised, and with thousands of different clients with varying servicing requirements, there is always a tendency to focus on repeatable client reports. There is also a reliance that requests are coming into the same place, but this often isn’t the case. If there is no central repository, the data that is being provided to clients will often be different – depending on what information that particular team has access to. When bespoke inquiries come in, they are incredibly difficult to deal with effectively. This is felt even more starkly if the incumbent data architectures are not interacting with a modern reporting solution.
Modern Architectures
While the fall-out from the French election does not seem to have been too severe on markets, it is a timely reminder, nonetheless. Client engagement is a key differentiator in an age where performance is squeezed increasingly by passive investing through exchange traded funds (ETFs)– it is important that clients remember who was able to put their minds at ease rapidly in the aftermath of surprise elections or other market-shaking events.
When you consider that those accounts that generally require the most bespoke treatment are the largest accounts, the ones that drive the majority of a firm’s revenue, it becomes clear why asset managers need to expect the unexpected, and prepare themselves with modern, interactive data architectures and reporting solutions.
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