A study by Advent Software suggests that a research management solution can save investment firms around 40 per cent in labour costs associated with inefficient and often futile information searching.
Based on a survey of 360 portfolio managers, research directors and analysts, the study found that highly compensated professionals spend an inordinate amount of time searching and sifting for information that is already in their firms’ possession, but scattered among different systems – email accounts, network drives and individual computers.
The inability to find critical decision-making data quickly is costly, not only in staff time but also in missed opportunities.
To quantify the cost of searching for data and the potential savings with an RMS, Advent correlated the survey findings with data from the most recent annual Asset Management Operations and Compensation Survey, sponsored by the Investment Adviser Association and the Advent Users Group. The study matched the hours that respondents spend on internal searching against the national industry-average compensation for directors of research, portfolio managers and analysts.
The study found that for a typical 25-person investment team, the cost of time spent searching internally for, compiling and analyzing research information is EUR2m annually (GBP1.7m, USD2.7m).
For a ten-person team, the cost is close to EUR0.9m (GBP0.8m, USD1.2m).
By centralising, organising and sharing research data in a single system, firms stand to save a significant amount of time spent searching for, compiling and analysing information internally.
The potential savings for these two investment teams are EUR856,000 for the 25-person team (GBP718,000, USD1.13m) and EUR376,500 for the ten-person team (GBP315,800, USD497,000).
“The time and dollar savings are significant, but only part of the ROI,” says Mark Rice, general manager of Tamale at Advent. “The real value of an RMS is that it empowers your most valuable people to spend more time evaluating opportunities, vetting ideas and deliberating decisions, all of which can improve performance. Moreover, an RMS preserves your intellectual capital when key staff members leave the firm, and it demonstrates to clients and regulators that you have a disciplined due diligence process.”