My name is Michaela Hundahl. I'm the global head of consultant relations at State Street. My team works across the organization to enhance consultant relations, to create better outcomes for State Street and our mutual clients. It's important for us to work with our consultant community again to drive better outcomes for State Street. We work with the consultant community to educate them about their offerings of State Street, but we also learn from the consultant community.

They educate us on market landscape. They provide Intel around clients, and they also provide information around State Street as well. So really those three legs of the stool, learning about the market, learning about clients and learning about ourselves help us to create better outcomes.

For the consultant community, it really allows them to better understand State Street. They're able to position themselves in the market as having expertise across various providers, and they're able to work with common clients. They can suggest transformational things, ways to improve processes, either at State Street as a provider, or with the common clients of us as well. And that allows them to engage with their client base.

There's a variety of ways that we engage with the consulting community. The first one I think of is around implementation, and most of those are front to back implementations, where the consultant is either working with State Street or working in our client shop for that transformational implementation. Also, we work with consultants around implementations for back-office deals as well.

Another area is around education. Consultants are able to bring their experts in and talk about the market landscape. They're able to talk about regulatory changes, technological developments, and share with people within State Street. The last piece is that we educate our consultants, whether those are webinars through client forearms, through consultant days, so that they better understand State Street as well.

And the last area that I highlighted specifically around RFP is where we work with the consultant, and we try to bring the team together internally as well across sales, relationship management and product so we can try the best response to create an outcome that's worthwhile for our common client.

Operational efficiency is tough for investment firms to achieve today because you have a number of different factors, such as increased regulations they need to onboard more investment types and the pace of technological change that just continues unabated today. Everybody wants to modernize, but data silos, legacy systems and budgets tightening get in the way. So one thing that we suggest firms do is to take a look at their end to end client experience and identify some friction points that you can start with and get those out of the way, so that when you embark on a larger modernization activity, you're not overwhelmed.

Today's marketplace firms tend to struggle to leverage their investment data. It's really generally due to the fact that the data is scattered across different systems in different formats and owned by different business units. And it often, even if the data exists, it may not be clean, connected or available in a timely manner. One other thing that we're seeing in the marketplace is that the people who understand data the most are not always aligned with this people making the strategic decisions around data.

So we think firms should be doing is taking a step back, adopting more collaborative data governance guidelines. And that's going to set them up to put policies in place to better leverage their data in the future.

Striking the right balance between insourcing and outsourcing is really an exercise in self-reflection for firms. I mean, much like as an individual, you want to be self-aware, know what your strengths and weaknesses are. It's the same thing for firms starting out on outsourcing journey. See what your core competencies are. If you have a lovely client relationship department and great data on your customers that enables you to serve them well.

Keep that in-house. Don't consider outsourcing it and consider going to the parts of the market that are more commoditized or scale intensive, like perhaps outsourcing your middle office operations or just starting with your technology infrastructure itself. Another important point for for firms to consider is that once you start the outsourcing journey, you need to remain flexible because the marketplace is going to change, right?

The marketplace continues to change, and you don't want to be rigid so that you can't take advantage of those changes that will come in the future.

Firms current operating infrastructure has some challenges, and they're generally around legacy systems. Lots of manual workarounds and an outdated architecture. So that leads to inefficient operations and increase risk profile as well as difficulty for you as a firm to make quick decisions. Also, the customer journey tends to be impacted adversely because you can only enact so much change with those limited options and then combine those factors with typical data challenges like data stuck in silos and not being accessible, data that may be accessible but not standardized.

You have a whole host of things that you need to overcome in order to modernize your infrastructure. You know, the need to scale, the need to update your your architecture is not going to go away. So I think firms would be well-served in chipping away at some of the small pain points so that when they embark on a broader modern architecture initiative, they're starting from a better foundation.

In today's environment, asset managers and asset owners are looking to I use cases for a number of different purposes, like on the operational side, that may include predictive analytics for portfolio modeling and operational, data challenges. And when it comes to operations, we're seeing AIB used to make some routine tasks, automated. Right. That may be data reconciliation, compliance monitoring or even some aspects of client reporting.

In the end, the real value in AI comes from when firms can make better decisions faster without really adding a lot of complexity. A real world use case of AI in action is, something we've seen recently with a global asset manager that transforms its, trade. Reconcile ation process using some AI tools. It went from manually matching trades across platforms and custodians to implementing a machine learning model that analyze the historical mismatches and now can identify exceptions and even in some cases, resolve them automatically.

So in the end, this naturally leads to a more efficient workflow, less time for that recon to process, and it frees up people to do more value added work.

Some of the key areas that asset managers should be looking to make investments in include blockchain, quantum computing and then also cybersecurity. With blockchain, it really allows for the transparency of transactions. Quantum computing allows asset managers to solve complex equations, a lot more quickly. And then for cybersecurity, that technology investment is incredibly important, especially when you're looking at ensuring that you're up to regulatory standards.

I think that technology obsolescence is a continuing or continues to be a challenge for asset managers. You have firms that are, you know, have a lot of legacy environments, both on prem, and, you know, in, in data centers where, it becomes cumbersome and very expensive to make sure that those environments are up to speed and upgraded, up to version control to comply with a lot of the regulatory standards needed and the reporting, for regulatory challenges.

We're seeing a lot of investment in AI, use cases for process automation, testing, automation and, data driven AI insights as well. What we've seen to date has been there's been a lot of investments around, in investing in the areas of process automation to ensure that, you know, where we're taking some of the mundane, repeatable activities and being able to automate those processes to streamline operations.

A total portfolio approach is a shift in how organizations look at the more complex growth of our multi-asset portfolio. If we look at large institutional organizations in the past, they would have a max, usually of 5% of private assets in their books. Some of them had none. Now, when you look across this subset of organizations, they can have 30% or more.

So when you sit down and you have to help guide their investment management committees to think through, unifying and understanding public and private assets into a single portfolio takes time, effort, and you need to have alignment. You're not just looking at a benchmark or a mandate anymore, or looking at an allocation to a single asset class. You have to combined unique, illiquid data from private assets and sync that with meaningful metrics and risk models that also bring forward public markets.

What's really key here is that you need to understand how to look at measuring those metrics. You have to understand also how that's going to change the dynamic of going from that benchmarking into more of a global macro view, which provides organizations a faster ability to adapt to market changes. You need to be able to pivot. If you just think about the last 3 to 4 years that we've had in our markets.

Organizations have to drive that change. I think the other really important piece of the total portfolio approach is better marrying their client business with how they are managing those funds. You need to ensure that you're not overselling your capital or raising an inaccurate amount of capital, and that allows you to provide a better, more strategic view to your client pool base that is buying into some of these funds.

When we think about the transition to a whole fund view or that total portfolio view, depending on how certain clients, might phrase that across their internal teams, it comes down to three key shifts. It's a shifting of mindset on how your front office investment teams are looking at risk, how they're considering raising portfolio construction and scenario analysis, and then how those are executed in a very timely fashion across the market.

That's the first piece. The second piece is the grappling with legacy technology. Technologies are wonderful tools that allow us to be more effective and productive, but older technologies often have a fit for purpose that is unique to public asset classes. Now, what we see is an evolution in the vendor space that allows folks to begin to expand and unify both public and private assets onto a common platform.

We see this as your investment book of records or IBR. Folks usually take two key paths here. It's usually an enterprise level solution in the market. Now there are certain organizations, depending on how complex their asset class and multi-asset funds are, that might look at a hybrid model to help, supplement. As technology grows into this space.

The other piece here is data. Data is at the heart of everything that organizations do. Bringing in the right data is critical and the ability to cleanse data. When you think about data, you have to transform and bring two different languages together across public and private assets. So folks need to be able to push that data into technology platforms that can unify that view to an enterprise level multi-asset portfolio.

So those are going to be like the really key critical pieces that organizations have to approach as they go on their journey of their whole fund view.

When you think about insourcing and outsourcing across organizations today, they usually ask a couple key themes about their business model. How is their business model today from an operating perspective? But more importantly, what are they going to be in their next phase of growing up in 5 to 10 years? And that often looks at where are they positioned in the market globally?

What types of asset classes and strategies are they managing? What is the talent profile in these regions where they're operating, and where do they feel that they need to put the right cost to dollars? Is that putting cost into their front office teams that are driving some of the critical revenue that's coming into the business, and do they look for the right partner then potentially to balance either, a full lift out of maybe their middle office capabilities or do they go to more of a smart sourcing where they lean towards a particular area of their business?

Maybe that's derivatives and moving collateral. Maybe it's, thinking through managing some of their data components when you think about outsourcing or insourcing. It's about the strategy of where organization feels their secret sauce has to be maintained, to strive within their business, compete against their peer group, and grow to hit their personal revenues and targets. But then when they need the right partner, picking the right place to play those spots.

Now, firms that are doing that outsourcing, it's really important to them that two things they're putting the right managerial oversight and SLA so that their business has continuity and there aren't barriers where they are creating some timing variances. And then the other really important piece too is from an infrastructure perspective. When you are working with an outsourcing partner, it's really key that when you bring that data in and share and push that data out to your partner, it is clean, it is cleansed and that you can very, simply push that into other workflows and downstream processes.

We're seeing a ton of separation by asset class. So you may have a couple systems that may focus on fixed income others in equity. And so this is creating challenges for managers because they're looking at two different data sets managing multiple vendors. They're looking at managing two different technologies skill sets that they need to have in-house. And so it's like duplicating the work for them.

And I think as time has moved on, I mean, those are the challenges of maybe about ten, 15 years ago. And those technology stacks are still there. And when they're maturing, they're looking to do consolidation. So that's how they're looking to address some of those challenges.

Striking the right balance between insourcing and outsourcing is a challenge for all investment managers. And I would propose that there's two primary areas that they need to focus on. Number one is the core competencies of the front office and evaluating what the investment strategies, how the firm is going to create value. And then once you have that layer down, then you're looking at the second part and how the outsourcing, you know, whether it be trading data, middle office, how that's going to be taken care of through an oversight model.

And ultimately, you have to have at the end of the day, you're still the fiduciary. You have to have the ability to process those functions, even if there's a problem with the outsource providers. So you have to retain all those skills internally.

As managers look to, invest in private markets, some of them it's new to them. Some of them have some smaller component, smaller funds. But now they're looking to scale. But I think the key point for them right now is entirely just get into the market first. And even if it's on spreadsheets, we're looking at just the time to market is so critical right now at this point, because everybody's getting into it.

As time develops, you're looking at a challenges with a maturity technology stack. You're looking at challenges with scalability and automation. And so all those things combined are probably they're not going to change. And I think they're all going to face this over the next 2 to 3 years as the technologies and operating model, mature, they're going to lose out if they don't jump in and just get it done.

And I think we're trying to do this hand in hand. You have to, you know, build the products. There's a lot of complexities. It's a huge learning curve. You have to educate your clients. These assets aren't liquid. There's a lifecycle that they have to maintain. And then you're looking at that education, you know, of your clients. And so that adds time because then they have questions.

And so as they're looking around, and how to expand in the marketplace, there's tons of barriers that really, are not there for public market instruments because everybody's familiar how they work. So there's a lot of education that needs to be done up front.

Ten years ago when we were in consulting, we were doing vendor evaluations. And so we would bring out these spreadsheets and then everybody, you know, and then we would compare in order to management system for capabilities of basket trading program trading, probably about 1200 questions as you're looking at now, it's much broader because firms are not looking for a vendor.

They're looking for a strategic partner. And the service offering that the vendors have has now matured. And I think that calling them a vendor probably is. I mean, still an accurate term, but they're really looking at a strategic partner. And so we've started to use the term provider, because even at some of the banks that you've seen, they're looking they're getting into the software and the front office software, the middle office software.

And they're offering a full, you know, front to back service offering. You want to work with them, a partner that's going to build their capabilities over time, even if they're, there's a gap in functionality. But and this is important for your firm, from an investment strategy perspective, then you want them to build that over time. And we've seen that invest, you know, 2 or 3 years of of product development with those with those vendors.

And I think you're looking at really forming that strategic partnership with them and knowing that their maybe their product roadmap is not where it needs to be now, but they will eventually get it. There.

Prior to engaging in a major digital transformation, there's tons of, thought leadership out there. And I think what's unique from a unique perspective is going to be resilience, like building resilience. And so when you look at a transformation through the lens of, of scope, it's like, well, this is out of scope, this is in scope.

But really the industry is changing so much that something that was in scope a year ago, you know, may fallen out of scope. And now there's something new in scope that's coming in. So how do you build that resilience. How do you build, you know, how do you pivot towards, a new solution, a new technology, because that very well may happen during your transformation.

And then eventually as you move forward, even when you're done, have you reached the point where your organization is more resilient through, you know, human capital? Do you have the talent? It's these it's this innate capability to be able to adjust and pivot even beyond the transformation.

So building and ingraining those skills, you know, from human capital technology, having an agile digital, foundation and also having, risk management and cost optimization, all of those factors combined build resilience and give you the ability to adapt two, three years from now to events that we can't foresee.

Insourcing versus outsourcing has been something that we've been talking about this for ten, 15 years. You know, there was, the first generation of outsourcing, which was fund administration, back office, that's now kind of run of the mill. Everyone pretty much outsources those aspects. Nav striking, reg reporting in a lot of cases.

Then middle office outsourcing came along, I’ll call that the second generation of outsourcing and firms took a hard look at that. It’s no longer a trend. It’s here to stay. At this point, there are very few functions in the investment management process, outside of secret sauce portfolio management research and so forth, that are not a candidate to outsource.

Outsourced trading is now something that, not just smaller firms are taking a look at. I'm not going to sit here and say that traders have been commoditized, but it's certainly something that the asset management industry has taken a hard look at.

At the end of the day, there's no right answer in to, forming a balance between insourcing and outsourcing. I mean, there's cultural aspects that come into play. There's the types of assets that you trade.

How big of a firm, how global are you? The only way to really solve. I don't know if solve is even the right word. The only way I think to find that true balance between insourcing and outsourcing is to look at your operating model, both top down and bottom up, and see what the right fit is for you.

Legacy technology is pretty much why I'm sitting here. I mean, as a consulting firm that spent my entire career, in the asset management space, it feels like that's been the lion's share of the work that we've done as an organization, that I've personally done, as a consultant. Legacy tech has been around for decades. It's part of the game, right?

So making sure that you're constantly taking a look at your tech stack, that you're constantly looking at your operating model to follow along with your investment strategy is absolutely paramount. Legacy tech is not- I don't want to sit here and say it's here to stay because there's an inherent risk. The problem I think that a lot of firms face is, we can talk about legacy tech. We can talk about the fact that we have asset managers that are literally using the same technology and systems that they put in 20 to 30 years ago.

There's a legacy mindset in the industry that does cause inherent risk, reputational risk, people risk, monetary risk. And the quicker that we can kind of get senior members of an organization to kind of try to flip out of that legacy mindset and take a regular recurring look at what is out there.

Does it make sense to outsourcing certain aspects of your operating model? Does it make sense to look at cloud native, cloud enabled software that might enable you to pivot and move into investment strategies like private assets, ETFs, make acquisitions to augment your, your asset management organization. I think that's just something that people need to take a hard look at.

When I think about, you know, barriers, challenges, for our clients. I could sit here and talk about legacy technology and how that's holding people back. You know, certain kind of antiquated thinking is holding people back. But I'm going to take this in a slightly different direction. There's very few asset managers of any size, of any ambition that aren't taking on large transformative projects right now.

And I think there's a problem in our industry, which is what I feel is a massive barrier. And we see it firsthand because that's what we do. We run transformation projects. There is a lack of leadership and a lack of efficiency, that they are essentially running into each other right now.

When I talk about a lack of leadership, I think we've kind of lost sight of what it means to provide true sponsorship for large programs, large implementations. And when I talk about sponsorship, I'm talking about that kind of one throat to choke the person. Forgive me for that term, but, the one person on behalf of a software vendor, a solution provider and asset manager that is willing to make the hard decisions, and we have to spell that out, and that's fine as long as they understand the role.

Decision by consensus seldom works, in my opinion, and we try to empower our consultants to really kind of pound the table and make sure that they don't walk out of meetings without a decision. Now, the I talked about leadership. There's also an efficiency problem right now. And I'm going to point the finger at Covid. I think there's been since Covid. I think there's been a lack of collaboration. I think there's been communication problems, and it leads to inefficiency and transformation programs that used to get delivered on time and on budget are now hopelessly getting overrun. They're years behind. They are millions of dollars in some cases over budget.

I'm not saying there's a simple fix to this, but getting people in-person, co-located, running workshops like I've run countless times, and not walking out of that room until there's a decision is something that absolutely needs a light shine. Shine upon it, and it needs to be fixed.

Asset managers moving into private assets is something that certainly, I don't want to call the flavor of the month because it's absolutely happening. There isn't a conference that I have been to, whether it's an industry conference, whether it's something that's put on, by a solution provider, what have you, where private asset assets is in front and center, private assets and I but I don't want to talk about AI right now, Private assets moving into alternative assets is something that everyone's looking at.

All right, you got the Blackstone's, the BlackRock's, the Apollos, State Street. Both from a provider standpoint and an investment standpoint. Everyone is moving in that direction and trying to figure out what they need to do from a technology and an operations standpoint.

Now, spending. I don't want to date myself, but I'll just say 20 plus years in the industry, an investment manager, a CIO that wants to get into whether it's real assets or, or ETFs, complex derivative books back in the day and now private assets, they're not going to stop and wait for, ops and tech to have a surefire solution.

They're going to expect them to catch up, even if they have to manage certain aspects of their book on, heaven forbid, Excel spreadsheets.

What does that lead us to? It leads us to white papers that are in my inbox every day, from providers saying they have a TPV, a total portfolio view, or they have a solution to the whole office or the whole fund view or the whole portfolio view, there's everyone's coming up with these names and acronyms.

It reminds me a little bit of IBOR. IBOR, believe it or not, has been around for 12 plus years now and I still think there's a disagreement as to exactly what IBOR is. And then all the other BORs came, right? The ABORs boards and the PBORs and the TBORs. Ultimately, let's take a step back and let's look at the requirements like, what are we really solving for? What is the front office needed in terms of properly managing with, understanding risk, understanding performance. What alpha are they looking to achieve with a private market book?

I'm not sitting here saying that TPV is a solution looking for a problem necessarily. There is a lot of hype around it right now, but we're all familiar with the Gartner hype curve. Let's see where this goes.

I ask the question sometimes who owns it? Who owns that? I'm going to call it TPV. Who owns TPV? Where does it reside? Is it imperative that you have a solution for this, right now? I'm not so sure you might be able to solve it with a data construct and make sure that you're able to nail down, you know, the timing and the accuracy and so forth. I think time's going to tell. I think it's a client-by-client type of situation. But it really kind of boils down to the requirements and it's going to start with the front office. What do they really require to properly manage these assets.

When I think of some of our clients in the past it was clear that they were looking to grow through acquisition, whether their target was to get to 500 billion, a trillion plus. It's hard to do that organically. I guess it depends on where you're starting, of course. I think of one of our longstanding clients and they had a stated goal. They had an operational mindset that they wanted to grow by acquisition. They wanted to fill out their investment book. They wanted to fill out their geographical reach, through acquisition and the CEO said, we need an acquisition ready platform. Okay. Well, what does that mean?

It did not mean that they wanted a single platform front to back, necessarily.

They decided to go about it with Best of Breed. They had multiple IBORs. Okay. They had an IBOR for their fixed income. They had an IBOR for their equity. They had an IBOR for their derivatives book. They eventually got into ETFs. They got into alternative assets, you name it, they did it, and they still do it. Okay.

How they stitched together, and I guess the key cog in their strategy, and like I said, mindset, operational mindset to having an acquisition ready platform was through data. They had and still have in my estimation, a cutting-edge data platform and a cutting-edge data approach to ensure that if they were to do, a 250 billion, our acquisition, several 100 portfolios to fill a gap in their book, they were able to do it seamlessly, moving on to the best of breed platforms and so forth, that I didn't name by name, but I described them at least a little bit from an accounting standpoint or a management standpoint. They had different systems, but they had a single data approach.

They had a forward thinking, forward looking, data ecosystem, data integration platform and so forth, which enabled them multiple times. I can think of three acquisitions off the top of my head right now. They got them all done. They got them all implemented, transformed and were able to close on those deals. All within one year.