The latest technological innovations are bringing enhanced customer experiences to financial organizations, but with those milestones come new cybersecurity threats. As protecting firms and clients becomes a growing and evolving concern, it’s more important than ever to stay one step ahead of cyber criminals.
NICSA members tackled this topic during a breakout session on best practices aimed at protecting investors during the 2018 GMM.
Scott Nussbum, Director of Global Investigations and Compliance, Navigant, moderated the panel, which featured experts from Dechert, M3Sixty, and PwC.
Joe Divito, Principal of Cybersecurity & Privacy Services, PwC, began with a high-level overview of current fraud concerns.
“If you look at the history of data breaches, the good news is that we’ve yet to have a loss of life or any major destruction as a result of a breach,” Divito said. “But the increasing frequency and disruption to global businesses continues to challenge the infrastructure and the processes that many organizations have in place.”
PwC is advising clients on how to become more cyber-resilient. To that end, Divito said “threat actors” exist among severalprimary lines ranging from least to most sophisticated:
Hilary Bonaccorsi, Associate, Dechert, LLP, brought the group up to speed on the latest phishing schemes. “We’re most familiar with them impacting our personal email — maybe someone sends us an email that says, ‘Click on this link and you’ll win these sweepstakes,’ or you get a business email from someone posing as your ‘CEO’ asking to wire money immediately,” she said.
Bonaccorsi said most people have their guard up for these types of fraud. Unfortunately, phishing schemes now are transitioning into sophisticated social engineering processes that pose additional risks to companies over time. In these scenarios, hackers psychologically manipulate potential victims to gain access to information that is then used for malicious purposes.
“Traditional phishing emails are turning into something that poses more risks to the organization and can expose flaws in incident reporting and inter-company dynamics around security,” Bonaccorsi said.
Andras Teleki, Chief Legal Officer, M3Sixty, said malware is “any type of executable software designed to harm the computer user or the system that it’s on.”
“Malware typically is manufactured for nefarious purposes, but it’s also any software that basically has undisclosed, behind-the-scenes purposes,” he said, pointing to three common types of malware:
Trojan horses are also used to install ransomware, which encrypts data on individual computers as well as entire networks. Usually the encryption is so powerful that the target entity ends up paying to unlock the system.
PROTECTING INVESTORS
Bonaccorsi said from a legal perspective, it’s important to conduct due diligence on website providers by requesting security documents. “Really understand the procedures they have in place and what their risk profile is,” she said.
Divito agreed, adding that risks associated with various third parties can be evaluated through on-site assessments. “We definitely see increased interest in third-party risk from regulators,” he said. “If you look at the GDPR in Europe, for example, there is clearly an expectation that you understand what data you’re sharing and what controls third-party vendors have in place to protect individuals’ information.”
Teleki said it’s also important to have an incident response plan in place. “In the ideal world, this plan lays out all the various steps, who the stakeholders are, and what they have to do,” he said. “Stakeholders typically include people from IT, compliance, management, and legal.”
Bonaccorsi added that documenting the incident is an important follow-up to these plans. “Even with smaller incidents, you still want to document the incident in a one- to two-page report, explaining what information was at issue, what happened, when it happened, how it was resolved, and any remedial actions that were taken,” she said.
NICSA will be recognizing outstanding leadership in the global asset management industry at its GMM in Boston. Nominated by their colleagues within the asset management industry, the award winners are chosen by an independent panel of judges comprised of distinguished industry leaders. Don’t miss the opportunity to celebrate excellence in innovation!
This year’s Strategic Leadership Award winners are Robert Conti, Chief Executive Officer and President, Neuberger Berman; and Victoria McGowan, Head of Global Fund Administration, BNY Mellon. The 2018 Lifetime Achievement Award will be presented to Jeffrey Paul Beale, Chief Administrative Officer and Vice President, Eaton Vance (retired).
Among NICSA’s Industry Innovation award winners are Delta Data, American Funds, Putnam Investments, Citi Fund Services, and Envision Financial Systems. In addition, NICSA will also recognize emerging leaders in the industry, with awards presented to Kelly Cornwell, Financial Advisor Services Manager at The Vanguard Group; Anna Jamroz, Senior Vice President, Global Fund Services at Northern Trust; and Jonathan Rizzo, Senior Manager at Deloitte.
“NICSA’s NOVA Awards program recognizes outstanding leadership and achievement within the global asset management industry. We congratulate those that have set their organizations apart by exemplifying excellence and innovation,” said Jim Fitzpatrick, President of NICSA.
The human element will become a critical asset in the workplace of the future, said David Atkinson, People and Organization Director at PwC, during a recent #WebinarWednesday on employee wellness.
Atkinson moderated the event, which featured a panel of forward-thinking experts from Franklin Templeton Investments, Invesco, and MFS Investment Management. The session allowed attendees to explore the employee value proposition through a broad lens encompassing multifaceted wellness programs.
Going Holistic
As the “wellness-to-wellbeing” landscape grows, Sharon Anderson, VP of Benefits and HR Communications at Franklin Templeton Investments, said her organization has worked to meet that need through the launch of a new global campaign known as “Reach for Better.”
The campaign represents a belief in ambition over status quo, and an understanding that better outcomes in investing come to those with the ambition to seek them.
“To launch the new brand and help employees connect with what ‘better’ means to them, we partnered with our brand group and held some pop-up cafés,” Anderson said. “During those events, we intentionally introduced our new holistic wellbeing framework.”
This whole-person approach focuses on providing resources that support five critical aspects of wellbeing: Physical, financial, emotional, social, and community-focused.
Mark Leary, Chief Human Resources Officer at MFS Investment Management, said his organization’s wellness journey began years ago with a heavy focus on physical health. Today, the group leans more toward the whole-person approach referenced by Anderson.
“We focus on work-life balance, flexible work schedules, a ‘dress for the day’ dress code, and enhancing our family leave policy,” he said. “But we also put heavy emphasis on career development and growth — making people aware of the opportunity to broaden their skill set.”
Tara Patterson, Senior Human Resource Business Partner at Invesco, added that her organization focuses on purpose-based work intended to help employees “get more out of life.”
“When employees are not financially secure, it has tremendous impacts on their stress levels and wellbeing,” she said. “Even though we’re an asset management firm, a lot of employees were lacking confidence that they were doing the right things to secure their financial futures, so we put a lot of emphasis on on-site retirement workshops,” she said. “We also started offering access to our internal experts to provide employees with education.”
Driving Culture
“Culture is incredibly important,” Atkinson said. “We know it’s not something you can necessarily touch and feel, we know it’s not something you can manipulate — it’s something we can only hope to influence.”
Leary said a collaborative, familial culture is a differentiator for MFS. “We know that happy and engaged employees are more productive and willing to help out their coworkers,” he said. “We do an employee engagement survey every two years and build a comprehensive action planning around opportunities.”
Patterson said her group works to promote a culture of care. “We take care of employees, and employees take care of our clients and shareholders,” she said. “That translates to having a work environment where employees have the flexibility to harmonize work and life, feel secure in their finances, have the opportunity to connect and socialize, and give back to their communities.”
Chasing Engagement
Like Leary, Patterson said her organization uses employee engagement surveys to track the impact of its increased focus on employee and workforce quality of life. “What we’ve consistently seen in our engagement results is that overall, our employees feel motivated, enabled, and energized,” she said. “We also have very high retention rates.”
Anderson said Franklin Templeton also assesses employee engagement through surveys. “We also have a new listening strategy that includes asking more pointed questions of employees throughout the year in hopes to achieve greater connections,” she said.
Leary said his firm also studies promotion rates and mobility within the firm. “We want to determine if there is a healthy amount of people moving within the firm — it’s not just about bringing in new talent, thought that is also important.”
NICSA’s 2018 General Membership Meeting in Boston was kicked off Thursday, Oct. 11, with a peek into the minds of top asset management executives.
Bob Mulhall, Partner, Wealth and Asset Management, EY, led a panel of seasoned executives from RBC Global Asset Management, State Street Global Advisors, and Eaton Vance through the discussion, which focused on data analytics, technology and investment strategies.
TECH CONSIDERATIONS
By 2020, RBC Funds Trust, the U.S. mutual fund family of RBC Global Asset Management, aims to become a data-driven, digital firm. Kathleen Gorman, President, RBC Funds, RBC Global Asset Management, said the goal is to create “the infrastructure, systems and culture to make evidentiary rather than experiential decisions, and use that data to support innovation and competitiveness, and become more efficient in decision making.”
Lori Heinel, Executive Vice President, Deputy Global Chief Investment Officer at State Street Global Advisors, said asset managers are always looking for an informational advantage, and the cache of data available to analysts and resources allowing them to identify signals and investment opportunities is beyond the scope of what we ever imagined.
She illustrated this fact by pointing to the Worldscope database, which houses the fundamental financial data of companies globally.
“If you look at the number of data points captured there and then you look at Google, there are 10 million times more data points created by Google Search in one month compared to the entire Worldscope database,” Heinel said. “So if you’re not thinking about how to harness, interpret, analyze and draw investment insights from that data, you’re missing out on a tremendous opportunity.”
For Matt Witkos, president of Distribution at Eaton Vance, it’s important to consider what to do with the data after it’s collected. “There are many third-party providers of data; you can purchase data …that provide insight into financial advisors, but what I’ve learned is it’s important to consider how you make it actionable.”
To that point, Gorman said it’s also important to successfully onboard staff when new data-based or technical solutions are put in place. “It’s incredibly difficult to change behavior,” she said. “It’s an ongoing process and that’s one of the things we didn’t really anticipate. Once you create these great tools, consider how to get people to use them.”
DIVERSITY & INCLUSION
In recent years, State Street has taken a lead on diversity and inclusion when it comes to indexing practices. Its “Gender Diversity Index” fund — represented by the arrival of Fearless Girl on Wall Street — invests in U.S. large-capitalization companies that rank among the highest in their sector in achieving gender diversity across senior leadership.
“We find companies appreciate the perspective we bring, because we don’t go in from a judgement perspective; we actually go in from a value standpoint,” Heinel said. “We can show them the research that demonstrates that companies with certain types of practices, including diversity, actually deliver, in the aggregate, longer-term returns, even within in their own industry.”
State Street has seen enormous success with its diversity campaign: 152 publicly-traded companies that the firm reached out to (through either its voice or its vote) that previously had no women on their boards now have at least one female board member.
ENVIRONMENTAL, SOCIAL & GOVERNANCE
Eaton Vance recently acquired Calvert, one of the first fund complexes to concentrate on ESGs.
“The purchase of Calvert has changed how we think at Eaton Vance,” Witkos said. “ESGs are an undefined space in terms of who does it right, and there’s an opportunity for a lot of education. We’re used to just talking about investment performance, but now people want to know if their money is making a difference, and they want you to prove it to them. It’s a new endeavor and there’s a lot of interest in it.”
When discussing the active vs. passive debate, Witkosfocused on customizing beta exposure.
“You can build an index the way you want it at Eaton Vance through our affiliate, Parametric, and why that’s important is about $20B of our custom indexing has some type of environmental, social, and governance (ESG) flavor to it,” he said.
Gorman said there’s been a spectrum of ESG adoption at RBC Funds. “One of our London teams has a very integrated ESG model that is being taken to some of our other investment teams to see if they can help them achieve whatever’s right for them,” she said. “They’re not all going to be created equal — based on the investment strategy, there’s different ways to incorporate ESG.”
RBC Funds’ ultimate objective is to be a partner to its clients. “We want to understand your objectives and work with you to solve your problems,” Gorman said.
#GeneralIndustryTrends
#NicsaEvents
NICSA is pleased to announce the winners of its 2019 Volunteer of the Year Awards. Volunteers will be honored at the NICSA Strategic Leadership Forum held from April 3-5, 2019 at the Sawgrass Marriott Golf Resort and Spa in Ponte Vedra Beach, FL.
“NICSA’s Volunteer of the Year Awards recognize the outstanding efforts of members who are especially dedicated to serving the NICSA community. These individuals have shown exemplary commitment as volunteers, and have demonstrated a passion around furthering best practices within the global asset management industry.” said Jim Fitzpatrick, President of NICSA.
NICSA’s many topic and events committees work to provide association members with educational content, resources, and events on top-of-mind issues within the global asset management industry. On behalf of NICSA, committee members support the association’s mission of developing, sharing, and advancing leading practices among industry participants. Each year, NICSA recognizes outstanding volunteers whose sustained contributions over the previous twelve months were deemed exceptional.
A list of the 2019 award winners follows:
Compliance & Risk Committee
Nick D’Angelo, PwC
Content Committee
Chuck Gallant, BNY Mellon
Data Analytics Committee
Karen Fay Luedtke, UMB Fund Services, Inc.
Diversity Project North America
Shaelyn Otikor, Northern Trust
East Coast Committee
Matthew Mackay, J.P. Morgan
NextGen Committee
Nick Lombardo, Citi
Strategic Leadership Forum Committee
Janet Bienkowski, MFS Service Center, Inc.
Technology Committee
Gary Casagrande, Confluence
TA Committee
Julie Smith, Touchstone Funds
Webinar Committee
Bethany Hendricks, Franklin Templeton Investments
UIT Committee
Jack Tierney, Invesco
NICSA members enjoyed an update on one of the industry’s fastest-growing initiatives — the Diversity Project North America— during a recent #WebinarWednesday event.
Shaelyn Otikor, Senior Vice President, Global Strategy, Corporate & Institutional Services at Northern Trust, moderated the event, which also featured forward-thinking representatives from NICSA and Aon.
Jylanne Dunne, VP, Diversity Project North America at NICSA, kicked off the program with an overview of the NICSA-sponsored initiative, which was introduced during the General Membership Meeting in October 2018 and inspired by a similar effort launched in the UK in 2016.
“The Diversity Project North America followed the UK project in some important ways,” Dunne said. “We established two levels of membership, founding and participating, with founding members leading both strategically and from an execution standpoint. We’re similar to a board management structure where the participating members are heavily involved in the active communities.”
The Diversity Project North America will be overseen by a CEO Advisory Council comprised of C-suite representatives from each of the member firms, as well as an Executive Steering Group that will lead the implementation of the initiatives championed by ambassadors.
The strategy will be managed via committees and workstreams focused on different dimensions of diversity and inclusion. A dozen success indicators have been put in place that will be reflective of the group’s efficacy in reaching overall goals. These include:
1. Identification and acceptance of measurement metrics and standards.
2. Enhanced recruitment pipelines utilizing anti-unconscious bias practices.
3. Operating procedures with clear accountability for hiring, career pathing, sponsorship, and mentorship.
4. Shared findings with actionable industry feedback.
5. Development and offering of leadership, diversity and inclusion training, and education.
6. Advancement and retention of diverse mid-level and above employees.
The Diversity Project’s new operating committees are already setting plans into motion. For example, Paul Olschwanger, Associate Partner, Strategic Initiatives & Human Capital Development at Aon, said he has been serving on the Executive Steering Committee of the Diversity Project North America as Co-Chair of the Talent Management Initiative.
“As all of the committees had been asked to do, we’ve created a mission statement: ‘To promote investment management opportunities to interested and diverse talent on behalf of the investment industry looking to further establish best practices from a business case for diversity and provide the tools required to effect quantifiable change,’” Olschwanger said.
“That’s important because our senior leaders are tasked to show tangible results of diversity and inclusion, and it’s critical that we earn their support,” he added.
Dunne said other operating committees are setting up in a similar way. “They are identifying key initiatives and having volunteers focus on one of those initiatives as a subgroup,” she said. “We have over 100 volunteers today currently working on these five committees, and I expect that we’ll continue to grow as more firms are added to our membership.”
Note: Although the observations contained in this work represent the best thoughts of the individuals comprising the NICSA panel, they do not necessarily reflect the views of NICSA or any of its member organizations. Matters addressed in this work may touch upon legal or regulatory matters, however nothing herein is intended to be or should be construed as legal advice. You should contact your own counsel in order to obtain legal advice regarding these or any other matters.
#DiversityandInclusion
#NicsaUpdates
NICSA will once again partner with ALFI for the Association of the Luxembourg Fund Industry’s Global Distribution Conference from September 25-26 , where 650+ senior representatives from the global distribution community will convene to learn about the latest developments on the global distribution landscape.
The conference will reflect on 30 years of UCITS, explore the future of enhanced cross border distribution, and take a deeper dive into distribution trends in LatAM and Asia, product trends around the globe, and the technology that is making distribution easier and more efficient.
While at the event, I’m eager to hear from the 50+ speakers and to network with the fund distributors responsbile for the global reach of investment funds. I am also looking forward to sharing the ALFI stage with Sally Wong, CEO of the Hong Kong Investment Funds Association (HKIFA), to provide important perspectives regarding our respective markets as they relate to the global distribution ecosystem.
Fee compression and shrinking shelf space are on the watch list for global asset managers facing an increasingly competitive environment. Data-inspired distribution models and strategic alignment of intermediary partnerships significantly contribute to the future vision of global financial product distribution. All the while, technology-inspired service models designed for the digital era are taking center stage. A global view of these matters is critical to growth for innovative industry leaders. I look forward to sharing NICSA’s views with conference attendees.
NICSA has enjoyed a long and successful partnership with ALFI and its members. Events such as ALFI’s Global Distribution Conference are critical to serving the global asset management community as it meets the challenges posed by increasing globalization. Collaborating on innovative approaches to global distribution is certainly in line with the NICSA mission. Serving the distribution community within the global asset management industry has been a focus for NICSA in recent months, and will continue into 2019. Our organizaton recently formed two new working committees: a Product & Distribution Committee and a Data Analytics Committee. We look forward to sharing the good works of these important groups with our own membership and the ALFI community in the coming months.
#Nicsa Updates
Affluent millennials — defined as individuals born from 1982 to 2000 who have $100,000 or more in investible assets — are a nascent but quickly expanding population, and learning how to successfully engage them is of increasing importance to asset management firms.
According to a recent study by Cogent Reports, more than a third of U.S. adults qualify as affluent investors. Millennials represent a whopping 15% of the total affluent investor population and nearly 20% of affluent investors with $100,000 to $500,000 in investible assets.
“These aren’t your average millennials,” said Linda York, Senior Vice President, Cogent Reports, Market Strategies International, during a recent #WebinarWednesday event. “The average household income of the affluent millennials … is upward of $228,000 per year.”
York kicked off the educational session, which explored insights on working with the next-generation client, with a review of the Cogent Reports research.
“One of the striking findings from our report this past year was that affluent investors, and in particular, affluent millennials, are searching for new places, new ways to invest their money other than the traditional mutual funds, CDs, and bank accounts,” she said. “In fact, we found that the millennial population is driving up the use of ETFs, separately managed accounts (SMAs), hedge funds, and other alternatives.”
The report also revealed that affluent millennial investors receive more than three times the typical outreach volume every month compared to all other generations. They also received more touches than ready-to-act investors.
“Those are the folks that are in the shopping mindset – but even in comparison to them, the millennials are showing much more activity in terms of the number and types of touches that they’re reporting and receiving from financial services providers,” York said.
Millennial investors are also eager for information and most open to digital communication. “We’re seeing that these digital touchpoints can be a real win in both situations: for the financial providers as well as their potential customers.”
Matt Schiffman, Principal, Broadridge Data & Analytics, highlighted findings from his organization’s national research study on understanding the next generation of investors.
“We found that the vast majority of millennials, roughly 69% that we surveyed, do not have or use an advisor,” Schiffman said. “And the gender split overwhelmingly is dominated by men, underscoring the need to bring more women into the conversation.”
When compared to other generations, Schiffman said millennials display vast differences in their views and attitudes toward financial advice. In terms of asset growth, millennials stand in stark contrast to their parents. “For them, it appears to be less about the stock market and more about entrepreneurship and buying into a business,” he said. “They’re also way more confident in robo-advice than previous generations.”
Millennials also anticipate receiving an inheritance more than any other generation. “Millennials have a measurable level of optimism with regards to inheriting some money, but given numerous studies on boomer spending habits, in concert with rising retirement costs like healthcare, you have to wonder if this is a well-founded, solid plan,” Schiffman said.
“Recognizing and acting on these emerging millennial trends will position financial advisors and the industry to attract and keep this huge generation of clients at a critical time in their wealth creation and loyalty-building stage,” he concluded.
NICSA would like to thank Broadridge for sponsoring this webinar.
#DistributionandSales
#ProductandMarketing
LGBT Great Launches 50For50 Pride Campaign
NICSA is delighted to announce that President and CEO Jim Fitzpatrick is featured in LGBT Great’s #50For50 Executives campaign. The campaign showcases 50 executive leaders across the asset management industry pioneering a diverse and inclusive environment. Jim is a proud ally of the LGBT community and has been recognized for his leadership in the launch of the Diversity Project North America. NICSA launched the Diversity Project in the fourth quarter of 2018 and the initiative is growing steadily among a broad range of firms within the industry. With hopes of deepening the D&I lens within the global asset management industry, we are pleased to see our industry leaders stand together in support of the LGBT+ community not just for #Pride but all year round.
About #50For50 Executives
LGBT Great’s #50for50 Executives campaign is part of Project 1000, which is a five-year drive to shine a light on 1000 LGBT+ and allies within the investment and savings industry. The purpose of the campaign is to showcase 50 executive leaders across our industry and to recognize the 50 years since the Stonewall movement began. The 50 executives represent a broad range of firms (at C-Suite and executive level) across the USA, EMEA and APAC.
About the Diversity Project North America
The mission of the Diversity Project North America is to promote a diverse and inclusive asset management industry with the right talent to deliver the best possible results for our clients, reflect the society we serve, and ensure long-term business sustainability. We aim to achieve diversity across all dimensions through collaborative leadership from executive business leaders pooling resources from industry participants around challenges we all face.
The Project spans the entire range of the industry: asset managers, fund complexes, asset servicers, broker dealers, asset owners and professional service firms. We share best practices, identify gaps in our industry, and initiate action to help solve or improve those inadequacies.
Those interested in learning more about the Diversity Project can visit nicsa.org/diversityproject.
Note: Although the observations contained in this work represent the best thoughts of the individuals comprising the NICSA panel, they do not necessarily reflect the views of NICSA or any of its member organizations. Matters addressed in this work may touch upon legal or regulatory matters, however nothing herein is intended to be or should be construed as legal advice. You should contact your own counsel in order to obtain legal advice regarding these or any other matters.
#DiversityandInclusion
#DiversityProject
#NicsaUpdates
NICSA will be recognizing outstanding leadership in the global asset management industry at its 2019 GMM in Boston this October. The NICSA NOVA award ceremony is one of our most anticipated events, and we very much look forward to recognizing this year’s winners. Nominated by their colleagues within the asset management industry, award winners are celebrated for innovation and dedication to the global asset management industry. Read press release.
We offer our congratulations to those that have set their organizations apart by exemplifying NICSA’s mission to advance leading practices throughout all facets of the industry.
A list of the 2019 award winners follows:
LIFETIME ACHIEVEMENT AWARD
OUTSTANDING SERVICE TO THE FUND INDUSTRY – ROBERT L. GOULD AWARD
INDUSTRY INNOVATION AWARDS
EMERGING LEADER AWARDS
Website Design By Branophia LLC