Do It Yourself or Get It Done For You? Either Way It Is Good to Have Options.

Amir Dehestani, Global Sales Solutions Manager, BNY Mellon Program Services, Eagle Investment Systems

I have always prided myself with having a “do it yourself” (DIY) attitude. Increasingly however, I find myself embracing the “done for you” (DFY) way of thinking. Case in point: five years ago I purchased paint supplies from the local hardware store with the intention of painting a bedroom in my home. The years passed and the cans of paint sat there unopened serving as a constant reminder of how short-lived my DIY attitude was for this project. Sure, there were feeble attempts over the years when I would take the paint back to the store to get re-stirred in hopes of finally seeing this project through, just to return home and put them right back in the basement. Finally, after five years, I caved in and hired someone to perform the now daunting task.

Why the change of heart? How did a once proud “do it yourselfer” resort to becoming a “done for you” type of person? More importantly, what does this have to do with the investment management community?

The investment management industry has become increasingly comfortable with the concept of outsourcing over the past decade. It’s been a gradual change: instead of keeping installed systems in-house, firms began opting for secure cloud-based solutions. In addition to alleviating their technical footprint, firms became more open to alleviating operational effort and risk in the form of investment services outsourcing.

Even the most entrenched “do it yourself” firms are seeing the benefits of going down the “done for you” route, which is being driven by a number factors:

  • At the end of the day, investment managers want to focus on growing assets, not to be in the operations business. The end client wants to see the benefit from investment decisions the front office makes, as inexpensively as possible. Having a trusted, well-run middle office feeding the front office is a means to an end, not something that firms necessarily want to be in the business of doing.
  • In some cases, an outsourcing option becomes the most viable option as a result of a structural change in the business. Market forces, acquisitions, regulatory changes and changes to a firm’s investment strategy (investing in more complex instruments that the existing systems/staff is hard-pressed to support holistically) can require far-reaching changes that lead to questioning the “do it yourself” approach. Perhaps the current infrastructure is centered on an aged system that is getting retired or becoming obsolete.
  • As offerings for investment services and hosted solutions have matured, investment managers are putting more trust in their providers. BNY Mellon and Eagle Investment Systems’ innovative approach to providing insight into the middle-office operations, in addition to providing control and ownership of the data, has made firms more comfortable with an outsourcing arrangement.

Eagle’s solution is unique in that not only is it offered directly to the investment management community, it also an integral part of the BNY Mellon middle-office outsourcing platform, satisfying both the “do it yourselfers” and the “done for you” camps. Having the same solution at the heart of your middle and back office allows long-term flexibility should firms decide to switch back and forth between an outsourcing and insourcing arrangement.

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