MMI conference highlights industry scalability needs

A March 25 article in the industry journal FundFire on the proceedings of the 2008 Money Management Institute Annual Conference highlights the discussion of the role of technology and communications in enabling managed account operations to scale. The conference featured a presentation by Gary Jones, Vice President of Industry Operations for the Money Management Institute, and Peridrome President and CEO Gib Veconi, which forecast the increase in client service requests as a function of  growth of accounts industry-wide.

Veconi and Jones used data from prior MMI research on staff compensation to estimate that industry expense for client servicing would increase by 129% by 2013.

In a subsequent interview with FundFire, Veconi explained, "“Most firms address growth in the number of accounts today by adding people. The servicing of the client account in most shops is a fairly manual process in terms of how work actually gets routed, which is either on paper or using a scanned image. A lot of information needs to be re-keyed. And there’s enough complexity to the fulfillment of each of these client requests that you need fairly highly trained employees to complete them.” At the MMI presentation, Veconi used examples from retail brokerage and consumer businesses to show how scalable client servicing has been achieved in other industries by utilizing rules-based business process management systems to automate service operations. Peridrome distributed to conference attendees a white paper on how similar technologies are being applied to in the managed accounts industry.

Veconi and Jones estimated that the adoption of straight-through processing tecnology in the managed accounts industry would have the potential to reduce staff expense by 50% or more. “We took a conservative stance on this,” Jones said, noting that in the securities industry as a whole, which has seen enormous adoption of messaging and improvements in processing systems, productivity gains have been several times higher.