Evaluating Investment Research Management Solutions for Your Fund. Part I

Modern RMS for Asset Managers and Asset Owners

The need for a formalized approach to research management has never been greater. A recent industry report by analyst firm Celent stated “RMS is no longer an option, but a source of competitive advantage for capital markets participants in the New Normal.”

Today then, the bar is significantly higher for legacy RMS vendors and newer entrants alike to address the multiple, often conflicting, requirements of fund performance, investors, regulatory bodies and the best investment research talent.

This blog post, the first in a new series evaluating investment research management approaches, looks at the category of Modern RMS. It includes excerpts from the recently published Ultimate Buyer’s Guide to RMS for 2020-21, which tracks the evolution of the Modern RMS product category among other investment RMS approaches.

There are still some gray areas around what exactly constitutes a modern RMS today. However, if you steer away from feature checkbox comparisons in the first instance and look to core technology approaches, implementation capabilities and depth of RMS functionality, a clearer definition will emerge to help you navigate the vendor landscape in your evaluation. 

The Shift Away From The Old School 

A sizable cohort of large firms implemented traditional RMS solutions 5-10 years ago, and a significant proportion of experienced investment professionals will be familiar with a traditional RMS. Although many got on with these solutions in the early days, few have good things to say about the user interfaces and mobile integration today, which can be lacking and considered comparably clunky and rigid by modern standards.

Traditional RMS assets were largely developed from a fund control and compliance perspective, rather than for usability and productivity. It’s one of the reasons the traditional RMS is rarely found in newer funds, today. And one of many reasons those with aging systems in their tech-stack are re-evaluating.

Unlike these Traditional (Or as some would now say, legacy) RMS offerings, Modern RMS approaches are significantly more likely to be software-led, user-driven, highly configurable and fully integrated with funds unique data workflows. Next, we’ll explore these attributes..

What to Look for in a Modern RMS 

The best examples of Modern RMS have compliance capabilities built-in and consider (and to some extent, automate) end-to-end investment workflows and processes. Their scalable design, open interoperability and cost-competitive pricing models also make them more accessible to funds of all sizes.

When evaluating RMS, the following are examples of key criteria to look for in identifying a Modern RMS solution:

  • Like traditional RMS, modern RMS components are pre-built and relatively mature, so little, if any, initial development resources are required.
  • Customization and integrations are available to suit the specific needs of your fund, research processes and the people who use it. However, these processes are significantly simpler and faster than traditional approaches with highly configured implementations typically achieved in one month.
  • Ease of use is akin to more familiar consumer technology applications, for intuitive note-taking, mobile capabilities and collaboration for example. This typically leads to rapid and successful user adoption.
  • Many compliance safeguards are available “out-of-the-box” with limited burden upon internal resources for tuning or training.
  • Updates and upgrades are typically made as part of a continuous process (e.g. two-week cycles, though this varies vendor by vendor) meaning minimal disruption to the user experience or accessibility.
  • Modern RMS is delivered via SaaS meaning updates are performed centrally rather than at each customer site, and leverage the security and infrastructure capabilities of world renowned cloud specialists.

The Modern RMS category is the fastest-growing, and has established a strong foothold in the market in the last five years. It’s done so, in part, by combining and innovating on the best attributes of all RMS approaches that have gone before – combining the compliant, system-of-record orientated approach of traditional RMS, the configurability of bespoke build-your-own RMS approaches and the usable, automated characteristics of consumer technology.

In acknowledgment of the pent-up demand for Modern RMS solutions for investment management, some market data providers or legacy CRM providers have begun backing into the RMS space with what many analysts in the industry describe as “RMS-lite” products.

These stripped-down or add-on solutions often exhibit some of the user interface characteristics of Modern RMS, but lack the comprehensive productivity features, workflow automation and compliance support that research IP demands. Care should be taken to understand the distinction between these approaches within the Modern RMS category of products, particularly with regard to the effect this has upon compliance and security posture, and process management.

You can find more detail on Modern RMS and all the other categories of research management solutions for investment management in the latest edition of the RMS Buyer’s Kit – The Ultimate Investment RMS Buyer’s Guide 2020-2021, available to download here.

In our next blog in this series, we’ll start to delve into key considerations for evaluating Research Management Software and approaches for different fund strategies across LP/Allocators to GP/Alternatives and Traditional Asset Managers.