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I’ve been in the investment management and technology industry for 30 years, starting my career as a practitioner working for an institutional asset manager in trading and portfolio management. After spending nearly a decade on the buy-side I moved into investment technology where I have worked with some of the largest Asset Managers and Wealth Managers applying technology to help them achieve their strategic business goals: growth, scalability and operational efficiency. While I have only been at Ridgeline for five months, what impresses me most is the completeness of Ridgeline’s solution.
Ridgeline’s Superpower
When we think of superheroes, their character is defined by a primary superpower by which they’re identified. Like Wonder Woman’s lasso of truth, Aquaman’s power to communicate with sea animals, and the Wonder Twins’ power to “shape-of” and “form-of” any object that would save the world from disaster. Ridgeline has a superpower too. Simply put, it is the power of a single platform built from a clean sheet of paper with everything an investment manager needs - all in one place. This superpower is unique to Ridgeline, as there is no other technology partner out there today that is architected like Ridgeline.
The Industry Problem
When we think of the systems of record primarily utilized by investment managers, the three core systems are a CRM, OMS, and a PMS (accounting, reporting and performance measurement). To implement these core systems nearly every investment manager has taken a “best of breed” approach, which means that they have licensed an accounting system, an OMS, and a CRM from three different vendors and they have integrated them. This has resulted in massive business risk for investment managers as it has created three sources of truth that must be reconciled and that are updated at different points in time.
Having two or more different systems has also created business and communication silos. The more systems an investment manager installs, the greater the number of silos, and the more difficult and complex intra-organizational communication becomes. For example, users who only have access to the OMS only know the information in the OMS, and must ask their colleagues in the Operations silo for data and information from the accounting system since it does not exist in the OMS. This communication hurdle is the cause of trade errors and labor-intensive “work-arounds” that cause highly-compensated CFAs, CIPMs, and MBAs to toil in monotonous data management to ensure that the data they are using to make mission-critical investment decisions is correct.
To make matters worse, what I have just described is a simple integration between an OMS, an accounting system, and a CRM. In reality, there are many more systems in place like reconciliation, reporting, performance measurement and attribution, composite management, model management, portfolio optimization and rebalancing, compliance, execution management, trade affirmation, and client portals. When you think about all the points of integration for even a small investment manager and all of the work-arounds they employ to make these systems and employees work in harmony, this picture has RISK written all over it. This also creates operational inefficiency, which eats away at operating margins and exacerbates the effect of fee compression.
Is Diversification the Solution?
In keeping with our superhero theme, the investment management industry “kryptonite” has been the false notion that the investing principle of “diversification” should also apply to a firm’s technology. Technology diversification leads to:
- Integration issues
- Data management and timeliness of data issues
- Siloed groups who only have access to a specific system (and only the data in that system) which breaks down communication across an organization
Moreover, each system has its own version and software development life cycle (SDLC) where software updates may happen annually at best and require additional work to ensure that integration to other systems does not break.
To deal with this, investment managers have delayed upgrades, making them less operationally competitive. Or, they have completed the upgrade cycle which typically is a 6-9 month process costing six figures and makes the CTO and IT team work late nights and weekends only to achieve parity of the previous version and continued vendor support.
This “technology diversification” approach is also fraught with data security issues as data transport between various systems may not be encrypted to current standards and could be easily hacked. Ask yourself, “How many processes do we have where we are emailing spreadsheets with investment information and client PII”? You may be surprised when you realize these points of vulnerability. Additionally, every system has its own method for backing up data and SLAs for availability. When integration goes sideways, multiple vendors will point fingers to who’s at fault. This leaves you in the lurch to run your business and have a business continuity plan in place to solve for these infrequent yet disastrous events.
Historical Approach
In the investment technology industry, many vendors have started with a particular specialty like accounting, compliance, or OMS, and have expanded their offering to other functional areas. Some of this growth has been organic, but in order to accelerate growth, vendors have acquired other vendor technology, integrated it and have created a product that may appear holistic but is simply integrated with other acquired systems. This leads to issues with multiple data models and code branches that only few developers actually understand. From the technology vendor perspective, this makes client service, product enhancement, and bug fixes that much more difficult.
Ridgeline: The Future You’ve Been Waiting For
To solve these endemic problems, Ridgeline was designed from a blank piece of paper with the vision that everything an investment manager needs could be in one place. Deployed as a secure, cloud-native enterprise platform with a universal data model and single branch of code, Ridgeline’s mission is to empower the investment management industry with a modern, intuitive, easy to use platform that is accessible to your entire firm anywhere with internet connectivity, and built with intelligence at its core.
Ridgeline breaks down organizational silos and massively improves communication and employee harmony because everyone is singing from the same hymn book. Meaning that everyone is looking at the same data which is updated system-wide in real time. Because the Ridgeline platform supports all investment management personas in the front, middle, and back office, and end investors via a client portal, all personas are leveraging a single source of truth - the universal data model. What’s more, Ridgeline empowers the investment management organization through enterprise accessibility. No longer are employees denied access to the systems that help them do their jobs more efficiently simply because of economic reasons (seat licenses) or interoperability (system integration) reasons. In this way, Ridgeline democratizes information and intelligence across the enterprise, elevating everyone’s role above the toil of shuttling data around and empowering them to add massive value to the organization.
Additionally, Ridgeline solves the data security problem not only by democratizing access to data across investment management personas, so that siloed groups aren’t forced to email spreadsheets to each other, but also by being SOC II Type 2 compliant. This means that data and accessibility controls are part and parcel of the platform and these controls are audited by a third party.
Ridgeline has also thoughtfully considered the best-of-breed reliability issue and the investment manager’s concern about putting all their eggs in one basket with a single technology partner.
Alternatively, Ridgeline is cloud-native and maintains a single branch of code. Cloud-native deployment not only means that the platform is scalable for any size business, can be easily updated for all clients, and has secure data encryption built in, but also that the platform supports high availability, hot failover, backups, and 99%+ uptime baked into the SLA. Having a single branch of code means that Ridgeline can provide superior customer support as developers can quickly and easily test new code, and any client issues can be quickly mitigated.
Finally, Ridgeline future-proofs and de-risks an investment manager’s business model, empowering them to grow and scale, and develop new products while maintaining and expanding operational margins. What does future-proof mean? It means that Ridgeline continuously innovates and develops its platform, functionality, and technology as well as releases updates to its customers on a weekly basis. Customers no longer have to endure the vicious and costly upgrade-to-a-new-version cycle that they have historically experienced.
Ridgeline is a new waypoint on my journey to helping investment managers achieve better business outcomes through technology. If you’d like to learn more, please reach out to me at jr.tippo@ridgelineapps.com.
