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    Building an Orchestrated Ecosystem to Simplify the Investment Lifecycle

    Key considerations for achieving harmonious operational models with third-party solution providers.

    As investment managers of all sizes face a cacophony of pressures from regulations, evolving technology, market volatility and inflation, many are looking to third-party providers to help solve these challenges. However, building solutions with solutions providers requires careful consideration to ensure a harmonious result. In this article, Gerard Walsh, Northern Trust’s Global Head of Capital Markets Client Solutions shares six key tips for achieving an orchestrated ecosystem across the investment lifecycle.

    In 1624, John Donne published ‘No Man Is An Island’ and the theme that ‘no-one is self-sufficient, everyone relies on others’ is one that’s particularly relevant to the management challenges of the modern financial services firm.

    It is impossible to imagine a modern firm attempting to ‘own’ everything it does, as companies like Ford Motor Company or William Hesketh Lever’s Sunlight Soap did a century or so ago. All firms ‘rent’ capacity or services or expertise from someone else. It’s a fact of modern corporate life.

    This is true at every ‘activity point’ in the lifecycle of an investment decision at investment management firms. At every level – whether global giant or start-up - industry participants rely on a far-reaching network of service providers to help earn their daily bread. In truth, there are few functions and activities that could not be provided on a contract basis.

    Examples abound. Data provision is contracted out - that’s why companies like Bloomberg and Reuters exist. Hard infrastructure and associated services are contracted out – banks don’t (in general) employ cleaners directly, they contract with services companies. The Magic Circle would be much less magical if it wasn’t for the amount of legal advice sought by financial services firms. The Big Four accountants are big for a good reason. Entire industries contract out for accounting and audit services.

    Some may think contracting out is rare in the activity set that earns investment management firms a return, i.e. raising assets, managing money and driving an investment return. However, there are multiple providers delivering valued solutions and services at every step in the chain. Some firms contract out investment management. Some contract out investment research, or trading or transaction reporting - or any number of activities, including those that are tightly regulated.  A good example - Contracting out compliance activity is commonplace; however, investment managers understand it is about an outside party supporting them to help meet these obligations only. It does not remove their responsibility and accountability.

    Recent activity in the market lends weight to this proposition. As the industry pivots out of the post 2009 ‘easy money years’ into a higher embedded interest rate environment and increased focus on fee transparency, one of the more difficult challenges will be generating alpha and improving fund performance. To that end, solutions firms within the industry are acquiring capability at all points in the investment lifecycle to help their investment management clients do exactly that.

    Of course, choosing whether activity is ‘DBU’ (Done By Us) or ‘DBO’ (Done By Others) is almost always based on economic factors with elements of competence, expertise and resource availability in the decision-making mix too.

    To that end, in an investment firm, the question should be ‘does this activity add to my ability to drive improved alpha or gather more assets’? If the answer is not a resounding ‘yes’, the business case for contracting it in from a solutions provider might well be an effective option.

    If the case is sound, there are key tips to ensure contracting out is implemented with as much chance of success as possible.

    Tip 1 – Be clear on REASONS WHY. You don’t have to delve far into the history of contracting out to find examples of it going badly. In almost all cases it went badly because the reasons for contracting out were insufficiently tested, were thus misguided, and therefore not economically or operationally robust. Whatever the reasons are for reviewing what is DBU and what can be DBO, make sure those are supported by a sensible business case that is framed, challenged, and agreed.

    Tip 2 – Once the reasons why are framed appropriately in a business case, an absolute priority should be a focus on PARTNERSHIP. Companies are made up of humans and the human dimension is very important here. Partnerships are based on relationships with humans, not just on the machines, technology or data lineage wrapped up in the working structure. Investment managers should (will want to) work with partners who can add measurable tangible value to their own activities.

    There are multitudes of service providers in the market. Seek out global, innovative and trustworthy partners who can deliver focused local solutions at global scale. They do exist. Look for expertise and insights. Work with potential partners who know and understand the business case for change and know how to contribute to implementing the change itself. In summary – develop strategic partnerships based on enhanced mutual benefit, long-term collaboration, and a realistic assessment of the level of innovation the other partner can bring to your benefit.

    Tip 3 – Know and understand the RISK inherent in a decision to contract out. Look closely and ensure you’re not accidentally introducing risks like conflicts of interest into your value chain. Of course, conflicts of interest are Janus-like for investment managers – they face both ways. Investment managers have a duty of care to manage and mitigate conflicts of interest on behalf of their clients, in their own operations and in the extensive ecosystems they use to deliver service to clients. 

    Tip 4 – Whilst the function and activities DBU will change, your responsibilities don’t – therefore an emphasis on ensuring the right GOVERNANCE and OVERSIGHT is very important. That means clearly defined shared objectives, appropriate measures and other KPIs set out in a partnership agreement (an enhanced Service Level Agreement is a good way of thinking about this) and an appropriate mechanism for improvement. Responsibilities and accountabilities should be clear and documented.

    Tip 5 – Look for relevant EXPERTISE. Capability, implementation track record, innovation, ambition and stability. Look for all of them in one proposition. The reason there are many service providers and relatively few solutions providers is that the latter is earned through expertise, created out of a proven track record of implementing at scale. 

    Tip 6 – Extracting maximum benefit will accrue to those who can plug into an ORCHESTRATED ECOSYSTEM OF SOLUTIONS, enabling them to focus on what matters – managing assets, driving alpha and performance, and gathering assets through distribution. A fully functional ecosystem of solutions will deliver benefits through front, middle and back office.

    The benefits of cohesive execution solutions, portfolio solutions, performance solutions and asset and custody servicing solutions are available now. Proven ‘bang for buck’ for investment management firms, no matter where they’re domiciled, can be delivered through blended expertise-based solutions 

    An orchestrated ecosystem of solutions providers, capable of helping with transformative change that delivers measurable tangible value to investors, will help investment firms futureproof themselves for whatever the next cycle holds.

    Such transformative change is available and potentially deliverable in execution outperformance against benchmarks, through efficiency and productivity improvements, and through enhanced data lineage and straight-through processing.

    In summary, a successful contracting relationship is akin to the way a successful orchestra combines different musicians to create a harmonious result. As the industry faces into a very different investment environment over the next decade, focusing on creating an operating model based on a mutually beneficial partnership approach of combined capabilities, strengths and expertise will drive success.

    A well-considered contracting out approach that delivers measurable benefit should be at the heart of investment management strategy. Creating an orchestrated ecosystem of solutions is a proven way of doing it.

    Gerard Walsh Portrait

    Gerard Walsh

    Global Head Client Solutions, Banking & Markets
    Gerard leads the Global Capital Banking & Markets Client Solutions group, covering Equities, Fixed Income, FX and Securities Finance. He is responsible for matching Banking & Markets solutions to client needs, including new business development, Target Operating Models and strategic client relationships.


    For asset managers across the globe, there is a growing focus on data analytics that can help support decision making.


    © 2023 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation.

    Northern Trust Capital Markets is comprised of a number of Northern Trust entities that provide trading and execution services on behalf of institutional clients, including foreign exchange, institutional brokerage, securities finance and transition management services. Foreign exchange, securities finance and transition management services are provided by The Northern Trust Company (TNTC) globally, and Northern Trust Global Services SE (NTGS SE) in the European Economic Area (EEA). Institutional Brokerage services including ITS are provided by NTGS SE in the EEA, Northern Trust Securities LLP (NTS LLP) in the rest of EMEA, Northern Trust Securities Australia Pty Ltd (NTSA) in APAC and Northern Trust Securities, Inc. (NTSI) in the United States. For legal and regulatory information about our offices and legal entities, visit

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    © 2023 Northern Trust Corporation. All rights reserved.

    © 2023 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability as an Illinois corporation under number 0014019. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. This material is directed to professional clients only and is not intended for retail clients. For Asia-Pacific markets, it is directed to expert, institutional, professional and wholesale clients or investors only and should not be relied upon by retail clients or investors. For legal and regulatory information about our offices and legal entities, visit The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual. The following information is provided to comply with local disclosure requirements: The Northern Trust Company, London Branch, Northern Trust Global Investments Limited, Northern Trust Securities LLP and Northern Trust Investor Services Limited, 50 Bank Street, London E14 5NT. Northern Trust Global Services SE, 10 rue du Château d’Eau, L-3364 Leudelange, Grand-Duché de Luxembourg, incorporated with limited liability in Luxembourg at the RCS under number B232281; authorised by the ECB and subject to the prudential supervision of the ECB and the CSSF; Northern Trust Global Services SE UK Branch, UK establishment number BR023423 and UK office at 50 Bank Street, London E14 5NT; Northern Trust Global Services SE Sweden Bankfilial, Ingmar Bergmans gata 4, 1st Floor, 114 34 Stockholm, Sweden, registered with the Swedish Companies Registration Office (Sw. Bolagsverket) with registration number 516405-3786 and the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) with institution number 11654; Northern Trust Global Services SE Netherlands Branch, Viñoly 7th floor, Claude Debussylaan 18 A, 1082 MD Amsterdam; Northern Trust Global Services SE Abu Dhabi Branch, registration Number 000000519 licenced by ADGM under FSRA #160018; Northern Trust Global Services SE Norway Branch, org. no. 925 952 567 (Foretaksregisteret) [VAT if applicable], address Third Floor, Haakon VIIs gate 6 0161 Oslo, is a Norwegian branch of Northern Trust Global Services SE supervised by Finanstilsynet. Northern Trust Global Services SE Leudelange, Luxembourg, Zweigniederlassung Basel is a branch of Northern Trust Global Services SE. The Branch has its registered office at Grosspeter Tower, Grosspeteranlage 29, 4052 Basel, Switzerland, and is authorised and regulated by the Swiss Financial Market Supervisory Authority FINMA. The Northern Trust Company Saudi Arabia, PO Box 7508, Level 20, Kingdom Tower, Al Urubah Road, Olaya District, Riyadh, Kingdom of Saudi Arabia 11214-9597, a Saudi Joint Stock Company – capital 52 million SAR. Regulated and Authorised by the Capital Market Authority License #12163-26 CR 1010366439. Northern Trust (Guernsey) Limited (2651)/Northern Trust Fiduciary Services (Guernsey) Limited (29806)/Northern Trust International Fund Administration Services (Guernsey) Limited (15532) are licensed by the Guernsey Financial Services Commission. Registered Office: Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3DA. Northern Trust International Fund Administration Services (Ireland) Limited (160579)/Northern Trust Fiduciary Services (Ireland) Limited (161386),  Registered Office: Georges Court, 54-62 Townsend Street, Dublin 2, D02 R156, Ireland.