Here are some key quotes from my latest podcast with Pete Cherecwich, President of Northern Trust Asset Servicing, discussing how his firm has expanded its offerings for middle and back offices.
“[Northern Trust] split into wealth management and asset servicing. I run the asset servicing business, which is really a collection of other businesses like fund administration for hedge funds, custody for pensions, capital markets group, FX securities lending, brokerage, as well as commercial banking.
“I mean, it sounds sort of funny. But actually remember, the world doesn’t revolve around the East Coast time zone. You might consider when to schedule a meeting and take it into consideration that everybody doesn’t have to do it at night just to make your life convenient.”
“So you sit back and say, ‘what should you build? What should you buy?’ What we tell our clients that are in the asset management space, we say, ‘Are you getting competitive advantage from building the system or not?’”
“What [clients] really want is all the aggregated data, and all the analytics that we can provide, and the cash movements that are required surrounding those types of investments. So we end up moving from custodian to data provider.”
“Pretty soon, you’ll be considering tokens. There’s not going to be any bonds. It’s going to be a fraction of a token on a blockchain; you’ll pay with a digital currency. But that’s not the death of the custodian because the custodian still gets paid to facilitate aggregating all that data, making sure it happens, and providing insights to our clients that can make better decisions.”
“What Front Office Solutions is doing is combining both public assets and private assets into one platform. That enables an asset allocator to make allocation decisions based on risk metrics, performance metrics that are looked at by combining those assets types. And that’s not available in the marketplace today.”
“As soon as we spread ourselves too thin, have clients that are unhappy with the current service, every reference check that comes in and we fail, we don’t grow anymore. So you have to grow at the rate of that you can continue to keep happy clients.”
“I call clients by myself. So you know, I set up meetings, have a conversation with a client, just one on one, and get a flavor directly from them in terms of how’re things going, what do they see that’s good, what’s bad, etc. So that individual client contact that’s unfiltered is really important.”
“I think that more and more the model for the buy side is going to be slimmed down, and really focused on portfolio management and distribution. And that’s going to be the core of what they do. And they will outsource almost everything else.”
“You never thought hedge funds would actually outsource their shadow [accounting] and administration. That’s happening now. And you see it happen more and more. So I don’t think anybody gets a pass on this trend. I just think it’s a question of when it will happen.”
“If I’m a betting man. [office space] will go down 20%, at least, over the next couple of years. And the employees will be happier because we’ll be able to have some work at home, some work in the office. But I do think that work in the office is key as a team to get collaboration.”