Managers shift attention towards essential duties, with side projects gaining momentum as a result

In the dynamic world of asset management, it's crucial for managers to assess their operations and identify what's truly core to their business. This process of refinement can lead to better management of non-essential functions elsewhere, allowing for a more streamlined and focused approach.

Lift-outs, a strategy that transfers in-house operational functions to external partners, are gaining traction as asset managers seek to focus on growth and operational stability. These strategic moves offer numerous benefits, including enhanced operational stability, growth enablement, and efficiency gains.

Operational Stability

The lift-out process is designed to transfer operations with minimal disruption, maintaining day-to-day functionality while replacing fragmented systems with integrated platforms. This shift reduces errors and delays, providing a more reliable and efficient operational backbone.

Growth Enablement

By adopting modular, cloud-based technology and embedded automation, asset managers can introduce new products faster, improve investor servicing, and position themselves for scalable expansion. This modern infrastructure supports the agility required for future growth.

Efficiency Gains

Automation of manual tasks like Net Asset Value (NAV) calculations improves accuracy and speed. Unified platforms reduce redundant efforts in investor onboarding and servicing, and overall cost and complexity are reduced through technology integration.

Transformational Success

The success of a lift-out depends on careful planning across people, technology, and process. A service-first mentality is important when selecting a lift-out partner, with platforms that support the delivery of outcomes rather than driving it.

Lift-outs can help managers maintain execution quality while shifting costs to the fund, particularly during transitions between fundraising cycles. A lift-out partner should have the scope and scale to support an evolving strategy, across geographies and functions.

Outsourcing Non-Core Activities

Outsourcing non-core activities through a lift-out presents a compelling alternative to overburdened or costly internal infrastructure. Tightening service level agreements (SLAs), key performance indicators (KPIs), and budget controls as part of a lift-out can significantly enhance operational performance.

Defining the Target Operating Model

A clearly defined target operating model is essential before beginning a lift-out, including mapping the current structure and understanding future goals. Proven transformation expertise is crucial when choosing a lift-out provider, with strong programme management credentials.

The Appeal of Lift-Outs

The appeal of lift-outs lies in access to modern technology platforms, stronger regulatory alignment, enhanced talent retention, and better support from service partners. Managers face expanding challenges, including delivering better investor outcomes and maintaining resilient operations. Lift-outs can help managers transition operational costs to the fund, improve investor servicing, and access the latest regulatory and technology frameworks.

In considering people, technology, and operations for a lift-out, it's essential to define core competencies, assess role bifurcation, consider partially dedicated roles, and improve budget discipline and service levels. The use of a lift-out provides an opportunity to challenge legacy systems and consider external solutions for internal platforms.

Two-thirds of managers who have completed a lift-out would consider doing so again, indicating the strategy's longevity. With the right approach and partner, lift-outs can transform asset managers’ operational foundations into a more agile, scalable, and efficient model that supports strategic growth and competitive advantage.