By Michael Cembalest
Chairman of Market and Investment Strategy for J.P. Morgan Asset & Wealth Management
While efficient, cost-effective and scalable middle office solutions are a strategic priority, there is neither a clear target operating model nor consensus on what a best-in-class model looks like. We explore the need for change, potential options and key decision points to help asset managers choose their right path.
“While there isn’t clear agreement on an ideal model, given the varying needs of different managers, there is broad consensus about the potential to meaningfully improve the bottom line by finding the right middle office solution for your investment needs.”
In a growing and increasingly complex market, asset managers are seeking to transform investment middle office operations to be more competitive.
Global assets under management are projected to hit $145 trillion in 2025, nearly doubling from $84.9 trillion in 20161. This includes asset allocations to private markets, which are projected to grow to $23.3 trillion by 20262, 1.7x their 2021 levels. It’s typically difficult to scale processes for these complex asset classes, ultimately burdening investment operations. In fact, 73% of asset managers point to increasing operational costs as a key driver behind finding efficient solutions that can scale.
Between rising costs, shrinking fees, industry-wide operating margin compression and resource constraints, asset managers are viewing middle office transformation as a key differentiator. But it comes with challenges.
73% of asset managers cite the increasing cost of operations as a reason to seek solutions that enable scale and efficiency3.
There is no one-size-fits all approach to middle office transformation, since every organization has its own priorities and objectives. However, there are five common challenges for middle office operations that are driving the need for change.
In combination, global operations support requirements and regional, functional and batch-based systems create a costly, inefficient model. Fragmentation results in investment data copies, reconciliations and inconsistencies, making it harder for investment teams to manage strategies, liquidity and risk.
For most asset managers, a high-performing middle office has systems that talk to each other and can easily access the right data at the right time. As an organization grows, its middle office model can scale through seamless integrations. To achieve this, asset managers will need to adopt:
Between mega-cap stock performance and artificial intelligence’s rise during the narrowest-recorded market leadership, the beginning of summer is heating up in every sense – see what Michael Cembalest, Chairman of Market and Investment Strategy at J.P. Morgan Asset and Wealth Management, has to say about it all in this edition of Eye on the Market: Letters to the Editor.
Read the full article here (PDF).
IMPORTANT INFORMATION
This material is for informational purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at accessibility.support@jpmorgan.com for assistance. Please read all Important Information.
GENERAL RISKS & CONSIDERATIONS. Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.
NON-RELIANCE. Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.
Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.
Legal Entity and Regulatory Information.
J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.
Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.
This document may provide information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). The agreements entered into with JPMS, and corresponding disclosures provided with respect to the different products and services provided by JPMS (including our Form ADV disclosure brochure, if and when applicable), contain important information about the capacity in which we will be acting. You should read them all carefully. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.
Between mega-cap stock performance and artificial intelligence’s rise during the narrowest-recorded market leadership, the beginning of summer is heating up in every sense – see what Michael Cembalest, Chairman of Market and Investment Strategy at J.P. Morgan Asset and Wealth Management, has to say about it all in this edition of Eye on the Market: Letters to the Editor.
Read the full article here (PDF).
IMPORTANT INFORMATION
This material is for informational purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at accessibility.support@jpmorgan.com for assistance. Please read all Important Information.
GENERAL RISKS & CONSIDERATIONS. Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.
NON-RELIANCE. Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.
Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.
Legal Entity and Regulatory Information.
J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.
Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.
This document may provide information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). The agreements entered into with JPMS, and corresponding disclosures provided with respect to the different products and services provided by JPMS (including our Form ADV disclosure brochure, if and when applicable), contain important information about the capacity in which we will be acting. You should read them all carefully. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.
Between mega-cap stock performance and artificial intelligence’s rise during the narrowest-recorded market leadership, the beginning of summer is heating up in every sense – see what Michael Cembalest, Chairman of Market and Investment Strategy at J.P. Morgan Asset and Wealth Management, has to say about it all in this edition of Eye on the Market: Letters to the Editor.
Read the full article here (PDF).
IMPORTANT INFORMATION
This material is for informational purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at accessibility.support@jpmorgan.com for assistance. Please read all Important Information.
GENERAL RISKS & CONSIDERATIONS. Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.
NON-RELIANCE. Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.
Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.
Legal Entity and Regulatory Information.
J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.
Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.
This document may provide information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). The agreements entered into with JPMS, and corresponding disclosures provided with respect to the different products and services provided by JPMS (including our Form ADV disclosure brochure, if and when applicable), contain important information about the capacity in which we will be acting. You should read them all carefully. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.
Kyle Kothari shares how a professional athlete career can pivot into a professional finance career with J.P. Morga.
If it weren’t for a ruptured Achilles tendon, J.P. Morgan intern Kyle Kothari would have been at the Tokyo Olympics standing 10 meters above a pool, intently focusing his thoughts on the acrobatic dive he was about to execute, before launching into the air in pursuit of winning a medal. Instead, he found a new world of opportunity to dive into.
Kothari, one of five athletes selected for the firm’s Military and Athlete’s internship program, has been working the past six months for Wholesale Payments’ U.K. Financial Institutions Group in London’s Canary Wharf. At the end of this month, he will resume training with Great Britain’s diving team, continuing a career that has seen him consistently ranked among the top 20 divers in the world.
The training regimen for competitive diving, he says, requires four hours a day in the pool, six days a week. While the enforced hiatus was disappointing for him, Kothari feels fortunate that he was able to participate in J.P. Morgan’s internship program, given his background as a graduate of the London School of Economics where he majored in Geography and Economics. Like all other interns welcomed to J.P. Morgan, Kyle was recognized for his attributes and accomplishments beyond just academic achievements.
The training regimen for competitive diving, he says, requires four hours a day in the pool, six days a week. While the enforced hiatus was disappointing for him, Kothari feels fortunate that he was able to participate in J.P. Morgan’s internship program, given his background as a graduate of the London School of Economics where he majored in Geography and Economics. Like all other interns welcomed to J.P. Morgan, Kyle was recognized for his attributes and accomplishments beyond just academic achievements.
In FIG Sales, Kothari supports Treasury sales managers with their clients, as they manage existing relationships in whatever needs to be done for ongoing or new deals. He also leads team meetings and keeps members up to date on initiatives.
His ability to perform under pressure is evident, “I’m much more resilient and unlikely to crack under pressure,” he finds. Having dealt with a potentially career-ending injury, the experience gave him much more confidence in his own resiliency – a valued quality to have in a banking environment, especially in a sales role, where the team works weeks on a deal that might end up not materializing.
Since he has also competed in synchronized events, where two divers perform as if in unison, he’s experienced how valuable it is to collaborate and to give and take criticism gracefully if one of the team fails to perform the dive flawlessly. “If it’s your partner, it’s best to acknowledge the difficulty and how it could have just as well have been yourself who missed the dive,” he says.