Read article and learn about:
- What makes a successful global operating model
- Diversification as a key driver of globalization
- How technology can act as a cross-border growth enabler
- Why you need clean data that has integrity, reliability, and availability – across the globe and without interruption
About the author:
David Eckert, Managing Director, CIO, Operations Head, Corporate Real Estate at Neuberger Berman.
David Eckert joined Neuberger Berman in 2011 from a position as global COO/CIO at ING, responsible for its investment management and insurance business. Previously, he spent 15 years with JP Morgan Chase, rising to CIO for its investment management business.
The global investment management industry faces many challenges. In this recurrent CXO Corner relay column, we ask top executives to point the way ahead, sharing their views and best practices for meeting the challenges.
Journal: Thank you for taking over the CXO relay from George Batejan, Global Head of Technology and Operations, Janus Capital Group. To begin, please describe your role and responsibilities at Neuberger Berman (NB).
David Eckert: My role as Head of Infrastructure, comprising around 400 employees, entails managing all the firm’s technology, application delivery, and infrastructure and architecture functions. I am also responsible for the investment management operations across the globe, including fund and trading platforms, settlements, reconciliation accounting, and corporate actions, and some day-to-day operations that facilitate the business.
Journal: That’s a huge role. Moving along from your professional role at NB, could you tell us a little more about the business?
David Eckert: We are a leading employee-owned investment manager with USD251 billion AUM, focusing on equities, fixed income, and alternative assets globally. NB has been in business for over 75 years, managing investments for pension funds, endowments, and sovereign wealth funds, as well as for high net-worth individuals and advisors. We have 32 offices in 18 countries worldwide, and in 2014, we completed the buyout of our former parent, Lehman Brothers, which was a very exciting milestone for us.
Journal: Exploring this business model a little more, what makes NB stand out from other investment managers?
David Eckert: During most of those 75 years of existence, we were a privately owned company. For a brief time we were publicly listed, until we were purchased by Lehman Brothers. When Lehman Brothers went bankrupt, after a management buy-out, we returned to our roots as an employee-owned firm. So we have come full circle, which creates a very interesting dynamic. We are like a 75-year-old start-up; with the bankruptcy forcing us to rethink the business and start from scratch, building out the firm from within.
Journal: So would you characterize your employees as real entrepreneurs?
David Eckert: Because we are employee-owned and independent, we have no external stakeholders. We are a very client-centric organization and entirely focused on client interests over the long-term. We have one mission: Help our clients achieve their unique investment objectives over time. We like to say we sit on the same side of the table as our clients, because our portfolio managers invest alongside them.
Journal: Would you say that is what differentiates you from other investment managers?
David Eckert: One of our enduring hallmarks is employee engagement and retention. Almost all our senior investment professionals have remained in place over time, with 95% of client assets managed by lead portfolio managers with 20 or more years of experience. This means a lot to our clients because they like longevity, stability, and continuity – a team they know is going to stay and protect their assets. We don’t have to chase after quarterly earnings statements – instead we focus on satisfying our clients. By being employee-owned and by co-investing with clients in the same products, we put skin in the game.
Journal: With offices in 18 countries, what does it mean for you and your team to support this global operating model with diverse clients in all sorts of locations?
David Eckert: From a technology perspective, one of the biggest challenges is the 24/7 nature of the way commerce works around the world. Our technology must be reliable, user-friendly, and accessible across worldwide time zones and languages at all times. Traders in London and Hong Kong need their technology to work alongside their peers in New York and Chicago. When we have executives traveling globally, they need to have the same access they would expect in their home offices. Technology solutions need to be executed with careful planning and implementation to satisfy the needs of a rapidly expanding global presence. So you need to have excellent technology, high speed, sufficient availability – you need the tools to get the job done.
Journal: Can you expand a little on the opportunities associated with being a global organization; from an investment standpoint – what does this mean to you as a firm?
David Eckert: Ours is a global operating model anchored to the firm’s structure as an employee-owned independent manager striving to help our clients worldwide achieve their investment goals. Since 2009, we have expanded our resources to serve our growing international client base locally. Work in the regions is often more complicated, more multifaceted, and requires a different skill set to be effective. Having resources near our clients helps us provide better solutions and better service. So clearly, diversification is a key driver. Huge growth potential exists outside of the US, which is a very mature market, and globalization is constantly and strategically in focus. One of our major initiatives recently was an emerging markets debt capability that with just one fell swoop added 20-plus people spread out across Singapore, The Hague, Netherlands, and Atlanta, Georgia.
Journal: Can you tell us a little about the challenges in running and being part of a global operating model?
David Eckert: The project I just referred to created a challenge and an opportunity at the same time. We did not have an off-the-shelf technical solution at hand to replace the one the emerging markets debt professionals were accustomed to. As it turned out, this was an opportunity for us to leapfrog the issue by adding state-of-the-art global IT capabilities to our existing toolbox, investing in what is now our global fixed-income solution. We aim to deploy global solutions and standardized processes, only deviating where there is real business value and need. Connecting people through work, process, and technology helps us stay connected and relevant.
Journal: Let’s talk a little bit about the role technology plays in supporting overall business objectives with specific reference to the group you run. How do you quantify the value to the business, specifically to the front office?
David Eckert: For us, technology is an enabler. We partner with the business to provide the best tools and technology to facilitate unique ways of serving our clients. Our investment teams are all quite autonomous and have a number of individual ways of working. In our IT group, we encourage the portfolio teams to share technology for commodity-like services. ´Because our investment boutiques may have a special way of investing, we want to understand those unique perspectives and build valuable and one-off solutions. Where we can buy solutions, we get the best of what the industry has to offer, and then our build-capability can focus on what is proprietary, unique, and delivers value.
Journal: In terms of what you just said about technology enabling change, can you give an example of something your group has done project-wise to support transformation in the business?
David Eckert: From a strategic perspective, we align and partner technology to our business, buy products and services where the industry has more capacity to invest, and build where we can differentiate ourselves. One of the major areas we focus on is in multi-asset, alternative, global products with multi-currency capability. Here, our technology platform is a big enabler to ensure the business will be less constrained in terms of volumes of some more complex instruments. We can now run multi-asset instruments on a single accounting platform, which will simplify operations, reconciliations, and the speed at which we are able to grow the business. Teams and multiple geographies will have their information when they need it at the start of their day as opposed to waiting for the US cycle to complete.
Journal: And what does that mean for the business in terms of globalization?
David Eckert: The first big benefit is providing a world-class tool with excellent features and functionalities. If you have an operation like ours that relies on information and insights, you need clean data that has integrity, reliability, and availability – across the globe and without interruption.
Journal: Let’s talk a little bit about your data management strategy. Obviously that is crucial for a global operating model. So could you expand your thinking around what enterprise data management (EDM) means for you?
David Eckert: We established an architectural blueprint for how we want to deal with data. We call it our enterprise data management function. We needed to have some design principles around data, precise definitions, clear roles and responsibilities, and strong integration – all of which form the cornerstones of what we believe our strong global enterprise data framework needs to entail. The more global and varied your operating model, the more important EDM becomes. Consistent definitions and usage, clear lineage of data, and single versions of the truth enable a global operating model and the best-of-breed approach to our tool set. We have teams devoted to managing reference data, reconciling transactional data, and addressing transport and access. In an organization of significant size, data management should be considered a program rather than a specific project. All our key technology initiatives are judged in the light of their contribution to our long-term data strategy.
Journal: Summing up, with such an illustrious career that includes high-profile tenures at ING and JP Morgan Chase, what would you characterize as your key achievements and the most important lessons you have learned during your professional life?
David Eckert: One thing I would say is that it really matters whom you work with. People are your most valuable assets and a great team is the key to success. It gives me a lot of satisfaction when I see teams thrive and succeed. You have to build a diverse team, with varied styles and strengths, nobody can do it alone. As far as lessons learned, I’d recommend that firms keep it simple; complexity is the enemy. Making complex things simple is the key to speed and getting things done.
Journal: Thank you for your insights. To continue the dialogue, whom would you like to hand over the relay to in the next CXO Corner?
David Eckert: I would like to hand over the word to Clare Flynn Levy, founder and CEO of Essentia Analytics, London, whom I’m sure with her considerable professional experience will have some great things to say about what she views as the biggest challenges facing the industry going forward.