Balancing Consolidation and Innovation in Investment Operations: Insights from InvestOps US 2025

It’s no secret that the asset management ecosystem is undergoing a profound operational and technological transformation, as firms seek to balance system consolidation with the integration of new capabilities. This was the key theme of the panel discussion, Operating Model Consolidation and Capability Upgrades, held at InvestOps US two weeks ago. Moderated by John Lehner, President of FundGuard, the panel brought together industry leaders to discuss how asset managers and asset servicers can modernize their operations while maintaining efficiency.

Panelists:

• Andrew Onslow, Managing Director, Global Investment Operations, Morgan Stanley Investment Management
• Chris Kuehne, Global Head of Investment Operations, Northern Trust Asset Management
• Theresa Messina, Managing Director, Investment Operations, Principal Asset Management
• Patrick Wolcott, COO, Kennedy Capital
• Richard Anton, Chief Client Officer, CIBC Mellon

The discussion centered around the critical question: How can firms identify processes and systems for consolidation while innovating to develop new capabilities and build a cutting-edge operations function? Following is a summary of key discussion points.

Operational Priorities for 2025

The panel kicked off by discussing the key priorities and initiatives firms have underway for 2025:

• Alternative investments and derivatives are driving investment in new operational capabilities.
• Efficiency and cost reduction remain the top focus for traditional asset management operations.
• Product development continues to evolve, with increased interest in commingled trusts, unregistered products, and new asset structures.
• Balancing efficiency with innovation remains a core challenge—firms must enhance existing infrastructure while accommodating the growing complexity of new products.

The Role of Data Infrastructure

Data remains at the heart of operational transformation, but firms continue to struggle with:

• The lack of a standardized platform to support multiple new investment products, adding complexity.
• The need for seamless data integration, workflow optimization, and normalization across disparate systems.
• Increasing client demands for near real-time data availability and reporting, placing immense pressure on operational teams.

System Consolidation and Cloud Migration

A growing number of firms are moving towards vendor consolidation and cloud-based solutions to modernize their operations as the cloud is proving to be an enabler of efficiency. However,  data extraction and client reporting challenges persist. Firms face a tough balancing act: implementing a strong data layer while also investing in new strategies.

Many are prioritizing end-to-end platform adoption and/or fully integrated best-of-breed, reducing reliance on multiple legacy systems.

Emerging Asset Classes and Structures

New asset classes and structures continue to shape investment operations:

• Crypto assets are on the radar, with some firms preparing for market entry.
• Interval funds and private credit/equity structures are gaining traction.
• Real assets and direct co-investment models are increasingly appealing to asset owners.

AI and Machine Learning in Investment Operations

AI continues to generate significant excitement, with some panelists citing early use cases demonstrating promising results:

• Predicting nightly valuations within accounting platforms.
• Summarizing insights in client reports.
• Trade reconciliation and failure prediction, improving operational efficiency and reducing risk.

However, the panelists acknowledged that AI adoption faces hurdles, including rigorous approval processes that can slow down implementation, as well as integration challenges that come with incorporating AI into existing vendor solutions.

Lessons Learned & Key Takeaways

1. Operational consolidation and new capability development must go hand-in-hand. Firms cannot afford to prioritize one at the expense of the other
2. Investing in data infrastructure is critical, but implementing it effectively alongside strategic initiatives remains a challenge.
3. AI has strong potential to revolutionize operations, but firms must navigate integration complexities and regulatory concerns while unwinding from legacy systems that can’t support long-term innovation.
4. Balancing new product development with efficiency remains a fundamental industry challenge.

As asset managers and servicers prepare for the future, the need for a harmonized operating model that integrates technology, efficiency, and innovation has never been greater. The discussion at InvestOps US 2025 made it clear: firms that successfully navigate this balance will be the ones that define the next era of investment operations.

Ready to join the transformation? 

FundGuard is transforming legacy operating models with our AI-powered, cloud native and investment accounting platform for asset managers, asset owners, custodian banks and fund administrators. Book time to learn more about our multi-asset, multi-jurisdiction, multi-view accounting engine.