Asset managers remain cautious despite markets rebounding

TSAM, Europe's largest buy-side technology and operations event, is due to be held this year on 9th March at the Brewery in the City of London. Cognito is the official PR agency. The conference will bring together high profile players as they overview how they have ridden out the worst of the recent financial crisis; emerging stronger, better and wiser. Attention will also be drawn to where the buy-side should focus its efforts in order to stay afloat and sustain growth.

Among this year's 65 speakers are Mark Holt, head of technology for Systemic Trading at BlueCrest Capital; Colin Close, president, Netik LLC; and Martyn Cuff, managing director at Allianz Global Investors Europe. Cognito caught up with them before the show.

The event will address how the buy-side will emerge and progress in 2010. Mr Holt, BlueCrest Capital, reflects on his presentation: "Without the developments in electronic trading over the past decade, buy-side trading would not exist at its current output or scale. The progressive disintegration of investment bank proprietary functions and the technology available for market access has created an inevitable momentum to move more trading activity to the buy-side. Indeed, electronic trading is helping to naturally restructure the finance industry; a process that is far from over." During his address on the anatomy of a systematic trading strategy, he will talk delegates through the generation, implementation and execution of various systems and strategies.

Speaking about data management and the implications of outsourcing, Mr Close, Netik, said: "It is important we don't assume the crisis is completely over and that some of its' characteristically complex investment practices are not resurgent. They are. For example, hedge funds are back with the additional twist that multi-strategy funds are emerging as attractive products. Even securitisation is not dead with CDOs and CLOs quietly returning in evolved, lower leveraged form. Therefore, huge complexity remains in the middle and back office at a time when the regulators and money-owners are demanding better operational processes and more transparent reporting. For buy-side firms to satisfy these demands in 2010, they are investing in prerequisite enterprise data management solutions and using these to enhance reporting and enable the outsourcing of investment operations processes in order to achieve the best practice that is expected of them. Their ability to attract assets will increasingly depend on them demonstrating success in such initiatives." 

The conference will also examine the rapidly changing business environment. Speaking about its impact upon risk, Mr Cuff, Allianz Global Investors Europe, added: "Risk and cost management are going to become progressively more important throughout 2010 and beyond, changing the balance of the environment we have grown used to pre the financial crisis. Products are going to retain their importance, although a product push alone is not good enough, with instead, clients also wanting a tailored solution-based approach. In terms of where these products and solutions come from, we can expect to see continued globalisation. This is not just European and US fund management companies going into developing markets but there are early signs that companies in countries such India and China are interested in moving into mature investment management markets."

Organised by Osney Media, the event will showcase speakers throughout ten individual streams and delegates will be able to meet over 40 solution providers who are exhibiting on the day. Come and see for yourself!

For more information or to enquire about a free press pass email adam.honeysett-watts@cognitomedia.com

A little overdue now but a couple of weeks ago PR News asked me to contribute to its 'Advisor' column on the question of Goldman Sach's bonuses. The exact question was:As Goldman Sachs prepares to announce its final compensation pool and bonuses, how well are they reacting to the public sentiment, and what could they do differently?

My answer, published in last week's issue was:

"Thanks to its niche client base, Goldman Sachs has traditionally managed to avoid proactive engagement with the wider world, a strategy that served it well until recently. But times have changed irrevocably and the public can now exert a much greater influence via heavy-handed regulators and even, as reported recently, through direct threats against the firm's employees. Clearly something needs to change. 

Goldman has had 18 months to roll out a holistic PR strategy but teaching an old dog new tricks has been difficult. The steps Goldman has taken recently have been the right ones: trumpeting the firm's philanthropic efforts, engaging in a new $500m small business initiative and converting a greater percentage of its cash bonuses to equity. Unfortunately, not having had an established platform of engagement in place, many of these knee-jerk moves are falling on deaf ears or being dismissed as gimmicks. Goldman is a cautionary tale on the value of building long rather than short-term relationships with the public.

If we are to avoid the kind of populist 50% bonus tax currently being levied in Europe, Goldman and other investment banks are going to need to fundamentally rethink their engagement strategy."

On the back of box office smash, Avatar, and better than expected profits, Rupert Murdoch declared yesterday: "The debate over the primacy of content is over: content is not just king. It is the emperor of all things electronic." As Carly Fowler noted on this blog 2 weeks ago, a serious backlash is currently under way which presages the end of free content as we know it. While I may not see eye-to-eye with the proprietor of Fox News on most things, the reality is that Mr Murdoch may be the one player with enough clout to bring about the necessary rebalancing to the content equation.  

As we cross into the first week of Feburary, its looking like the financial technology space is really heating up for some serious M&A activity this year. Last week the WSJ broke the story on RiskMetrics putting itself up for sale: http://tinyurl.com/ycektoq. Not only did the Journal speculate on potential buyers (Thomson Reuters, Bloomberg, and MSCI amongst them), but they also went so far as to suggest that Interactive Data Corp (IDC) might also be on the block, and potentially an even juicer prospect.

Also last week, General Atlantic, the Greenwich CT PE firm purchased a 7.5% stake in Markit. According to a statement, and an article in Securities Industry News: http://tinyurl.com/yl749ep, General Atlantic will "assist Markit in developing its growth strategy further and executing 'value-creating acquisitions' ".

In addition to the above, we've already seen some significant dealflow this year with the most interesting transactions being in the commodities space (Triple Point Technology and OpenLink have both announced acquisitions in January) and of course Citi's sale of LavaFX to FXAll. Surely we are just getting started....

For those venerable marketing communication folks out there who work for a FinTech company that may do a deal this year, what are the major tenants to keep in mind when communicating both internally and externally? While it doesn't encompass the whole spectrum, you'd get a head start if you keep the following at the top of the list: preparation, strategic press interaction, and good internal communication.

To receive a copy of Cognito's article on FinTech Deal Communications please write to sanfrancisco@cognitomedia.com

For the latest social networking statistics and analysis, look no further than the most recent Economist special report. It highlights the considerable business benefits of embracing social networks. These include the ease with which customer relationships can be maintained and created, as well as the estimated millions of dollars firms like Intel save by using LinkedIn instead of headhunters to recruit senior managers. We are left in little doubt that while the social networking revolution is only in its infancy, there are already tangible business benefits being derived from its use. What's more, there are even greater benefits to come, as employees learn to use these collaborative tools to communicate and share ideas on a scale and at a speed that has never been seen before.   

Last summer, Rupert Murdoch, leader of the News Corporation media conglomerate, made waves when he announced during an earning’s call on August 6 that his News Corporation would be leading the charge to reclaim journalistic content from the free, unpaid-for wilderness of the internet.

Murdoch stated, “Quality journalism is not cheap, and an industry that gives away its content is simply cannibalizing its ability to produce good reporting.” He added, “The digital revolution has opened many new and inexpensive distribution channels but it has not made content free. We intend to charge for all our news Web sites.”

Yesterday, the New York Times, arguably the United States’ most venerable and respected newspaper, and undoubtedly a leader in the beleaguered newspaper industry, made an announcement that seemed to validate Murdoch’s predictions. The newspaper announced that in 2011, it would start charging for frequent access to the New York Times website.

This is just latest indication that the news industry is changing at a blistering pace. In the past year, the Seattle Post-Intelligencer has moved all of its content online and the Boston Globe was forced to institute $20 million in cuts on the heels of layoffs. Every day seems to bring new stories about local papers with decades of history shutting their doors or major news outlets laying off staff and cutting content. Is the online subscription model the dying newspaper industry’s best hope?

The Wall Street Journal’s website charges for access to content, as does the Financial Times – models that have both been successful. The New York Times has indicated that it will likely follow the FT model: a user will receive access to a certain number of articles for free each month, after which he or she will be charged per article viewed. Alternately, users will be able to purchase subscriptions that allow unlimited access.

So what does this mean for the news industry going forward?

Industry experts note that the online subscription model might be harder to implement than the FT and WSJ examples initially indicate. New York Times media columnist David Carr has pointed out that both the FT and WSJ offer more than just access to news stories – they also offer specialized alerts and other content that are valuable to the business and finance communities to which they cater. Carr makes the point that getting people to pay for updates on the lives of celebrities, for example, will most certainly be more difficult, and surely he is right.

But the fact remains that the business model that the print media industry has relied on for so long is no longer sustainable, and once a critical mass of media outlets – perhaps led by the New York Times – acquiesce to this unhappy reality, their customers will very soon be confronted with the fact that, bottom line, quality content cannot be produced and disseminated for free.

We have two ears and one mouth, suggesting we should listen twice as

much as we speak.  FT - A tip for business on social media

highlights how the same rules apply when using social media and why it is

equally important to find out who your listeners are.

The New Yorker's Ken Auletta has a masterful piece ("Non-Stop News") on the Obama Administration's communications efforts and the changing nature of media in this week's issue.   Under guidance from Obama's precocious Press Secretary, Robert Gibbs, we are given a picture of a Presidency that is ultra-aware, deliberate and 'on message', sensitive, reactive and oftentimes political, in a media environment that has been put into hyperdrive by technology - which has at once increased competition for content and challenged previous revenue structure - as well as everchanging consumption habits.

There are many lessons for both firms as well as journalists that we may take away from the results Obama and his press team's initiatives have seen in this new epoch:

- Transparency may give you the benefit of the doubt, but certainly won't let you fully control the story

 - New media is essential to engage, but thinking it will replace the press and their "preoccupation with conflict" is naive,   as well as intimating ambitions of something much more severe

- Reactivity sets a mold that is hard to break.

- PR strategy is paramount in an era where 'the story' can shift at any moment

- "We're all wire-service reporters now" - NBC’s chief White House correspondent, Chuck Todd.

- Being proactive and picking your battles still matters, no matter how short the attention span and story cylce seems to favor variety - be it legislation or a company's product offerings.  

With recent landmark setbacks to his party, it'll be interesting to see where history attributes blame for poor democratic performance in the polls, the oft-cited unemployment rate or the hyper-paced news cycle, increasingly incapable of digestion, only constant conflict.  Additionally, the power balance in the Senate will no doubt create many more challenges for Obama's PR program, ones that won't be so easily solved with a beer in the garden. 

We at Cognito constantly assess the developing media landscape in the financial services space and counsel clients on how to best articulate, further industry discussions and manage reputation under these evolving parameters.   The capital markets naturally have a longer running relationship with an audience known for instantaneous reaction to events and data, though even that is increasing with yet-to-be-seen consequences due to technology and structural shifts in the market.  And while on the topic of the capital markets (the one piece of legislation Auletta avoids is Financial Regulatory Reform actually), it is interesting to note other prominent figures who have found themselves victimto today's rapid fire news cycle with varying degrees of success and reactivity vs proactivity in approach.  

 The 90s was the decade of "e". Email became ubiquitous, Ebay was founded and E*Trade went public. "e" came to symbolize the first generation internet revolution which drove so much of our lives on to one electronic platform or another. Electronification was so successful and pervasive, in fact, that by the end of the 90s the "e" had become pretty much superfluous. Who in 2005 would announce the launch of an e-store? Come to think of it, how many 18-year-old internet users today realize that the "e" in email actually stands for something?

Thanks to Apple Computer Inc, the 2000s were dominated by the letter "i". Ipod, iHome, iSchools and iShares all entered the lexicon, but, unlike "e", "i" came to have several meanings. "i" stood for information - the ever-growing surfeit of data that we now have to process and manage in our daily lives. But "i" also came to symbolize the growing power of the individual as the internet broke down old media and put greater control than ever in the hands of you and me.

So which of the three remaining vowels will reign supreme in the coming decade? It could be argued that "u" will pick up where "i" left off, reflecting the continuing power of you, the individual to create, publish and share: YouTube as uTube. Or perhaps, with outsourcing continuing to grow, "o" will dominate and we will "o" the lawn where once we mowed it, and our kids will email their "o"mework to be completed in developing countries.

Or, for the first time in twenty years, will we simply be vowel-less? Forced to use plain old words without the zippy prefixes? ifeel, personally, that would be a shame.