Allocators are still challenged by the lack of technology infrastructure despite increased productivity at work.
In 2022, allocators spent an average of 71 percent of their time on core tasks, up from 64 percent in 2020, a sign of improved efficiency, according to the latest report by Backstop Solutions and Mercer. However, they are still bogged down by manual tasks that are largely viewed as non-core activities, such as dealing with fund documents. “In the previous month, more than 80 percent of respondents thought, ‘There must be a better way of doing this,’” according to the study. “When we asked, ‘what were you working on when you had that thought?’ their top response was ‘searching for documents on shared drives.’”
The report was based on a survey of 100 allocators, most of whom work at pension plans, endowments, and family offices. C-suite executives, mid-level managers, and junior analysts responded to the survey between June 17 to August 15.
“Productivity is a popular performance measure in any industry, and we wondered if allocators had any productivity gains in the last two years. The answer, according to our analysis, is yes and no,” according to the report. Although allocators are spending a bigger proportion of their time on core tasks like meeting with managers and conducting due diligence, they are also working longer hours – from 44 hours per week in 2020 to 50 hours per week in 2022. That means the absolute number of hours they spend on non-core activities remain roughly the same, according to the report.
Maryling Yu, chief marketing officer at Backstop Solutions, said allocators have traditionally lagged asset managers in technology infrastructure and data solutions. According to the report, allocators spend an average of two hours per week searching for documents on shared drives, an action that frequently prompt them to think “there must be a better way.” They also spend two hours per week just downloading fund documents and uploading them into the internal system, a manual task that can be easily replaced by automation.
Allocators have been spending more time meeting with their current roster of managers rather than with new ones. In 2022, they spend an average of nine hours per week meeting with existing managers, up from five hours each week in 2020, according to the report. Allocators are spending more time with existing relationships because these managers are raising follow-on funds far more quickly than in the past. According to Yu, managers are coming back to allocators every 18 months in 2022, down from 24 months in 2020.
“If you believe in a manager, you don’t want to have a situation where they don’t come back to you [for a follow-on fund],” Yu said.