Blog > The shifting tectonic plates of the global operating model

The investment management industry is experiencing a fundamental reshaping of its global operating models amid unprecedented geopolitical tensions and regulatory fragmentation. Traditional approaches, built on the premise of seamless cross-border capital flows and centralised investment operations, are being challenged by a new landscape of financial nationalism and regulatory divergence.

Strain from geological pressures

Asset managers have historically benefited from highly integrated global operations, with investment hubs in major financial centres like London, New York, and Hong Kong serving clients worldwide. However, this model is under strain as geopolitical tensions affect everything from data sharing to talent mobility. The growing strategic competition between the some of the largest markets has particular implications, with increased scrutiny of cross-border investments and mounting pressure to “de-risk” exposure to certain markets.

Investment firms now face complex operational challenges. Take, for example, the impact of data localisation laws. A global asset manager must now navigate different requirements for storing and processing client data across jurisdictions, potentially requiring separate technology infrastructures for different regions. The EU’s GDPR, China’s Personal Information Protection Law, and various other national regulations create a complex web of compliance requirements that challenge the traditional centralised operating model.

The regulatory landscape has become increasingly fragmented. While post-2008 reforms aimed to create global standards, recent years have seen a drift toward regulatory divergence, including the:

• UK’s post-Brexit regulatory framework
• EU’s sustainable finance rules
• U.S. SEC regulations on private funds all require specific operational adaptations

The evolving regulatory landscape in the United States, alongside developments in other major markets, highlights the increasing diversity of approaches to financial oversight globally. Investment firms are responding by strengthening their regional operational structures, creating more autonomous local teams with dedicated compliance and risk management functions in each major jurisdiction.

The future of operational practices

ESG integration is an example of the operational challenge. Different regions have varying requirements for ESG reporting and sustainable investment products. European managers must comply with SFDR and taxonomy regulations, while U.S. firms navigate evolving SEC climate disclosure rules. This requires sophisticated data management capabilities and often separate ESG analysis frameworks for different markets.

Looking forward, several trends will likely shape the evolution of investment management operating models. First, the rise of digital assets and blockchain technology is pushing firms to develop new operational capabilities while navigating an uncertain regulatory environment. Many are building separate teams and systems for digital asset operations, recognising that these cannot simply be integrated into traditional investment platforms.

The future likely belongs to investment managers that can build flexible operating models capable of adapting to regional requirements while maintaining global scale advantages. This might mean adopting a “hub-and-spoke” model, with regional operations having significant autonomy while connecting to global platforms for certain functions. Some firms are exploring “follow-the-sun” trading models with regional trading desks, each operating under local regulations but coordinating globally.

However, these adaptations come at a cost. The shift from highly centralised to more regionalised operations increase overhead and can impact operational efficiency. Firms must invest in robust technology platforms, enhanced risk management systems, and specialised compliance capabilities across multiple jurisdictions.

What will success look like for investment managers?

As we look ahead, success in investment management will require mastering the complexity of multi-jurisdictional operations. Firms must:

• Balance global efficiency with local responsiveness
• Maintain consistent investment processes across regions while adapting to local requirements
• Leverage technology to bridge operational gaps.

Those that can effectively navigate this new landscape while maintaining strong investment performance will be best positioned to thrive in an increasingly fragmented global financial system. However, success in this complex environment requires more than just strategy – it demands robust technological infrastructure and operational expertise.

SS&C Advent’s global investment management solutions are specifically designed to help firms master these multi-jurisdictional challenges. Our platform enables firms to maintain operational efficiency while meeting diverse regional requirements, from data localisation to ESG reporting.

Schedule a consultation with our experts today to discover how we can help you build a resilient, future-ready operating model.