Rockland, Massachusetts, February, 13, 2025 – Cutter Associates, a leading provider of consulting services and research for asset managers, asset owners, and other investment companies around the world, conducted a survey of 34 firms with a combined total of USD 7.4 trillion in AUM to benchmark their processes to manage their relationships vendors and service providers.
The survey revealed that only 9% of companies have a well-established program for managing vendors and service providers. However, firms say it’s an area of focus, with almost half (47%) reporting they have a coordinated yet maturing program, while another 34% report a somewhat coordinated program and are in the planning stages.
“Investment managers are focused on finding ways to be more efficient and stay competitive, and they are increasingly recognizing that optimizing third-party relationships and better managing vendors and service providers is a means to this end,” said Gina McCafferty, Principal and Head of Research at Cutter Associates. “However, we expected that firms would have made more progress in advancing these programs since we last conducted this survey in 2021,” McCafferty added.
Firms point to numerous challenges that they face in improving their vendor oversight function. Topping the list, 65% of firms say they struggle to keep pace with the growing number of providers and vendors. Over half (58%) point to the time-consuming and manual process of vendor oversight, and 55% cite managing vendor risk, including data privacy, cybersecurity, and financial risk, as a top challenge.
“To keep up with the growing number of providers and services, the volume of work is immense,” McCafferty said. “A good vendor management program means that firms must inventory vendors, confirm their criticality, conduct risk and performance reviews, and foster good relationships. But many firms simply don’t have the staff and the time needed to do that effectively.”
The number of vendor relationships managed varies widely by firm but mostly correlates to a firm’s size. Larger firms have over 1,100 vendors, while small firms average about 130 vendor relationships. Asset owners report lower vendor counts than asset managers by a significant amount, which may be explained by the scale and outsourcing of some investment management functions.
“Peer benchmarking is a critical service that our member firms heavily rely on,” said Cindy Castellano, CEO of Cutter Associates. “Customized report results allow them to see how their processes and practices stack up against other firms and highlights areas for improvement while reinforcing areas of strength.”
“We are grateful that Cutter Research members continue to participate in Cutter Benchmarking surveys and trust us with their insights into the workings and aspirations of their organizations,” Castellano said.
For more details, view the executive summary Cutter member firms have exclusive access to the full report.
About Cutter Associates
Cutter Associates LLC serves the operational, technology, and client experience needs of the global asset and wealth management industry, providing companies with the tools and services they need to be successful. With deep industry and domain experience and expertise, Cutter Associates provides global consulting, independent research, exclusive members-only events, process benchmarking, and a vast peer network. Headquartered in Rockland, Massachusetts, and owned by Tokyo-based NRI Group, Cutter Associates offers services in the United States, Canada, Australia, United Kingdom, European Union, Singapore, and Asia. For more information, visit us at www.cutterassociates.com and connect with us on LinkedIn.
About NRI
Founded in 1965, NRI is a leading global provider of consulting services and system solutions, including management consulting, system integration, and IT management and solutions for the financial, manufacturing, retail, and service industries. Clients from all layers of these individual industries partner with NRI to tap NRI’s research expertise and innovative solutions across the organization to expand businesses, design corporate structures, and create new business strategies. NRI has over 16,000 employees in more than 100 offices globally, including New York, London, Tokyo, Hong Kong, Singapore, and Australia. NRI reports annual sales above $4.9 billion. NRI is rated “A” by S&P Global Ratings Japan. For more information, visit www.nri.com/en.
For more information or to get in touch with a Cutter Associates’ representative in your region, contact us at [email protected].
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Jennifer Murray
Cutter Associates
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