Case Studies
In all these case studies, direct interaction with the “on the ground” client and ops
teams, disciplined profitability focus, and market expertise played pivotal roles. By leveraging these elements, each firm showcased the ability to win deals, scale operations, and strategically navigate complex opportunities, even if it meant passing on certain deals or clients.
01.
Winning the Deal with best in class data
Problem Statement
Financial services firms compete to secure new service contracts through a complex process involving RFPs, site visits, and rounds of pricing negotiation. The challenge is presenting a compelling service proposition and accurate revenue estimates. Typically this process involved the trading team making a good-faith estimate, with high level numbers. But we thought we could do better.
Solution Developed
In this situation, we built a model using the actual portfolio to more accurately forecast securities lending revenue. The approach combined a real time assessment of market conditions, trading behavior and very detailed reporting that answered both questions “how much” and as well as providing detailed response on “how” the revenue would be made.
Result
The team secured a $25 million mandate from a large West Coast mutual fund. Their detailed analysis, based on an accurate estimation model, gave them a competitive edge. Even though competitors were asked to replicate the same level of analysis, the firm’s first-mover advantage and meticulous approach led to winning the opportunity.
02.
Picking the "right" clients
Problem Statement
Midsized financial services company was faced with multiple challenges:
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A pipeline of new, complex clients who did not easily fit the firm’s operating model.
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P&L report that did not adequately capture client-level revenue and expenses.
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Ownership expectations of increasing value based on new sales. Additionally, the CEO had a ‘hunch’ that some bigger clients were unprofitable but couldn’t prove it.
Solution Developed
SGA built a client PnL tool using on staff costs verified by team leaders, tech expense allocations based on usage (not
AUM), and separating marginal costs from fixed overheads. Time to completion: two months.
Result
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Within the top ten revenue clients, several did not cover their marginal costs. Next step – repricing, adjusting service model or exit.
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Analysis provided profitability reporting by client segmentation (by service and size). Next step –refocus sales teams efforts towards opportunities in the best segments.
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Provided owners with a monthly playbook of next steps towards increasing profitability.
03.
Efficiently Scaling Research Operations
Problem Statement
A hedge fund with limited hiring capacity sought to scale its investment research by involving students for real-world research experience, for pay. The task was given to an up and coming young manager with strong ties to the founder. However, managing the growth, aligning with profitability, and balancing between investment ideas and returns became challenging.
Solution Developed
Collaboration with the manager led to prioritizing profitability over mere growth. A product profitability model was created, involving multiple departments. The focus on profitability and controlled expansion gained approval and acceptability, particularly with the more experienced members of the executive team.
Result
Despite challenges and a temporary halt due to market factors, the disciplined approach restarted the project. By demonstrating controlled profitability and a well-structured process, the founder convinced investors to reinvest, leading to renewed successful operations.
04.
Making Strategic Rejections Count
Problem Statement
During a market downturn, investment firms consider cost-cutting. Lift-out opportunities were common, involving absorbing client staff and services. However, a significant proposal to absorb a 100-member accounting staff in Dublin presented complexities.
Solution Developed
A model was developed to evaluate if absorbing the staff could enhance productivity and account for conversion costs. This model provided factual insights for decision-making. The decision to decline the bid was made, considering cost-benefit and risk factors.
Result
By communicating that they understood the client's needs and the risks of a large-scale conversion, the firm positioned itself as a provider committed to long-term success. A competitor with less insight bid high, leading the client to withdraw the opportunity. Even though the deal was lost, the firm's strategic approach indicated success. Expense save: $7 million.