Operating Model Priorities for Asset Managers Following Market Correction - March 14, 2025

By Christian Cebreros, Managing Partner at The Good Guys Company | March 14, 2025

The past week's significant market movements have sent asset and wealth managers across EMEA scrambling to address client concerns. While the market commentary is best left to economists, these volatile conditions illuminate critical operating model and product design considerations for firms seeking to strengthen their positioning during market stress.

Product Shelf Architecture: Liquidity Tier Optimization

Large Cap Product Considerations

This week's volatility has exposed structural gaps in many firms' product shelves. Asset managers with rigid product architecture face challenges in repositioning as sector rotations accelerate. Our operating model assessments reveal that firms with modular product design capabilities can respond faster to changing market dynamics.

Several wealth management clients have identified specific operational bottlenecks during this period. Client reporting systems designed for quarterly cycles struggle to provide the real-time transparency that high-net-worth clients expect during volatility. Technology infrastructure optimization becomes particularly relevant when market dislocations trigger heightened client engagement.

For product development teams, this correction highlights the need for embedded risk scenario capabilities within standard reporting frameworks. Firms with operating models that separate risk analytics from client communication channels face significant manual intervention requirements during market stress.

Small and Mid Cap Structural Considerations

Small and mid-cap focused offerings present unique operational challenges during volatility. Asset managers with fragmented middle-office infrastructure report longer processing times for smaller-cap transactions, creating potential settlement risks as volumes increase.

Data architecture limitations become particularly apparent in small-cap strategy operations. Many wealth platforms lack the taxonomic sophistication to properly segment small caps by revenue exposure characteristics – a critical capability when tariff impacts create dispersion within market cap bands.

Firms implementing unified data models across market cap spectrums report faster response times to client inquiries during market disruptions. This operational efficiency directly impacts client retention metrics during periods of heightened service expectations.

Private Market Operating Model Adaptations

The recent correction underscores significant operational challenges for firms offering private market products. Valuation infrastructure designed for quarterly cycles faces substantial pressure when public markets move rapidly, creating potential misalignment between public and private representations in client portfolios.

Asset managers with integrated valuation functions report higher client satisfaction scores during market corrections compared to those relying entirely on third-party administrators. This operational capability becomes particularly relevant for wealth managers serving sophisticated clients who understand valuation lag dynamics.

From a technology perspective, this volatility highlights the importance of scenario modeling capabilities for private market allocations. Firms with siloed systems separating public and private analytics struggle to provide coherent portfolio perspectives during market disruptions.

Client communication protocols represent another critical operational consideration. Wealth managers with standardized playbooks for addressing private market valuation during volatility report lower client query volumes and significantly reduced advisor stress.

Digital Asset Infrastructure Requirements

Recent market movements have exposed operational vulnerabilities in digital asset offerings. Custody and settlement infrastructure designed for lower volumes face significant strain during volatility spikes, creating potential service disruptions for wealth clients.

Technology architecture decisions become particularly consequential in this asset class. Firms relying on separate systems for traditional and digital assets struggle to provide unified client perspectives when correlations shift rapidly. Integration capabilities become critical differentiators during periods of heightened client engagement.

Risk management operating models face particular challenges with digital assets during corrections. Standard VaR frameworks designed for traditional asset behavior produce misleading outputs when applied to digital assets' unique volatility characteristics. Firms with unified but configurable risk engines demonstrate superior client servicing capabilities.

Operational Efficiency Priorities Moving Forward

This market correction offers three actionable operational priorities for EMEA asset and wealth managers:

First, evaluate client communication infrastructure for real-time capabilities. Firms with integrated CRM and portfolio management systems demonstrate faster response times to client inquiries during market stress. This operational efficiency directly impacts retention metrics.

Second, assess middle-office scalability under volatility scenarios. Transaction volumes typically increase 300-400% during market corrections, exposing operational bottlenecks in trade processing and reconciliation functions. Cloud-native operating models demonstrate superior adaptability to these volume spikes.

Third, prioritize data model integration across asset classes. Firms with unified taxonomies spanning traditional and alternative investments provide more coherent client perspectives during market dislocations. This capability becomes particularly relevant as correlations shift unexpectedly.

Advisory Considerations for Client Organizations

For wealth management organizations, this market correction presents a critical opportunity to evaluate advisor support infrastructure. Firms with centralized market intelligence functions report higher advisor confidence scores during periods of heightened client engagement.

Product specialists integrated within advisory teams become particularly valuable during corrections. Operating models that separate product expertise from client-facing functions create information bottlenecks when market movements trigger sophisticated client questions.

Technology enablement represents another crucial consideration. Wealth platforms with configurable stress testing capabilities allow advisors to demonstrate portfolio resilience under various scenarios – a critical client confidence tool during uncertain markets.

At The Good Guys Company, we remain focused on helping asset and wealth managers optimize their operating models and product architectures to navigate these challenging conditions. While we don't provide market predictions, our operational expertise helps firms build the resilient infrastructure necessary to support clients through all market environments.