With her promotion to Manager, Operational Consulting, at JANA Investment Advisers recently, Jo Leaper is testament to two trends: the increasing importance of investment operations strategies and processes and the expansion of the big consulting firm’s governance advisory capabilities.
Leaper, a former custodian with NAB Asset Servicing (NAS), has tended to focus on operational issues at JANA, where she has been since 2010, and she is now responsible for a dedicated team and standalone product – operational due diligence.
“It’s been very different for JANA to expand in that direction,” she says. “Investment has always been the specialty, and always will be, but now we are also providing services to do with governance factors.”
Leaper got into the industry by accident, probably like many others. While doing her undergraduate degree in HR, a friend got her some holiday work in the mailroom at NAS, which she then joined full-time in 1998 and remained for nearly 10 years.
She married a famous Australian cyclist, Tom Leaper, and moved to Italy for a year, and then America, as he followed the money in his sport. She rejoined NAS on their return. After finishing a masters degree she moved into asset consulting with Access Capital for three years and then joined JANA.
The operational due diligence business tends to take most of her time now, with advice on custody and related matters part of a wider brief. Of the big consulting firms, only Mercer has a separate implementation company, Mercer Sentinel. Willis Towers Watson closed its operation in the 1990s after its specialist securities services staff moved to Deloitte, which also subsequently shuttered that business.
JANA has a number of current and prospective operational due diligence and custody clients.
“The biggest challenge,” Leaper says, “is what to do with the information you get back from the operational due diligence and the risk factors which are uncovered. Obviously the trustees have a responsibility to consider all risks.
“It’s becoming a more level playing field between operations and investments, where as previously operations was a sort-of poor cousin. For us, operational due diligence is now a very saleable product.”
JANA has a team of eight in Sydney who are part of MLC and have been doing operational due diligence for about 10 years, with Leaper, who is based in Melbourne, leading the “front office” and client interface with Steve Cross, who recently joined in Melbourne. The firm also has a head of client strategy, David van Ryn, who came across from Westpac
“The team has a breadth of experience and includes auditors, accountants and lawyers looking at all aspects from front office through to backoffice.”
With respect to custody, which has been through a couple of years of feverish tender activity, JANA looks to refine its search universe prior to formal tenders. “With only six in the market I don’t think you should go out to all of them any more,” she says. “We look for a balance and fit beforehand. You can’t waste their time on unnecessary questionnaires. But it’s the same with all service providers.”
She says she usually recommends a five-year term, with one or two years extra, because of the length of time involved in the lead up to a change. And then it probably takes 12-18 months for a new custodian to get into a business-as-usual pattern.
On the vexed issue of fees her view is that it always comes back to “value for money”. She recognizes, too, that every service provider needs to make enough to be able to reinvest in their business and personnel, to innovate and automate – to help drive down risk.
– Greg Bright