What is “best practice” when it comes to product?

We are seeing more and more interest from clients in how best to resource and run product teams – one of our recent Trialogue editions ‘How long does Product development take’ was one of our most popular pieces yet. Clearly our readers, like the Tria team, are true believers in the importance of Product to wealth management firms.

It’s somewhat self-evident that behind every successful and enduring financial services organisation are market leading products. Yet despite the critical role product teams can play in ensuring the initial development and maintenance of these solutions the function remains one of the least understood and often under-invested organisational functions. Team sizes can range from a handful to +40, with a wide variety of structures, areas of focus and responsibilities.

This is at least in part a benchmarking problem. While it’s relatively easy to benchmark the performance of your sales or investment teams, the benchmarks are less obvious for product teams; how do Heads of Product measure if their team is doing a good job and how does the CEO know if Product is performing?

It is however obvious – and sometimes frighteningly so – when products fail. Major rectifications such as when a product fails to comply with regulatory requirements, its’ trust deed or disclosure document is a classic sign of malfunctioning product management. Products consistently failing to meet objectives (growth, income), product proliferation, complexity and poor competitive positioning, while less dramatic, are also signs of product dysfunction.

A critical hub at the centre of wealth and asset management organisations

When done well the Product team becomes the critical hub at the centre of the organisation – it is akin to the conductor of an orchestra, often coordinating numerous departments to organisational objectives. Who else needs to have day-to-day engagement with everyone from investments, sales, operations, finance, tax, marketing, legal and risk and with enough knowledge and skills across these areas to actually understand and add value? This broad, collaborative remit helps explain the variability in Product department mandates, and why success is difficult to measure.

What is clear is that to execute effectively product professionals need a unique blend of entrepreneurial, technical and operational skills, unlike any other role in the firm. They also require support from, and empowerment by senior management.

We view Product as performing three key functions:

  1. Product strategy – holistically, based on how an organization’s capabilities and expertise aligns to the competitive landscape and customer needs, where does the firm want to position products, in which segments, via what channels, and targeting which clients;
  2. Product development – executing on that strategy with a clear and best in class product development process (often varies with a firm’s risk framework)
  3. Product management – ensuring the products deliver on their promise, product disclosure and marketing collateral, operational oversight, risk, legal, tax, audit etc

We see the most effective product outcomes when all of these functions are owned by a well-staffed and empowered product team.

While there is no single best practice template for running a product function, our experience consulting across wealth and asset management firms in Australia and globally points to a number of key markers present in high quality and successful product teams:

  • Product team has the respect and support of the CEO
  • Clear product strategy – (pricing/fees, product profitability, distribution, features) in place with agreed product plans, which also align to the broader organisation strategy
  • Clear product management ownership and adequate resources
  • Product development process – a clearly articulated process is in place and is universally adopted for all product development – even for the CEO or Portfolio Manager’s favourite idea
  • Single source of truth – detailed product specifications in place, which are up to date and act as the source of truth, with clear change control protocals.

In our experience, it’s when all of these are humming in unison that the conductor really has the orchestra playing in tune and the broader organisation is set up for success.

Posted In: Trialogue