View more on these topics

The Big Interview: Morningstar boss on unleashing tech’s potential

Morningstar chief executive Mark Roomans on bringing algorithmic investing to the mainstream

Morningstar UK chief executive Mark Roomans is a senior industry leader whose career has been largely devoted to helping the investment world harness the power of data to create better solutions.

Good data has always given fund managers their edge, driving better decision-making and alpha. But the way in which we consume and deploy it has changed beyond recognition since Roomans started his career in asset management in the 1990s.

Advances such as machine learning and artificial intelligence will not replace people as decision makers in our sector, he says, but they can drive operational efficiencies. And asset managers need to reduce costs, with fees and margins being squeezed under the watchful eye of the regulator.

Morningstar is a multi-jurisdictional business with a variety of products and services and, at first glance, it can be difficult to discern how each division connects up.

The Big Interview: Distribution Technology boss on fixing advice’s Achilles heel

But to Roomans, it is simple: data and research are Morningstar’s lifeblood, powering everything from portfolio management and fund selection to index creation.
Roomans’ first role at the group was as Morningstar Spain’s chief executive. He started the Spanish operation from scratch in the early 2000s just before the tech bubble burst. The first year was tough, with slim pickings for the fledgling firm.
However, in 2002, the Spanish government changed legislation so that investors could transfer assets between funds without incurring capital gains tax. This kickstarted competition between Spanish asset managers, and Roomans brought a fund comparison data product to market in a week. He has never looked back.
When he describes the evolution of Morningstar’s European business, you can see he still has a keen eye for new opportunities. Mifid II compliance is an obvious area of growth but environmental, social and governance fund research is another new string to the bow.
Morningstar is also keen to bring down index costs for passive managers by running a country indices service fund groups can use for free. While this does not drive revenue it does promote client loyalty.

The Big Interview: Allfunds chief executive on becoming the Amazon of the distribution world

A self-confessed “quant”, Roomans gained a PhD in finance and was early to spot the opportunity the nascent algorithmic approach could bring to institutional investing. His first experiences of working in “algo” teams was at such relatively traditional houses as Mercury Merrill Lynch and JP Morgan Investment Management.

The behemoths of the active management world are often criticised for not moving with the times and Roomans admits that, when he started, he encountered hostility from peers for using algorithms to drive investment decisions.

But these so-called traditional asset managers were willing to take a punt on the pioneering algorithmic investing. Now it has become mainstream and is the template for robo-advice portfolio construction, where efficiency and automation are critical to being able to charge reasonable fees.

Roomans’ views on the future of retail investing are animated by his enthusiasm for the opportunities technology has unlocked: “Technology has enabled a whole host of different ways of accessing investments,” he says.

In the immediate future, active managers will continue to lead in sectors where there are “informational inefficiencies”. Fees are under pressure. Roomans believes that, in asset classes where there are efficient markets, most asset managers should go either passive or quant.

The Big Interview: Ex-Skandia boss Peter Mann on why humans will beat artificial intelligence

He is a believer in strategic beta. These portfolios are constructed from factors that are not market-cap weighted and could come into their own with greater volatility.

In principle, buying the factors directly could be a cheaper way of constructing strategic beta portfolios. But Roomans sees the power shifting to the asset allocators, and Morningstar has skin in this game, having run model portfolios on platforms for advisers for five years.

Scale in asset management need not be at the expense of innovation. In fact, large asset managers could lead the way in bringing down operational costs by harnessing new technologies.


2015-present: Chief executive, Morningstar UK

2008-15: Various roles, including co-chief executive, Morningstar Australia; chief operating officer, Morningstar Europe; managing director, Morningstar Switzerland; head of new markets, Morningstar

2001-08: Chief executive, Morningstar Spain

1998-2000: Director, structured value group, Mercury Merrill Lynch Investment Management

1994-98: Vice president, JP Morgan Investment Management

According to Roomans, the next wave of innovation at Morningstar will be internally-facing. It is experimenting with using automation to improve the waydata is collected, analysed and processed.

By automating at scale, Morningstar can direct its people into higher value, more rewarding work. We should all take note. Driving operational efficiency is critical to scaling-up any business, whether ambitions are modest or grand.

Roomans’ career has been shaped by the possibilities advances in technology have opened up. Whether we use the next wave of tech to improve operations or drive better investment decisions, “we have barely scratched the surface of what can be done,” he says.

Miranda Seath is research director at Platforum


neill macgillivray

Neil MacGillivray: When expression of wish forms can let clients down

Clients cannot always rely on pension providers to follow their wishes when it comes to beneficiaries on death Headlines earlier this year drew attention to a startling statistic that 750,000 people coming up to retirement are at risk of their pension being passed on to an ex-partner when they die because they have not updated […]


How much are advisers charging for pension transfers?

Defined benefit pension transfer charges are being put under the microscope again as the regulator turns over more potential conflicts of interest. With the British Steel Pension Scheme the latest to dominate headlines and the FCA ready to interrogate further as it extends its review to include all firms authorised to give pension transfer advice, […]

A DGT with 100% access and 100% discount?

Clare Moffat, Technical Manager, looks at the benefits of pensions from an IHT perspective. 100% access and 100% discount – what type of wrapper could this be? A pension! Post flexibility there is 100% access (for those over 55) and normally pensions are inheritance tax (IHT) free. With flexibility the options available on death mean […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment