AFTAs 2018: Best Technology Executive, Buy Side—James Ferrarelli, Charles Schwab Investment Management

Institutions such as Charles Schwab Investment Management (CSIM) are certainly rowing with the current at the moment. The shift in investor appetite from actively managed portfolios, toward a preference for passive investment and exposure-based products has certainly been in the wheelhouse of providers such as CSIM, which can offer low-cost products to hungry clients—indeed, late 2018 saw some of the highest inflows for its exchange-traded fund (ETF) business. But all of this requires a delicate balance between products driven by demand and a technology backbone capable of delivering such offerings in an environment where even the slightest hiccup can be costly.

After all, to the average investor, it makes little difference whether they get their ETFs or index funds from CSIM, or Vanguard, BlackRock or any other number of competitors who would be all too happy to provide. Brand loyalty, these days, is primarily a function of two things—cost, and technological reliability, at least from a consumer standpoint.

Enter James Ferrarelli, who is tasked with keeping the lights on and the engine running at CSIM. As head of investment management technology, much of his focus has been on modernizing the technology estate at CSIM via a move to the cloud and hosted services. His tenure, which began in 2015 following long stints at Morgan Stanley Investment Management and JP Morgan Asset Management, has not only seen a 400-percent increase in cloud deployments, but also a reduction of well over 360 percent in on-premises vendor applications in favor of taking hosted solutions on a software-as-a-service basis.

In terms of modernization, Ferrarelli has also pursued an aggressive retirement strategy of legacy software, with what CSIM calls a “strong emphasis on fostering innovation” through deploying artificial intelligence and machine learning, and in automating end-to-end processes.

All of this isn’t just admirable from a pure technology standpoint. Against the aforementioned backdrop of cost control, CSIM says, Ferrarelli has held expenses to one-third of competitors, despite a 500-percent growth in the size of the overall organization.Technology heads, particularly on the buy side, are faced with extraordinary challenges today. They are required to be the perfect blend of business folk, with an eye on the numbers in their budgets and forecasts, while also having to be more conversant with and literate in the arcana of emerging technologies than ever before. Ferrarelli’s track record at an organization which, in many ways, is leading the charge in the changing world of investment management, makes him the well-deserved winner of the best technology executive award for the buy side at the 2018 AFTAs.