In January Advent Software announced that Stephanie DiMarco, founder and CEO, was stepping down at the end of June and would pass the CEO reins to the company's current president, Peter Hess. DiMarco started the software company when she was 23, while working as an analyst for a money management firm.
We remember when she visited Wall Street & Technology's New York City offices in the late 1980s, literally schlepping an IBM PC on wheels through the streets of lower Manhattan. Advent since has evolved from a one-product company focusing on portfolio accounting and record keeping into a global provider of software and services for the investment management industry, with 850 employees servicing more than 4,500 clients, including banks, brokerage firms, mutual funds, investment advisers and hedge funds. Across the years, DiMarco has stood out as one of the few women CEOs in the software industry and on Wall Street. WS&T editor-at-large Ivy Schmerken recently spoke with DiMarco, who reflects on 25 years of change in technology and money management and reveals what she envisions for the future.
WS&T: How has the investment management industry changed since you launched Advent?
DiMarco: We started the business 30 years ago next June. I've had the wonderful opportunity of having a ringside seat in the development of this industry. The investment management industry in a lot of ways was pretty much a cottage industry in 1983. The hedge fund industry barely existed back then, and today it's a global and thriving business. It's a dynamic business; it's a huge amount of fun to participate in that.
I think Advent had an important influence on the industry. Certainly having enabling technology to allow firms to easily open up shop and start firms managing money without costly infrastructure is a value proposition. We like to think we enabled the growth. And for me, the most gratifying thing is the impact the company has had on other lives -- our employees and people like Peter [Hess] who grew up at Advent. It's informed our careers and created opportunities for our families. There's a nice ripple effect.
[For more on DiMarco's departure from Advent and the appointment of Peter Hess as her successor, see related article.]
Why did you decide to step down?
DiMarco: Advent was coming up on our 30-year anniversary, and I am proud of the fact that we are a technology company that remained independent. We've had our ups and downs but to have that longevity has been unusual in the technology world.
Advent is an important company for the asset management industry. We are independent, and we focus on one thing: making our customers successful. So it's important to me that we have that legacy. But a company has to evolve and change and live beyond its founder. When I came back in 2003 -- when I hadn't been so successful in the succession -- I felt it was important to get it right the second time. [Ed. note: DiMarco left Advent in 1999 believing that it was time to allow someone else to lead the company. After the company lost money for the first time, in 2003, the board asked her to return.] I was fortunate to have a candidate in Pete to mentor. He has grown so much in the various roles.
What are your plans after you leave Advent?
DiMarco: I haven't had the time to spend on that. I know I won't start another company. I want to put my entrepreneurial business [ideas] into Advent. I'm looking forward to having some time to reflect on that. I have various organizations I am involved with on the philanthropic side.
Why are there so few women in technology and on Wall Street who are heads of companies?
DiMarco: It does seem sort of an enigma that there aren't any women in leadership positions. In the law and medical professions, you have much more balance. It's kind of a mystery why Wall Street has been slow and the technology industry has been so slow on how to develop the next generation of women leaders. And there are a lot of great organizations doing research in that area. I want to be part of that, looking at the solution.
How have asset managers' technology needs changed over the years?
DiMarco: The level of sophistication in investment management products has just exploded. Today you have a lot more specialization and complexity around managing money than in the early '80s, when a typical asset manger was a balanced fixed income and equity manager. It was a much simpler world. The trajectory was one that led to growth in total number of assets, growth in complexity and the whole international layer, and that's become the huge layer that is global investing.
One thing that has really stayed the same is, it's just a very entrepreneurial industry. Even though there has been consolidation, the total number of asset mangers and hedge fund managers has continued to increase each year. It's a very vibrant industry that continues to grow despite the fact that it's consolidating all the time. What you see first is consolidation and that creates a ripple effect of firms that go out and start their own firms. We see that continuing around the world. We see that happening in emerging markets and all regions. In the U.S., one of the outcomes of the financial crisis is a lot of advisory firms or groups of advisers going out and starting their own shops.
What challenges lie ahead for the investment management industry and its tech providers?
DiMarco: Most would say it's the uncertain economic environment and low growth. That kind of sets the table for what firms are dealing with and frames a lot of their thinking. At the same time, we see pockets of growth in different locales and different segments of the asset management industry. When we talk to our customers, there's a strong sense of: How do we grow our business in a very cost-effective way? And how do we leverage technology with the lowest cost and highest returns? That continues to be a dominant theme. That is a tough thing. You need to balance the conservativeness of what the economic climate is going to be and what that is going to do to fee income; and at the same time, there are a lot of wealth management companies -- how do firms continue to grow their businesses with less?
The other areas are related to the explosion in new technologies -- the combination of cloud computing, mobile computing and social are creating some very enabling technologies. But at the same time, firms are trying to navigate the best way to leverage those technologies.
Are the combinations of these technologies making it challenging to develop a cohesive strategy?
DiMarco: Not all the tools that are developed are appropriate for the professional market or the institutional market, but they are being developed very quickly. At the core of it, the mobile iPad paradigm, the always-on device, is such an enabler for managing information. That is what our customers do. Taking advantage of that platform, there is so much [opportunity] to create tools and allow our customers to manage information better. I don't think it's a challenge necessarily; it's really an opportunity for our customers and us to figure out the best ways to use these technologies [as] an enabler. It's a lot like the first IBM PC -- for the first time, our customers could manage their portfolios in a low-cost, easy way without having to rely on a service.
One thing that has been very constant: We don't develop tools and services and software for technology's sake. It's really about: What is the problem we're trying to solve, and what's the appropriate technology? Our secret sauce is the underlying customers' problems and what they are trying to solve.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio