Wed. Jun 7th, 2023

investment operations

What Is Investment Operations?

Investment operations is a part of the back office that helps an investment bank or management firm to maintain and grow its assets. It includes the accountants who reconcile client statements and risk managers who oversee compliance with investment regulations.

As investments become more complex, asset managers are facing challenges with data governance, risk management and cost control. They are also tasked with attracting new capital, while maintaining a high level of customer service.

Asset Protection

Asset protection is the process of repositioning assets from creditors’ claims to a position that is beyond their reach. This can be done with a number of strategies.

Using an asset protection trust is one of the most effective ways to keep assets away from creditors. These irrevocable trusts are a great way to protect liquid assets, such as cash and stocks, from creditor’s claims.

The right asset protection plan can help a business owner avoid the financial harm that could come from lawsuits or creditor claims. The best time to begin planning is before any potential liability is present since it’s generally too late to act after a claim or judgment is made.

In the United States, the concept of asset protection has entered the mainstream in the past few decades. Its popularity grew as the result of the proliferation of offshore asset protection trusts and the introduction of various U.S. states’ creditor exemption laws.

Some strategies for asset protection include funding a business through equity and secured debt. Another is keeping the title of assets divorced from the operating entity that runs the day-to-day operations.

An asset protection plan is a good idea for anyone who owns a home or a retirement fund. Putting these assets inside an asset protection trust can keep them from creditors’ claims and legal judgments.

A trust can also be used to protect business property from creditors’ claims, such as real estate and equipment. This strategy is particularly useful for businesses that have a high amount of assets or a significant liability, such as a medical practice or accounting firm.

The asset protection plan should be a collaborative effort that involves IT operations teams managing enterprise-wide assets, security teams working with IT or DevOps and DevSecOps teams, and subject matter experts advising on the risks, mitigation, and implementation of the plan.

A key element of the asset protection plan is to identify all of the assets that can be protected. This can include all of the company’s equities, commercial property, manufacturing equipment, vehicles, and savings accounts.

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Real Estate Protection

If you own property as part of your investment operations, there are several strategies that can be used to protect that property. Whether you purchase one or multiple properties, these asset protection strategies can limit the amount of money that may be at risk if a creditor or plaintiff wins a judgment in a lawsuit.

A common strategy for protecting property is to purchase landlord insurance. This type of policy provides compensation if a tenant is injured on the property and decides to sue the owner. This can include paying medical bills, legal and court fees, and compensating the tenant for lost wages and emotional distress. Damages like this can be a significant amount of money, and even when the case is settled out of court, the landlord may still have to pay the full amount.

Another asset protection strategy for real estate is to hold the property in a limited liability company (LLC). An LLC is a legal business entity that holds property and pays operating expenses and mortgages. This strategy limits the creditor’s ability to claim against both business and personal assets, because a creditor is only allowed to seek against the property held within the LLC.

To limit the amount of risk on real estate, some investors also use debt to reduce the equity that may be at risk. For example, if a landlord has $100,000 worth of equity in their rental property, a creditor or attorney might consider that to be a big red target. But if that landlord maintains a loan-to-value ratio of 75% and strips the equity out, only $25,000 is at risk.

In addition to limiting the amount of risk that may be at stake, these strategies can also help keep a landlord’s personal wealth protected as well. For example, holding a property in a trust can provide privacy of ownership.

Lastly, to further limit the amount of risk on a real estate property, some investors also choose to separate their properties from each other. For example, if an investor owns three rental properties with different equity levels, they can create separate Series LLCs for each. This is a great way to ensure that any potential lawsuits or judgments cannot take from one of the properties held in the LLC.

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Legal Protection

There are a number of legal protections available to investors. These include domestic laws, investment codes and contractual protections. These may provide stability in the treatment of an investment by a host state, and investors will want to carefully weigh their options when deciding which are most likely to be beneficial.

International law and treaty-based protections are also important considerations. These can be complex but there are a number of ways in which an investor could structure its investments to take advantage of treaty protections, particularly where a state is known to have communicated clear and unequivocal commitments to an investor.

These will be evidenced through communications with a minister or other senior official and the way in which those commitments are documented and understood by an investor is critical to the legitimacy of any claims under international law against the host state. Taking a strategic approach and seeking legal advice on an ongoing basis can help to mitigate the impact of political change and unforeseen circumstances that might otherwise impact an investment.

Disputes over sovereignty are another key issue that can have significant consequences for investors and it is important to consider these from the outset of an investment. These can have a wide range of implications, including disputes between states over their legal powers to grant rights, and claims by third parties that the investor is aiding and abetting a breach of international law or is complicit in human rights violations committed by organs of the host state associated with the investment.

A stable framework of law and regulatory control is important to any investor in the global capital markets. Many exchanges and financial industry self-regulatory organizations (SROs) have a number of rules that they must implement in order to protect the integrity of their markets, as well as their customers and shareholders.

One example of a legal protection is the Securities Investor Protection Corporation (SIPC). This non-profit corporation was created in 1970 to provide limited coverage of brokerage accounts in the event that a brokerage firm is unable to pay its bills or if unauthorized trading occurs in the account.


Insurance protection in investment operations is the ability to protect assets and cash from losses or damage. This coverage includes policies that protect your property against fire, flood and other disasters; electronic data protection that replaces or restores lost or corrupted files; and fraudulent transfer insurance that covers money transferred electronically, telegraphically or by cable or telephone.

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Insurance is one of the most important ways that an investment operation can protect its assets and keep the business running. It is also one of the most cost-effective ways to do so.

The Securities Investor Protection Corporation (SIPC) is a non-profit organization that provides deposit protection on certain investments and securities. Its members pay a percentage of their gross revenues as a premium to receive this coverage in the event that they go out of business and lose their customers’ funds.

SIPC protection is similar to FDIC insurance in that it offers financial compensation if you lose your investments or cash at an eligible brokerage firm, but it does not protect the value of your assets. In addition, there are limits on how much and when you can recoup your losses from the insurance provider.

Another type of insurance protection is political risk insurance, which protects foreign subsidiaries and their investments from certain perils such as nationalization, confiscation and other specified events. It may be a valuable option for large multinational companies with significant overseas investments or financial institutions that have significant operations in emerging markets.

Many insurers seek to expand their in-house investment capabilities by partnering with external managers who can help them implement strategies that are outside of their existing skill set. These partnerships can range from single investment strategies to fully outsourced chief investment officers, or hybrid solutions that blend in-house and external resources.

In this environment, a strong portfolio manager can play an important role in driving investment performance and helping the company maintain its competitive edge. To be successful, an investment manager must understand the specific business goals of the insurance organization, its risk appetite and a variety of regulatory requirements.

Jeffrey Augers
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By Jeffrey Augers

Jeffrey Augers is a highly skilled and experienced financial analyst with over 12 years of experience in the finance industry. He has a proven track record of delivering exceptional financial insights and recommendations to clients, empowering them to make informed decisions and achieve their financial goals. Jeffrey holds a Bachelor's degree in Finance from the University of Michigan, and an MBA from the Wharton School of Business.