A proposal on how to apply the balanced scorecard to the collective investment managerial firms

Resumen

Collective investment companies, as other institutions in the financial sector, are actually going through moments of great volatility. Consequently these firms need to reformulate their strategic forecast for the next years. This need arises, among other factors, from the collapse of global financial markets, progressive liberalizations in tax and company regulation and the evolution in information technology. Collective investments are very appealing for small investors, as they allow them to benefit from the skills of a professional management, as well as to spread different risks with a diversified portfolio in the different mutual funds. Nevertheless in moments of crisis such as the world is experiencing now, the great volatility of markets and capital losses clearly offset the attractiveness of the portfolio management. The starting point is to take into account the new scenario now developing in collective investment management firms: increasing competence, less captive clients, a more independent sales force, and decrease in their P&L account. With this background we propose to use a planning tool that, in the last ten years, has proven itself to be a great help in improving the management of the firms. The aim is to identify their core activities in order to define a better strategy, gain new clients, and improve the quality of their services. The final purpose is to increase their return on investment. Taking into account all the above mentioned reasons we have considered the collective investment management firms in Spain a good field to apply Balanced Scorecard as a device to improve management control . In our research paper, we propose a balanced scorecard model, exploring three possible strategic scenarios, together with an operating simulation of this device with a five years¿scope for these type of firms. To obtain this model we have used dynamic systems theory and other information technology instruments.