By Paul Chung and Jennifer McMackin
In the strains of operating remotely during an uncertain economic environment coupled with high market volatility and more stringent regulations, it becomes even more critical for investment operations managers to have automated and streamlined processes. High volumes of transactions and data is the new norm. The front lines of the industry have received plenty of expert advice to help firms address ongoing concerns of endowments, pension plans and other clients.
But how much attention has been paid to the back office and the important role it plays to support client interactions while also mitigating operational and compliance risk? How resilient will firms’ post-trade operations remain in remote work environments? Should firms outsource key parts of their reconciliation process to reduce the risk of multiple points of failure?
In recent years, and especially now, the asset management community is adopting Electra’s managed services for reconciliation and data aggregation. Here’s why.
investment operations, buy-side, best reconciliation solution, investment management, managed services, post-trade operations, data aggregation, back office, reconciliation services
By Jennifer McMackin
Many investment managers’ trade reconciliation and other post-trade processes are still burdened with the inefficiencies of collecting, normalizing and validating data from third-party sources. A typical investment management firm receives numerous data feeds on securities, positions and transactions. This creates more work for operations teams to manage data and maintain provider links, while causing workflow and settlement risk and delays due to errors and manual effort.
Is this the best way to acquire and aggregate external data, and utilize your staff’s time and resources? Is your firm potentially missing out on opportunities to optimize processes and spend more time on strategic areas? Let’s explore the two main data aggregation challenges investment managers face and what they can do about it.
Data Reconciliation, investment operations, investment management, post-trade operations, data aggregation, back office, Electra Data
By Todd Sloan
Over the last few years, our clients across the investment management community have seen a heightened focus on operational due diligence driven by a surge of institutional money into hedge funds. In addition, several fraud cases have caused significant losses for even the savviest investors. Regulators are also shining a bright light on hedge funds as they have gained popularity across both retail investors and pension plans. Having the right technology and third-party relationships in place is more important than ever before.
reconciliation, Hedge Funds, investment operations, investment management, due diligence, operational due diligence, data aggregation, operational risk, back office
By Doug Fritz
Client fee billing, invoicing and revenue management in the buy-side investment management community can become a significant source of risk and cost without an efficient workflow and audit process to manage review and approval checkpoints. Investment managers must be able to build and retain client trust as well as satisfy auditors. In today’s competitive and challenging market environment, the need for automated, accurate and timely invoicing is greater than ever.
investment management, fee billing workflows, client invoicing, client fee billing, fee billing, chief financial officer, CFO, four eyes, revenue management
By Todd Sloan
Practical artificial intelligence (AI) use cases and applications in buy-side reconciliation and post-trade operations are prevalent, yet many have yielded uneven and questionable results. AI can go only so far to autonomously solve the operational problems investment management firms face. The solution? An intelligence augmentation (IA) approach to AI.
Electra Blog Posts, Buy-Side Technology, Operations Management, Electra Information Systems, reconciliation, Hedge Funds, Investment Firms, Investment Managers, machine learning, buy-side, artificial intelligence, post-trade operations, intelligence augmentation
By Scott Rhodes and Todd Sloan
When we think about the transition from office worker to home worker, we think first about IT security: “lock it down!” Unfortunately, that mantra misses the big picture. McKinsey & Company says the most valuable asset of a firm is its people, and it is the operations-intensive environment of investment management reconciliation that underscores this sentiment. The role of skilled people and automation at the center of mission-critical, post-trade processes is apparent from both the standpoint of security and business continuity to eliminate single or multiple points of failure. That means not only protecting the business from being harmed by others; it also means ensuring business operations remain robust and efficient.
reconciliation, investment operations, buy-side, COVID-19, investment management, managed services, remote workers
By Todd Sloan
Failed trades occur when the seller or the buyer does not meet their trading obligations on or before settlement date. Whenever this happens, the party who failed to deliver cash or securities on their side of the trade could face financial losses, fines and damage to their reputation on the street. Failing to meet their trading obligations may result in rating agencies downgrading their credit score, limiting their ability to shop around for the best counterparty relationships, and paying higher penalties under new T+2 settlement regimes.
While automation can play an important role, many investment operations managers are still dealing with errors and delays that lead to higher operational costs and risks. What is the solution? First, let’s take a look at the reasons why trades fail and their effects on the health of an investment management firm.
reconciliation, failed trades, exception management, trade fails, settlement, investment management
By Todd Sloan
An investment manager’s post-trade operations environment generally evolves as the firm grows. Technology solutions are important for helping firms manage increased trade volumes, mitigate risk and lower costs. Operational efficiency is always the goal, but over time, siloed solutions used to manage a particular area of operations get in the way of reaching that goal due to the tendency to make solution choices according to organizational structures and processes already in place.
In hundreds of discussions with investment managers over the years, we’ve often discovered the existence of multiple reconciliation silos, little collaboration across teams, and limited visibility into the data needed to improve the situation. In order to find the best solution to the problem, first we must understand the full impact and significance of the problem on a firm’s business.
The Dangers of Operational and Reconciliation Silos
Electra Blog Posts, Buy-Side Technology, Operations Management, Reconciliation Solution, Electra Information Systems, reconciliation, Hedge Funds, fund administrator, Data Reconciliation, SEC Compliance, SEC, Investment Firms, automation, Investment Managers
By Doug Fritz
It’s natural to choose a familiar tool to make tasks easier, and turning to spreadsheet applications for calculations is no exception. In the investment management world, financial services teams, CFOs and operations teams often use spreadsheets for client fee calculation and billing. While the endless formulas, worksheet linking, and cross-tab capabilities may make spreadsheets a good choice at first, firms will quickly realize how much complexity and risk they end up creating.
Investment managers must be able to prove the accuracy of their calculations and how access to the data is controlled. When selecting the method for calculating fees and billing clients, care should be taken to ensure the platform provides flexible and consistent fee calculation, fee collection capabilities, audit tracking and data security, external system interfaces and analytical reporting. Hands down, spreadsheets offer limited ability to meet these requirements.
Here are six substantial risks investment managers take when they use spreadsheets for client fee calculation, billing and cash flow management.
Electra Blog Posts, Electra Information Systems, fund administrator, fee calculations, Electra Billing, Advisory Fee Billing, Investment Firms, Investment Managers