Heads of Performance or Client Reporting at any asset management firm are responsible for the outputs to the end consumer. Their biggest worry is always: ‘Can I trust the numbers (and text) on those outputs? Is it ‘good to go’? Has it been brought in faithfully from multiple external sources?’ A good vendor will have all the tools and processes in place to ensure that it can take the data from the point of reception to the point of dissemination, with a cast-iron guarantee that the data will remain unchanged throughout that transition, writes Abbey Shasore, CEO, Factbook.
Whenever an investment reporting system change is under discussion between an asset manager and a software vendor, the most notable recurring theme in the first meeting is that of data. Asset managers want to know if they can have sufficient confidence in the data that the vendor is presenting, whether it’s in a client report, a fund factsheet or a portal.
Understandably, asset managers seek reassurance that the exact data stored in their own internal systems (or supplied by third party administrators, custodians and other partners) and then conveyed into these reports will be faithfully represented every single time. Their fear is that the data published will not be the most up-to-date, verified data or will somehow have been altered during its journey from asset manager to investor. This fundamental question never goes away and I’m not sure that it will ever go away so long as there are humans involved in the investment reporting process.
There are two aspects to resolving this fear. The first step is for the asset manager to determine whether its own data management process is in order and if it isn’t, how it is going to resolve any inconsistencies. Most asset managers that have structured, organised data (and the closer they resemble a hedge fund or a wealth manager in this respect the better) will have processes and systems in place to ensure that the data which passes over the vendor’s threshold is always correct. That said, I am aware that some very well-known asset management firms have not reached this point and are in fact still operating in ‘spreadsheet purgatory’. My experience has been that such firms are usually very much aware of their data management problem but simply don’t know how to overcome it in the most efficient manner.
The second step is to ascertain whether the reporting vendor is capable of interfacing accurately with external data sources. It is in this second stage that vendors really enter the fray. The vendor’s position should be that as long as the asset manager is confident about its own data store, the vendor can be equally confident that it can manage the transition to published material through automation, without any re-keying of data.
There are therefore two stages to the data journey: from the investment manager’s own data repository to the vendor’s threshold and then from the vendor to the end consumer.
Of course, the asset manager’s own repository will be consuming data from outsourcers, custodians, internal and external fund managers, its own performance team and all manner of contributors. This is a task in itself; however, getting this data from the repository into pitchbooks, fund factsheets and client reports is down to the vendor having the right tools that can be trusted to bring that verified data in correctly and on time through every single reporting cycle.
If this process is followed thoroughly, the Client Reporting team need only eyeball the output design (for example, having certain headings emboldened or underlined); they will not be required to confirm the replication of the actual data itself.
Whatever ‘flavour of the month’ topic is prevalent in the world of investment reporting, accuracy and timeliness of data will always be the #1 issue. The moment that the data goes wrong is the moment all hell breaks loose. The asset manager will fall within the crosshairs of the regulator and suddenly they are in the realms of sanctions, fines and – in a retail environment – even compensation. There is also the risk of reputational damage in the investor community, with a loss of trust among clients.
In uncertain times like the present, it’s a risk that any asset manager can ill afford.
For more information visit: www.factbook.co.uk.