Today's investor understands that the landscape remains challenging; however, investment is still required to meet long-term goals and objectives.
The emphasis is now on asset managers to prove their worth by providing more client service if they want to retain clientele and expand customer bases.
Fee structures are no longer linked only to performance – other added-value services, such as client reporting, allow investors to understand how their money is being managed and the risks that are taken to do so. Added to this pressure is the new wave of legislation intended to provide much needed transparency about complex market structures.
Client reporting has evolved to enable asset managers to communicate and add value to their customers. The demand on asset management companies by investors has not only increased the frequency and mix of customised client reports but also the quality of reporting that clients are expecting – transparent, light to deliver and receive, easy to read, to understand and compare.
Automating the client reporting cycle is the only way to ensure that the complicated requirements and intricacies of each investment are reported accurately. The technology, therefore, behind much of the client reporting platforms needs to be scalable and flexible enough to build both new and custom reports, easily and quickly.
The return on investment can be significant as companies can increase not only the accuracy and scalability of their reporting, but also other internal efficiencies such as reducing time-to-market and increasing productivity.
This has forced the hand of many asset management companies to move away from both manual client reporting platforms and in-house legacy platforms, and to turn instead to customised platforms offered by client reporting specialists with the technology required to ensure the platforms are truly fit for purpose.
As investors can no longer accept high fees for poor performance, nor can asset management companies accept IT project failures as such when working with technology houses.
No matter how tricky, surety is required, that the solution is right for the company. This has resulted in a recurring theme. Ever more, clients are requesting that proof of concept (PoC) – a short, controlled test of a new solution simulating the real world environment – is an essential part of either the vendor selection process or the sales process.
To align expectations of the company and the software provider, the vendor selection process often concludes that a PoC should be included prior to a decision being made. A test allows the company to see the good, bad and ugly sides of the technology provider and of the company. PoCs highlight any potential risks and the development required by both parties to ensure that the solution fits. This saves the company both time and the cost of implementing a product that is unusable.
The challenging market environment and ever-greater demands on asset management firms are driving new and efficient ways of managing problems. This has created an interesting shift from manual processing to automation. Asset managers now have to ensure they make the right decision in choosing solutions that best fits their particular environment. PoCs are an integral part of making that decision; enabling firms to test-drive a system to ensure it is in good working order and has suitable characteristics for individual requirements.
Alan Beer is chief operating officer at Vermilion
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