In a previous post I discussed the problems many fund management firms have when it comes to the calculation of assets under management (AUM) and the importance of having a systematic, repeatable process for calculating AUM on a regular basis.
The macro analysis of AUM and the ability to calculate it reliably are absolutely fundamental to the operation of a sound investment management business, in addition to this though, a firm must be able get a firm handle on the micro analysis of AUM, and I am specifically referring to the analysis of flows on a daily and/or weekly basis.
The ebb and flow of assets at a product level is a direct indicator as to the health of the business. Having your finger on the pulse of these flows allows your firm react swiftly to sudden changes in market dynamics such as sudden large in- or out- flows of money from particular funds, strategies or ranges.
The problem for many asset managers is that their investor books and records are often spread across many Transfer Agencies. Aggregating sub and reds on a daily basis across multiple sources and systems, along with additional manual intervention in the process can present considerable challenges for many firms.
Another challenge is the desire by firms to consolidate investor views across the sources of data. Even for firms which have a single Transfer Agent, getting an investor view can be problematic when you consider different legal structures often end up being managed on different systems. The prevalence of nominee/omnibus accounts presents another process bug bear and this is often very difficult to resolve without constructive co-operation from the respective platforms/broker-dealers where the granular investor data lies.
Many firms do recognize the critical importance of consolidated daily views of flow data to their business. The rise of the “COO for Distribution” is a direct result of firms realizing that many COO offices had become too focussed on the investment management operations, and took their eye off the wheel when it came to managing the distribution side of the business. Distribution are data hungry in terms of their needs for good quality and timely data and I often refer to data being the oil in the sales engine - but they do not just need good data to facilitate the investment sale and follow-on client reporting, they all need readily accessible good quality, flow data to understand how their business is performing;
- Which funds are selling well, to what segment, to which region…?
- Early visibility of large institutional redemptions..?
- Which investor is moving assets, why…?
- Where are outflows coming from, which region, which product, which strategy…?
- Which regions are seeing an up-tick in sales…?
This often requires blending the flow data with the CRM system to provide actionable intelligence – this is what a COO of distribution requires - actionable intelligent data!
Filed under: Data Quality Tagged: accuracy, asset management, asset manager, assets under management, AUM, automation, back-office, consistency, control, data governance, data management, Data Quality, flows, fund management, inflows, investment management, outflows, oversight, redemptions, subscriptions
