Buy Side Seeks Back-Office Consolidation

Terry Flanagan

Fragmented technology and lack of data aggregation across the back office is impeding institutional asset managers’ capacity to respond to increased regulatory reporting and transparency requirements. This can also increase errors and costs and decrease efficiency and scalability.

Almost four out of five respondents (78%) reported that their firm uses multiple third-party solutions to support their back-office operations, according to a survey by Confluence, a provider of investment management reporting software.

Among firms that are using multiple back-office systems, respondents said consolidation would help to achieve higher operational efficiency through a common user interface (76%); streamline regulatory and investor reporting (55%); and reduce costs (48%).

“If you look at the market today, firms are using somewhere in the neighborhood of five, possibly even more different vendors to run return calculations and performance analytics,” said Paul Soltis, North American market manager at Confluence, a provider of investment management software. “Partly it is because they have one vendor that is doing their mutual funds returns, another doing SMA [separately-managed account] returns, another doing equity attributions, and another doing fixed income attributions. There hasn’t been a single system that supports the spectrum of activities.”

By expanding its Unity Performance system to support both returns and performance analytics across all asset classes, Confluence enables investment firms to manage enterprise-wide performance calculation, analysis and reporting from a single platform, Soltis said.

“We have expanded the types of asset management products for which we can now calculate a return whether it’s SMA, private mandate, mutual fund or variable annuity,” he said. “We have also added in all of the performance analytics explaining how the asset manager is delivering value. We have expanded ourselves out in both dimensions to provide a comprehensive solution for an asset manager across all classes.”

By eliminating multiple systems, the platform enables portfolio managers to measure and communicate how their investment decision processes have impacted customers’ investment results. “People don’t need five different vendors anymore,” Soltis said. “Consolidating with a single vendor across broad spectrum of activity helps promote operational efficiency.”

Featured image by treety/Dollar Photo Club

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