Using managed services, and co-sourcing arrangements, will not be suitable for all fund managers. It will always depend on the individual manager’s circumstances: How new is the business? How big is the team? What are the long-term objectives?
Using managed services, and co-sourcing arrangements, will not be suitable for all fund managers. It will always depend on the individual manager’s circumstances: How new is the business? How big is the team? What are the long-term objectives?
There needs to be buy-in across the firm and once the decision has been made, the rationale for doing so needs to be clearly explained to investors; this is especially important if an investor is concerned about concentrating operational workflows with a single counterparty. To reassure both managers and investors, SS&C Advent is able to demonstrate that the data it holds on the Geneva platform is properly segregated and kept independent – i.e. that there is no overlap between fund administrator clients, and fund managers licencing Geneva.
For those who do decide to go down this path, however, the benefits can be numerous.
“We are really an extension of the client’s middle- and back-office, and we maintain the right level of separation at all times,” comments Nolan. “But there are occasions when you don’t need that separation, such as on product development of OMS and data management systems, investor systems; it’s in the best interests of both us and our clients that we are working and collaborating together to provide the best solutions.
“We have a huge ecosystem to support that collaboration. We have businesses including Geneva, Intralinks, Eze, and we all work collectively to ensure that ecosystem is working properly.”
As such, the SS&C Advent team focuses both on separation and collaboration to deliver the optimal user experience and assuage any fears over the single vendor model.
As well as guarding against data overlap, there are instances where clients utilise the Geneva platform for shadow reconciliation, overseeing a shadow investment book of records, or even sending statements out separately.
“On the investor side, I think investors may want to segregate some functions to different vendors, like the annual audit, but as we’ve highlighted within this report, funds are becoming more complex,” remarks Nerlekar. “As a result, investors need more integrated systems. I think the days of relying on investor accounting systems that are separate from portfolio accounting systems are over; both sides are too interconnected for investors to be relying on different vendors.”
Crucially, a ‘one stop shop’ model can help to significantly reduce the manager’s overall technology footprint and lower the cost burden. This is a key benefit for emerging managers as they seek to build successful businesses in today’s competitive marketplace. Keeping the team streamlined and focused only on performing core functions that are truly value-added, such as portfolio management, as opposed to hiring a full team of operations staff full-time, can make a lot of sense.
“And by using our co-sourcing arrangement, managers still get full access to the system to check everything is being done correctly,” asserts Nerlekar.
At any time, one can check the team’s progress, review, approve, and make comments, or share and view attachments. Also, with Geneva’s comprehensive dashboard views, managers have oversight into the entire process in a single screen showing a full audit trail of all processes from initiation to final approval.
“We have teams offshore with expertise across fund accounting, portfolio accounting and investor accounting – there’s no need for fund managers to hire middle- and back-office staff. If the manager becomes big enough two or three years down the line, and they want to build more of an internal operations team, they can choose to stop using our co-sourcing solution overnight,” concludes Nolan.
In summary
Technology is advancing at an incredible pace. So much so that it is now possible for managers to create a fully customisable user experience; one that strips away much of the operational complexity by automating the reconciliation and reporting functions across asset classes and multiple legal entities.
With greater accuracy and transparency, managers can not only provide reassurance to their investors, but also have more time to focus on the primary task of generating outperformance in their portfolio.
With the recent Greensill collapse, managers must ensure their accounting processes and workflows are underpinned with the best technology. Those seeking out investment opportunities in private credit and esoteric asset classes will thrive if they can maintain an accurate look-through on the inner workings of their portfolios.
Nicholas Nolan, Vice President, Solutions Consulting and Product Management
Nicholas primarily works with Hedge Funds, Asset Managers, and Fund Administrators as they evaluate new operating models for middle and back office technology and services. Areas of expertise include Complex Derivatives, Bank Loan/Credit and Debt processing, Reconciliation, and Asset Servicing. Prior to SS&C Advent, he worked at Fidelity Investments in Collateral Risk Management. He is a graduate of Columbia University and currently lives in New York City with his wife and two children.
Aani Nerlekar, Senior Director, Solutions Consulting
Aani joined SS&C Advent in 2011 and is based in San Francisco. He brings a wealth of hands-on experience to the team, working closely with prospects in understanding their business needs, as well as functional and technical requirements around the front, middle, and back office. Aani is part of the Solutions Management team, working with Product Development on prioritising the roadmap, and assisting with the design of new features.
