info@meradia.com
How Investment Management Firms Benefit from Engaging the Right Consultant
During an era when critical skills are in short-supply and valuable IT and business personnel spend most of their working hours in meetings, consultants can make the meaningful difference between a project’s success or failure. The right consultant brings diverse skills, broad perspectives and an understanding of both business and technology. In addition, consultants are best positioned to contribute in a way seldom possible by others since they can apply focus and attention to the task at hand – something that is difficult for full time employees to do when they are juggling competing demands and BAU tasks. This article:
• delves into business problems prevalent in many investment management firms, especially in vendor product evaluations and implementations;
• deals with how an outside consultant can play a significant, contributory role; and
• leverages a practical use case to demonstrate key benefits and tangible results delivered by a Meradia consultant who moved an almost failing project to a successful outcome.
by Jose R. Michaelraj, CIPM, Senior Consultant
Wealth Management Study: A Survey Prompted by the Radically Evolving Operating Environment
Meradia’s 2020 wealth management survey collates information from interviews with key executives in the industry. The participating firms range from small- to mid-size and specialize in wealth management and trust service and operations. The study surfaces how firms view market trends and potential future challenges and involves deep discussions about their internal operating models.
The final output is designed to give insight to the industry in the form of commentary rather than statistics, gauge how the market is feeling as well as how firms are managing their clients and businesses. The views are based on observations made by the executives who participated.
by Joshua B. Levitt, Principal
Targeted Demos Benefit Both Buyers & Vendors in the Selection Process – Whether They Are Conducted In-Person or Remotely
Typical vendor selection methodologies include consecutive steps made by the buying firm. Their first step is to consider an ‘anything is possible’ list of vendors before culling it to a short list of qualified vendors, followed by a robust and time-consuming RFP process. A few vendors will make it to the final steps which involve product demonstrations, or ‘demos.’ Even after all this effort and detailed qualitative analysis, a firm may have a difficulty selecting a single vendor and/or feel less-than-confident that their choice is unbiased and free of incorrect assumptions. By including live or remotely conducted targeted demos as the final step, firms are better able to evaluate vendors objectively.
by Christine (Tina) M. Madel, CFA, Principal
Client Reporting for Wealth Managers: Taming the Challenges of Bespoke Meeting Books
Wealth managers offer a variety of services for high net worth, ultra-high net worth and institutional clients. Their services may include investment advisory, portfolio management, administration and oversight of trusts, monitoring against investment policy statements, goals-based wealth planning, total net worth aggregation and management of gifts and grants for endowments and foundations.
For multi-service wealth managers, there are a multitude of challenges in efficiently preparing client meeting books. They can include exhibits relevant to some or all these services. Advisors and support staff compile data points from multiple sources in multiple formats to create a comprehensive book which often takes hours to produce the finished product for a single client meeting. Here within we address solutions to making client reporting more efficient while maintaining flexibility and a high standard of quality.
by Thomas E. Alex, PMP, Principal
Re-Engineering Karnosky-Singer: Utility, Versatility and Insight for Practical Multi-currency Management
In 1994, Denis S. Karnosky, Ph.D. and Brian D. Singer, CFA published a monograph entitled “Global Asset Management and Performance Attribution” (KS). They presented the idea that – due to the arbitrage known as interest rate parity – some contribution to the total return of a multi-currency portfolio is known, and ‘baked into’ a foreign-currency investment at the time it is made. Because this contribution is knowable and hedge-able, it should accrue to the currency market allocations of the manager – whether or not these are ultimately hedged.
While hugely influential among asset managers globally, these ideas remain largely unexploited in current performance practice. Though KS fully detail an attribution approach based on an expansion of the Brinson-Fachler method, and though this method is implemented in several commercially available performance systems – it is rarely adopted in the field.
We posit this circumstance to have arisen from several causes: misalignments between the paper’s formulation and practical investing reality, as well as inaccurate readings of, and consequently flawed implementations of the attribution method it sets out. We explore these causes in detail, and how they contribute to attribution results that fail to explain portfolio performance, obscuring the otherwise substantial value of KS’ central premise.
Finally, we develop a re-statement of KS that addresses those issues, producing an accurate decomposition of multi-currency effects that precisely explains the portfolio’s performance, while preserving the original paper’s essential insight. We go further to generalize this method and demonstrate its applicability to any investment attribution methodology.
by Mark R. David, CFA, Director of Performance, Risk and Analytics
What Exactly is a Performance Book of Record (PBOR) and Why is it Important to Next-Level Growth Across the Investment Management Industry?
The asset management industry comprises a diverse group of firms offering countless products, funds and investment vehicles that are traded in forever-evolving financial markets. There was a time when the trading book and accounting book differed by days or weeks and clients received reports quarterly. This is not acceptable for firms today that are facing the need for complex asset administration and daily reporting cycles. Whether a firm invests in public securities or private assets, each come with their own challenges including underlying exposures, lagged pricing or fair value impacts to elicit and compare to a variety of benchmarks.
Today, managers of all investment strategies are compiling massive amounts of daily data. Fund strategies, client holdings, return results and analytics combine to support actionable information for portfolio managers, investment boards, clients and regulatory bodies. Most asset management organizations that support this daily function call it a middle office, and the platform upon which it relies is best described as a Performance Book of Record (PBOR). This paper outlines why developing a reliable PBOR is essential for next-level growth of your investment management organization – growth driven by data and confidence from knowing your organization is taking advantage of all the informational assets it possesses.
by Richard E. Mailhos, Principal
Protect an Organizational Investment by Avoiding Common Mistakes During a System Conversion
Once an organization has decided on a new system, the conversion process follows. Large-scale system conversions are complex, time consuming and expensive; however, they are necessary for investment management companies to tackle sooner or later. Whether the system is a data management tool, portfolio accounting, performance, trading or reporting system, there are key steps an organization should take to ensure both a successful conversion and to avoid risks and pitfalls.
Each implementation is different, and many aspects come into play such as customization, resource availability, volume of data that needs to be converted and hardware requirements. Simply having a plan in place will not ensure success. This paper provides guidance on how to successfully navigate key aspects common to implementation projects.
by John E. Leavy, Principal
Spending Smart Instead of Spending Big: Maximizing Efficiency in Investment Management by Optimizing Legacy Architecture AND Integrating Agile Methodology
The investment management industry – which relies on efficient processes and interdependent digital technology platforms to remain competitive – must keep pace with the perpetual rapid changes to industry standards and requirements and the technology that governs them. The latest innovations could be in any number of arenas: business processes, machine learning, artificial intelligence or blockchain to name a few. Adopting change is compulsory – lions and tigers and bears, oh my! The variables for a firm to consider include:
* Identifying the current drivers to implement changes
* Choosing the ‘right’ next changes considering the drivers
* Optimizing the implementation of the changes by using Agile methodology
Enlisting qualified strategic consulting partners can be instrumental in successfully spending smart instead of spending big when firms seek to maximize their front-to-back efficiency.
by Joshua B. Levitt, Principal
RECENT THOUGHT LEADERSHIPS
4 Mistakes When Implementing a Data Catalog
...
Automation: Taking Back Control From Excel and Email Anarchy
...
Four Signs Your Firm Is Ready for a Consolidated Front-To-Back Solution
...
Market Data Contracts – Managing the Invisible Fence
...
How To Maximize Your Performance Through Collateral Management
...