For investment operations managers, performance reporting is where the rubber meets the road.
It's the tangible results of the firm’s investment decisions, and these results will be shared with their client.
High-quality performance reports are key to maintaining client trust... and your own peace of mind!
Below are the best practices for making sure what ends up on your client reports from your portfolio accounting system is both pristine and accurate.
The portfolio manager is the best source for understanding expected performance. They select the securities driving most of the returns.
Before generating reports, discuss anticipated performance relative to the benchmark with the portfolio manager. This provides a good estimate of the IRR for the period.
This proactive step saves you from scrambling later when the PM says, "the performance looks wrong." You can investigate potential discrepancies during the reporting process and clearly communicate any differences to the portfolio manager.
Unfortunately, not all portfolio accounting systems have robust tools for data accuracy.
Millions of data points exist within these systems, and even a single error can erode trust if it reaches a client's report.
There are two approaches you can take: you can 1) build the system yourself or 2) partner with a firm like Empaxis that provides investment managers with the QA reporting tools they need.
If developing your own QA system isn't feasible, partner with investment performance reporting and quality assurance experts like Empaxis.
Our proprietary QA system, custom-designed for investment performance reporting, enables:
Empaxis QA systems integrate with your existing software and data sets, configured to track quality according to your specific definitions.
Data coming in from custodians arrives at different times based on when the custodian delivers it.
Batch your work by the availability of the statements. Some custodians provide statements earlier in the month than others. Establish reporting delivery dates based around the availability of these statements.
For example, use the 5th, 7th and 15th business days. This allows you to get out the reports for the clients with accounts at the early custodians earlier and later ones later. This also sets expectations internally about when to expect the reports to be ready.
Many operations managers avoid hard commitments. However, at Empaxis, we believe commitments drive better service and provide benchmarks for comparison.
Even without set client delivery times, establish internal deadlines and track your adherence. As Peter Drucker said, "You can't manage what you don't measure."
Measuring back-office performance against service levels can motivate your team. You can compare performance month-over-month or quarter-over-quarter. In today's remote/hybrid work environments, employee engagement is vital. Regular communication and performance tracking are key.
Measuring on-time performance, turnaround time, and error rates reveals your consistency. High variability in processing likely indicates an inconsistent client experience.
Performance reporting usually happens on a quarterly basis. Get it wrong only 1 quarter and your “grade” goes from an A+ (100%) to a C (75%).
If you only have one person who can do this job well, that is a lot of risk to not being able to successfully deliver come reporting time. You need to train and test multiple backups who can do the work.
The key is testing. If you train someone today and then don’t have them do the process for 6 months, is it rational to think they will flawlessly?
Have your people swap reporting assignments every other quarter. Ideally you have a team where anyone can perform at the level of the primary person responsible for the account.
People leave, get sick, get married, go on vacation – some of these you can control, most you can’t. Do not let absenteeism adversely affect your most important deliverable.
If finding and training backups takes too much time, then it is worth looking at performance reporting specialists like Empaxis, who have the technology and backup resources to ensure reports get done accurately.
The investment management industry is changing rapidly, and making use of technology is key to staying ahead. Embrace automation and integration to streamline your performance reporting processes.
Reduce manual effort and errors by automating the collection and validation of data from various sources.
Connect your portfolio accounting system with other critical systems, such as your CRM or data warehouse, to ensure data consistency and accessibility.
Cloud-based reporting tools offer scalability, flexibility, and real-time access to data, enabling you to generate reports quickly and efficiently.
For operations managers, providing clients and internal staff high quality performance reports is an essential part of their job responsibilities.
It can be a high stress part of the work since there are a lot of people who are looking over the information, and having the right technology and a reliable and qualified team to run the reports goes a long way.
Following these best practices will help you to produce a high quality result and perform more consistently.
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