A Transformative Investment Management Operating Experience

[In the asset management world, legacy technology may get the job done but it is likely to be clunky, inefficient, creates more work, and unnecessarily puts a drain on business productivity in today’s world of fast-moving markets and modern technology. Unfortunately, legacy systems and operational processes have been so relied on, maintained, and ingrained into our way of doing things that fear, resistance, and skepticism raise havoc at the mere mention of change. It takes understanding and willingness to adopt a better way of doing things, to seek the rewards of a competitive edge, and to implement the right growth enhancing solutions.

For asset managers with multiple strategies and multiple wrappers of delivery to investors, such as private funds, registered funds, and separately managed accounts, there are typically multiple systems and separate operating platforms that accumulate or produce various securities data for each product structure, making it difficult and time-consuming to reconcile information, normalize data, and make timely portfolio investment decisions. Data management can be resource-costly and inefficient if not streamlined effectively through the use of modern technology.

Ultimus Fund Solutions – one of the largest independent fund administration and middle-office service providers in the United States – is an excellent case study on disrupting legacy administration technology and how it has evolved into a strategic technology partner for asset managers and RIAs. In recognition, the firm has won numerous client service, administrator of the year, and technology awards from organizations like Global Custodian, Fund Intelligence, Institutional Asset Manager, and NICSA.

Ultimus’ enterprise-wide services − a complete front, middle, and back-office servicing solution that provides asset managers with a one-stop shop for optimizing their investment data − are turning the heads of mid- and large-sized investment firms. The platform helps asset managers gain scalability, optimize operations, and leverage technology across their entire product line, including their registered funds, SMAs, and any hedge or private vehicles. 

We reached out to Jason Stevens, Chief Technology Officer, Paul Wahmann, SVP Head of Middle Office Services, and Steve Scaringe, SVP Business Development of Ultimus Fund Solutions to learn more about their latest advancements. We wanted to explore how they strategically partner with asset owners and managers in building a next-generation data management technology platform.]

Hortz: How were you able to design your technology to service concurrently mutual funds, private funds, and separately managed accounts? What changed from all these separate legacy systems that allowed you to do that?

Stevens: The solution, Ultimus’ uSUITE platform, leverages its unique data-driven ecosystem of application programming interfaces (APIs), robotic process automation (RPA), and machine learning to drive each of its proprietary applications. This in-house developed solution enables clients to leverage our single technology platform for comprehensive data and analytics, creating uniform reporting across their entire product set. 

Just as important, the integrated technology environment also provides one source of data for each security – a golden data/ security master – across an investment manager’s entire book of business whether that security is held in private funds, registered funds, or SMAs.

Hortz: Can you explain more fully what a golden data/security master is and how having one central master is key to this administrative innovation?

Wahmann:  From a recordkeeping perspective, a golden data master and a single investment accounting book of record, or IBOR, can be significant by providing a single, consistent view of securities data across the investment manager’s entire book of business. For example, a single security master will provide consistent accounting treatment and normalized data across all securities within the investment manager’s business lines. All security attributes, analytical data, valuation, and corporate action/income data would be housed as a single record or golden copy, thus eliminating reconciliation and unnecessary workflow processes to support multiple data sets in different systems.

Additionally, it can allow investment managers greater flexibility in managing their market data costs by eliminating redundant data interfaces from their market data vendors. In many cases, a single security master minimizes the need for multiple data sources across their securities databases.

Hortz: What are the key technology layers imperative to a successful centralized data solution?

Stevens: First, it is critical to have best-in-class systems that can accurately calculate, store, and manage data. At Ultimus, we thoroughly evaluate the underlying core systems that support our clients’ business. Accuracy and accessibility are key attributes when working with data.

Next, we require all core platforms and external data vendors to provide systematic access to the data via APIs. This allows us to seamlessly access the data with technology versus labor-intensive manual extracts. We use these APIs by connecting them with our proprietary uSUITE technology.

Finally, our various uSUITE applications systematically source the underlying data from across a range of platforms, normalize it, and perform the required calculations and analysis before making the refined and combined data sets available to our clients. This data can be accessible in many forms including data extracts, custom reports, and analytical dashboards to name a few. The overall system provides asset managers with a harmonized fund administration and middle office solution.

Hortz: What are the changes needed at the data management level to make this all happen?

Stevens: Systematic access to data via APIs is essential when dealing with multiple data sources and large data sets. This access allows the technology to perform the heavy work – extracting, normalizing, combining, and presenting the data. It becomes near impossible due to the amount of resources and cost to do this at scale without utilizing the proper technology.

It is also critical to verify that the data going into the underlying systems is accurate and reliable. The quality of output is determined by the quality of the source input. At Ultimus, we wrap technology around the data input stage (verifications, threshold checks, reconciliations, etc.) to confirm that the quality of the data going in is sound, resulting in equally accurate data coming out.

Hortz: Can you review the specific benefits this new enterprise-wide operating system provides?

Scaringe: Benefits are two-fold including benefits for the asset manager and benefits for the investors.

From the Portfolio Manager Experience:

• It establishes one single-sourced service provider to manage all administration operations for their suite of products, eliminating the need to work with multiple vendors and/or teams
• Seamlessly delivers data to the investment management team in a consistent, aggregated, and normalized manner utilizing a single technology platform that allows for the integration of multiple source data systems
• Provides improved quality, timeliness, and efficiency of services received
• Reduces an asset manager’s overall risk since Ultimus actively manages the firm’s daily operations including data accessibility, reconciliation, and vendor management such as compliance and due diligence matters
• Supplies full connection to an asset manager’s custodian of choice for seamless, efficient, and accurate dissemination of reconciliation, trading, and transfer agent processes
• Provides a reduction in overall cost for administration as well as the ability to reallocate resources to better serve investors and shareholders

From the Investor Experience:

• It provides a customized and holistic experience
• Enables increased transparency into investment activity and performance metrics
• Offers real-time, direct access to reports and data
• Allows for an immersive experience to fund and account holdings

Hortz: How do these benefits specifically address the current needs of investment managers and what do you see that needs to come next?

Scaringe: Managers with increasing complexity, disparate data systems, and aging legacy reporting platforms could all benefit from a thorough review of their technology and potential implementation of an updated operating system. Also, managers still working off static reports with no access to real-time data are hindering their ability to make better investment decisions and provide key portfolio insights to their clients.

As far as what comes next, we would be remiss if we did not mention the power of machine learning and artificial intelligence. Empowering data management and reporting workflow with these tech components is likely the next key development in this space. Managers should have the ability to create customized reports on the fly, a situation in which analysts do not spend hours creating bar charts and graphs off of raw data. These tech components will help us get there.

Hortz: How can this operational innovation influence C-Level strategy decisions for investment managers?

Wahmann: First and foremost, a single data strategy and operating model can create efficiencies in their operational workflow across their organization, from their investment teams to marketing, operations/trading, client service, and compliance, resulting in direct cost savings in market data and technology costs, and additional reduction in headcount needed to support multiple environments or redeployment of resources to more beneficial functions.

Secondarily, a single firm-level book of record view of their business allows leadership to make broader business-based decisions on their investment and product strategy, while also providing supporting data to assist in driving their sales strategy through the use of centralized and consistent analytics.

Hortz: Any suggestions on how managers with legacy technology can make that jump to explore and edge into adoption of new systems and technologies?

Stevens: First, it is important to take inventory and assess your current technology to identify its limitations and inefficiencies, while at the same time understanding your data goals. Researching new technologies can be daunting, but taking the time to do this right helps you make the appropriate decisions aligned with your goals.

Systematic access to data is essential if you want to leverage technology on top of your underlying data sets. Most new technologies have API sets to accommodate this, but spending extra time to learn how this works is very beneficial. Once you have established goals and identified new technologies that meet your needs, it is equally important to develop a plan for a successful transition. Involve the team, provide proper training, and put the right tools in place to deliver accurate, reliable, and accessible data.

Yes, investing in technology may seem expensive and perhaps overwhelming. However, understanding your goals and being able to realize the benefits of efficiencies, scalability, and resource redeployment to more valuable tasks, make it an endeavor worth pursuing. Plus engaging with a company with expertise can help alleviate the burden.

At Ultimus, we take a very consultative approach to our clients’ needs, especially when they are exploring new operating systems or wanting to gain efficiencies with technology. We work closely with each client to understand their goals and objectives before developing and implementing the right solution for their business.

This article was originally published here and is republished on Wealthtender with permission.

About the Author

Bill Hortz

Founder Institute for Innovation Development

Bill Hortz is an independent business consultant and Founder/Dean of the Institute for Innovation Development- a financial services business innovation platform and network. With over 30 years of experience in the financial services industry including expertise in sales/marketing/branding of asset management firms, as well as, creatively restructuring and developing internal/external sales and strategic account departments for 5 major financial firms, including OppenheimerFunds, Neuberger&Berman and Templeton Funds Distributors. His wide ranging experiences have led Bill to a strong belief, passion and advocation for strategic thinking, innovation creation and strategic account management as the nexus of business skills needed to address a business environment challenged by an accelerating rate of change.