Equilibrium of front office efficiency and control is important to avoid risks and losses. But the raison d’être of portfolio managers and traders alike is ultimately to grow assets and make money for the firm. How can front-office staff be effectively supported in this quest while keeping regulators satisfied and being compliant?

The truth is that inefficient and uncompetitive investment processes are not just a result of burdensome regulation and excessive investor due diligence requirements, but predominantly because of outdated and old-fashioned processes and systems. Middle and back office staff may not be motivated to improve the processes that keep them in work.  There is still much of a “we’ve always done it this way” attitude. Senior executives will typically only see a rationale for making changes and replacing systems if there are significant operational changes, such as winning a large mandate or making an acquisition. 

As a result, it is the front office ‘rain makers’ who suffer the consequences of inefficient manual pre and post-trade compliance, telephone dealing and time-consuming manual reconciliation from spreadsheets and terminals to trading systems/ledgers.

At the same time, their investors will expect them to supply a “bespoke service” which includes customized reports taking into account their risk profiles, investment strategy and trading restrictions. In addition to this, the asset manager’s executive layer expects ad-hoc as well as monthly reporting for management purposes.

Naturally in large part, client services and marketing take care of formatting such reports. Yet how often do portfolio managers check these PDFs only to find that numbers have been swapped, performance figures copied in the wrong place and benchmarks taken from other fund factsheets?

As a matter of fact, operational inefficiency creates operational and reputation risk and wastes the time of highly skilled staff and thus the money of investors. With the additional ‘best execution’ requirements of MiFID II, the record-keeping needs necessitated by more formalized KYC requirements and the equity markets moving up, this is the worst time for firms to be bogged down with reconciliation, manual reporting and manual rebalancing.

With one integrated portfolio management system in place, all these actions can be processed straight through with a few clicks of the button, and as important with full audit trail. After all, if your investment strategy is paying off and you are signing up new clients, the last thing you want to tell them is that their mandate will take a week to implement and that you are struggling to meet their requests for well-defined, transparent reporting, performance updates, monthly ‘risk reports’ and periodic management calls. This ensures that you have position-level transparency required by investors from their fund managers both before AND after they invest– giving you efficiency and control.