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Savvy Investors Challenge Fee Billing Processes

Investors are getting smarter, and their changing needs and expectations are having a notable impact on the requirements of the technological infrastructure that asset managers rely on to accurately handle their investments.

A fragile economy and market volatility are making investors increasingly goal objective, pushing them to seek ever more value from their investments. They are looking at the costs and fees related to investment products and advisory services and demanding transparency into charges. As a result, investors are shopping around and evaluating both the firms to invest with as well as the products, to identify how they can cut costs and add more value to their portfolios.

Now that an array of choices is available, standard and stale product offerings don’t appeal as much to these savvy investors. In addition to this, investors now expect a more personalised service – asset managers cannot stay competitive with a one-size-fits-all approach.  The ability to offer innovative products and individualised advice is central to attracting and retaining clients, and the ability to evaluate and accurately bill for diverse portfolios is requisite to maximizing revenue for investment firms.

There is little value to be gained from ‘lazy’, less complex, investments, driving the most ambitious investors to invest across a range of products, including cross border. This then requires firms to have a fee billing structure in place that is able to handle diverse asset classes and currencies, in multiple languages, to support asset managers who are faced with making increasingly complex calculations based on a widening range of fluctuating data, from fixed management fees to fees that incorporate performance based calculations.

The only way for financial institutions to cope with the bespoke needs of savvier investors is for them to respond by offering a customized investment experience. This requires the flexibility to offer and support a wide array of products and pricing structures. Firms’ ability to thrive in this competitive and complex environment moving forward will therefore be underpinned by an effective billing service, necessitating the replacement of manual spreadsheets with automated processes. Having centralised technology to manage all assets and pricing structures will help investment managers respond to investors’ demands for transparency, and make it easy to understand exactly how and what they are being charged, in multiple timeframes. Automation will also reduce revenue leakage to investment firms caused by missed billings. So, from the investor and investment firm perspectives, the only sustainable model is one in which automated processes facilitate product diversity and operational efficiency. This will enable investment firms to focus resources on what is most important –their clients.


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