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REDEFINING INVESTMENT
RECONCILIATION FOR ASSET MANAGERS
THE CLEARWATER WAY
Reconciliation |clearwateranalytics.com 1
hen it comes to managing clients’ portfolios, you depend on accurate and
timely investment data. It drives every trading decision you make—and
you need it daily.
However, the process for acquiring and processing this data—and making sure that it
is correct—can be unnecessarily difficult. Many firms discover that as they grow, the
investment accounting and trading systems they rely on have become outdated and
inefficient, and are unable to scale to meet greater data and organizational demands.
Because there’s more data to manage, and less time to verify its accuracy, it’s
essential that your portfolio accounting system is producing trustworthy and
accurate data, and that it can scale as you win new mandates or expand to
new markets.
Reconciliation is a critical step in confirming that accounting values are correct
before they end up in your trading and accounting systems. However, while some
reconciliation is better than none, not all reconciliation processes and solutions are
created equal. In fact, many reconciliation processes and systems can’t deliver the
accurate and timely investment data you really need. They’re infrequent, incomplete,
and prone to error.
Clearwater’s web-based investment accounting and reporting solution takes
reconciliation to a whole new level. With Clearwater, reconciliation is daily, detailed,
and accurate. This frees internal staff to focus on more important tasks, and frees the
firm to explore new opportunities.
Learn more about the key reasons why legacy reconciliation solutions and processes
don’t meet your data management needs, and the key reasons why Clearwater’s
reconciliation does.
“With Clearwater, we can focus on strategy, and not
on reconciling numbers. Clearwater lets us focus on
making sure the client is in the driver’s seat and making sure
that we give the client what the client needs.”
William Dalziel
PartnerLondon & Capital
W
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1. Hard to Get Data
Getting the data you need for portfolio management
and reporting gets more difficult as your firm grows.
While some of the position, security master, and transaction data
you need is automatically aggregated and fed into your accounting,
reconciliation, and trading systems, you’re still tracking down
data from multiple custodians and systems and manually entering
it into software or spreadsheets. Manual activity shouldn’t be a
part of everyday data acquisition processes that produce critical
portfolio information. It’s infrequent, incomplete, error-prone, and
ties up your operations team when they could be focused on more
important, strategic work.
2. Hard to Compare
and Validate Data
Every day, you work with transaction data from three
sources: your trading system, custodians, and your investment
accounting system. The problem is, it arrives in different formats
and the values often don’t match. The process for comparing each
of these sources and merging them with security master data
every day is challenging and time-consuming. While there is some
consistency and crossover, and while some systems automate
the aggregation and validation of data from all three sources, the
process is rarely seamless and straightforward. As a result, your
operations team is forced to spend valuable time and energy
aligning mismatched data.
3. Shallow and Infrequent
Data Processing
As organizations grow, so does the amount of time
their operations teams spend collecting and reconciling portfolio
data. Faced with this reality, many firms feel compelled to reconcile
only the cash, position, and transaction data that is absolutely
necessary for core trading purposes. Some firms even choose to just
reconcile cash balances. The reconciliation of other vital accounting
data—including income, amortization, yield, market value,
factors, corporate actions, late payments, and more—is often only
performed weekly or monthly. By delaying the reconciliation of this
important data, asset managers have an incomplete picture of their
clients’ portfolios, which can lead to potential trading risk.
4. Cumbersome Exception
Resolution Management
As part of their regular reconciliation processes,
many asset managers manually track and resolve exceptions and
data discrepancies in separate spreadsheets or databases, and are
forced to investigate these exceptions on their own. As firms grow,
so too does the volume of exceptions their operations teams are
typically forced to examine. There’s more extraneous data to sift
through, leading to more “noise” than ever before. Tracking and
resolving reconciliation exceptions can be a time-consuming
challenge for already overloaded teams. It’s up to internal staff to
consult third-party sources or work with custody banks to identify
and resolve any incorrect values in the system.
5. Not Scalable
Outdated reconciliation systems inhibit asset
managers’ ability to take on new business or
explore new investment strategies on their clients’ behalf. Firms
need modern systems that can streamline data management
to effortlessly accommodate new mandates and investment
approaches without taxing internal staff or processes. Asset
managers operate on a daily cycle, and for a well-oiled firm, having
up-to-date, accurate cash, position, and transaction data at the start
of every trading day is essential. However, for many firms, the effort
to prepare this data can be overwhelming, and can ultimately stand
in the way of long-term growth. While operations staff can take on
more data management tasks, develop temporary workarounds,
bolt on additional software solutions, or even hire additional staff,
these are ultimately short-term fixes that don’t solve your core
scalability challenges, and can actually make things worse in the
long run.
Outdated systems inhibit your ability to take on new business or explore new investment
strategies on your clients’ behalf.5 Key Reasons Why They Fall Short
Legacy Reconciliation Processes
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1. Automated and Managed
Data Acquisition
Clearwater has streamlined the entire data
management process. It is efficient, accurate, and wholly managed
by a team committed to your firm’s success. Wherever your clients’
assets are custodied, the powerful Clearwater solution automatically
extracts holdings data from hundreds of separate financial
institutions daily. The position, security master, and transaction
data you need is automatically aggregated and fed into Clearwater’s
reconciliation, accounting, and reporting solution. With Clearwater,
you’ll spend zero time tracking down hard-to-find data from
disparate locations. Errors caused by mis-keying information are
eliminated and your operations team is freed up to work on other
important tasks.
2. Automated and Managed
Data Validation
Clearwater’s solution identifies the most accurate
investment data by comparing and validating information
generated from your trading, custody, and investment accounting
systems. This streamlined process automatically reconciles
investment data, even if it arrives in different forms and formats.
Not only does Clearwater’s solution provide accurate cash, position,
and transaction-level details, it enriches this with leading third-
party sources to build a complete profile of the data you need.
The security master is fully formed, analyzed extensively, and
contains all the data necessary for Clearwater’s core reconciliation,
accounting, and reporting processes—all without your operations
team ever needing to manually intervene.
3. Thorough, Daily
Data Processing
Many reconciliation and processing systems
simply match daily trades and transactions to a custody source.
Clearwater takes reconciliation to a whole new level. Not only is the
Asset managers need modern systems that can streamline data management processes to accommodate new mandates
and investment strategies without taxing internal staff.5 Key Reasons Why It Is Superior
Clearwater’s Reconciliation Process
reconciliation thorough, it’s daily. Once we’ve connected with your
trading system and safekeeping institutions, we process transactions
plus the vital data that you need for trading and core accounting
purposes, such as income, amortization, yield, position, market
value, factors, corporate actions, late payments, and more, every
single day. You gain immediate access to the information you need
for daily trading, and a clearer vision of your clients’ portfolios.
4. Streamlined, Painless
Exception Resolution
Clearwater’s software-as-a-service (SaaS) technology
streamlines the exception resolution process. Clearwater
automatically reconciles cash, positions, and transactions in all your
portfolios. Any exceptions that the solution cannot reconcile are
flagged and individually investigated by experts dedicated to your
account, with no burden on your employees. Clearwater identifies
the true issues, not the numerous false positives that can hinder
your access to accurate and timely investment data. Clearwater
removes the noise, and lets you focus on what really matters.
Exceptions are resolved quickly and accurately, and you gain time to
devote to more important tasks.
5. True Scalability
By streamlining the entire data management
process, Clearwater enables your firm to easily
scale. From an operational perspective, this allows you to
take on additional portfolios without adding new processes
or staff. From a relationship management perspective, this
lets you support your clients in a much more meaningful
way. And from a strategic perspective, this frees up your
firm to consider new investment types and areas of growth.
Clearwater’s scalable reconciliation, accounting, and reporting
solution allows you to focus on what you do best, giving
your organization a key advantage in a highly complex and
competitive environment. Clearwater enables true scalability
for today’s—and tomorrow’s—data management challenges.
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Problem Implication
1. Hard to
Get Data
Because your data management system is based—
at least in part—on manual processes, getting
the data you need for portfolio management and
reporting gets harder as your firm grows.
Tracking down data from multiple sources and
manually entering it into accounting, reconciliation,
and trading systems increases the potential for error.
2. Hard to
Compare and
Validate Data
The process of comparing data from your trading
system, custodian, and investment accounting
system—and merging this with security master data
every day—is inefficient and time-consuming.
Your operations team is forced to spend valuable time
and energy aligning mismatched data.
3. Shallow and
Infrequent
Data Processing
As your organization grows, so does the amount of
time your operations team spends collecting and
reconciling portfolio data. You only have time to
reconcile essential data each day.
The reconciliation of data necessary for core
accounting and trading is shallow and infrequent,
leaving you with an incomplete picture of
your portfolios.
4. Cumbersome
Exception
Tracking
As your firm grows, so too does the volume of
exceptions your operations team is forced to
investigate. There’s more extraneous data to sift
through, leading to more noise than ever before.
It’s up to your already overloaded operations team
to consult third-party sources or work with custody
banks to identify and resolve any incorrect values in
your system.
5. Not Scalable Over time, your ability to scale has decreased as
your organization has grown.
Legacy solutions inhibit your ability to take on
new business or explore new mandates and
investment strategies.
Solution Benefit
1. Automated and
Managed Data
Acquisition
Clearwater has streamlined the entire data management
process. It is efficient, accurate, and wholly managed by
a support team committed to your success.
You spend zero time tracking down
hard-to-find data from disparate locations. Your
operations team is freed up to work on other
important tasks.
2. Automated
and Managed
Data Validation
Clearwater’s solution identifies the most accurate
investment data by comparing and validating
information generated from your trading, custody, and
investment accounting systems.
Trading and accounting data is fully formed, analyzed
extensively, and contains all the data necessary for
in-depth reconciliation, accounting, and reporting.
3. Thorough,
Daily Data
Processing
Clearwater takes reconciliation to a whole new level.
Not only does it reconcile transactions and holdings, it
reconciles vital trading and core accounting data every
single day.
Gain immediate access to the information you
need for daily trading and a clearer vision of your
clients’ portfolios.
4. Streamlined,
Painless
Exception
Resolution
Clearwater’s SaaS solution streamlines the exception
resolution process. Exceptions that the system cannot
reconcile are flagged and individually investigated by
experts dedicated to your account.
Free your operations team to work on more
important tasks.
5. True Scalability Clearwater streamlines the entire data management
process, allowing your business to scale.
Take on additional portfolios without adding new
processes or staff, support your clients in a much
more meaningful way, and consider new investment
types and areas of growth.
The Reconciliation Process
Clearwater removes the noise, and lets you focus on
what really matters.
Legacy Reconciliation Processes
A Side-by-Side Comparison
| Reconciliation clearwateranalytics.com8
Automated Reconciliation Delivers Accurate and Timely Portfolio Data
Clearwater Analytics recognizes the problems inherent in traditional
reconciliation processes and has developed a better way. Clearwater’s
web-based investment accounting and reporting solution leverages the
power of technology and automation, deep industry knowledge, and
access to the very best data sources to create a reconciliation process
that provides asset managers with accurate and timely portfolio
accounting and trading data at their fingertips, when they need it.
When it comes to reconciliation, there’s
the legacy way, and then there’s
THE CLEARWATER WAY
©2015 Clearwater Analytics All rights reserved. This material is for informational purposes only. Clearwater makes no warranties, express or implied, in this summary. All technologies described herein are either registered trademarks or trademarks of their respective owners in the United States and/or other countries.03.2015
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