Empowering the Performance Team

Jeff Cullen, Principal Consultant and Vice President

Historically, performance measurement has been a discipline largely relegated to a supporting role within organizations both large and small, and performance teams have been responsible for what was primarily reactive and backward-looking analysis. Today, investment firms are, more than ever, looking to explore the possibilities of predictive and prescriptive analytics in helping to manage risk and improve performance. This requires an understanding of the consistency and quality of data across the firm, how to apply that data, and a skill in high-level analysis that spans across departments. It is no surprise that smart management teams have noticed that their performance teams are the nexus of exactly the type of data aggregation and skills best suited to unlocking this potential. At a recent discussion I took part in at TSAM Boston, one panelist noted: “Anything with a number attached to it is going to find its way to the performance team.”

That panel discussion, “Creating a Holistic Performance Measurement System”, focused on the nuances of these burgeoning capabilities. Joining me on the panel were performance executives from Aberdeen Asset Management and Acadian, while Bob Leaper, President of PanoVista.co, served as moderator. Sitting with these delegates was a great opportunity to gain insight from talented professionals in the discipline to which I have dedicated my career at Eagle.

The discussion ranged from the challenges facing asset managers as it relates to the deployment of multiple systems, to the methods and solutions that allow for a more comprehensive approach to performance measurement and risk reporting.

Performance teams are effectively the gate-keepers of business insights and understanding that can deliver a real competitive advantage to their organizations. But these teams need to be empowered to maximize their potential. Moreover, firms need to create an environment that frees up the performance team to focus on analytics. As one delegate stated: “I don’t want to be in the weeds; I want to be analyzing performance and adding value to my firm.”

To facilitate this shift towards value-adding analysis there are both institutional and technological factors that need to be addressed. Inevitably, data quality lies at the heart of performance measurement. As one delegate succinctly put it: “We can’t do our job without good data.” This has become more of a challenge as new asset classes and investment instruments have been introduced, translating into more data types and increased volume. Source data is also increasingly disparate and complex in nature, yet it still needs to be aggregated in order to gain a complete picture of performance and risk. Yet there is a solution for these growing concerns: With an exception-based framework in place across the organization, much of the error-prone duplicative work can be eliminated, freeing up time for the value-adding analysis. Fortunately, Eagle Performance offers this very type of holistic, exception-based solution.

Another challenge that was brought up repeatedly by both the panelists and the audience was the difficulty posed by the deployment of multiple performance systems. Often these systems perform ostensibly similar tasks, yet they can arrive at very different results. This increases misreporting, confusion and costs in addition to defying common sense in some respects. I posed the question whether we, as practitioners, should be so accepting of the common occurrence that our attribution systems, ex-post statistics, ex-ante systems and, inevitably, those pesky spreadsheets may all contain very different results for things that should in fact be equivalent.

“It’s not just that we operate three performance systems through outsourced providers; we also have a plethora of other systems for stats, ranking data and everything else,” one delegate replied. “It causes confusion because it can be hard for the performance teams to intuitively understand the different methodologies that go into each system.”

As data volumes grow and regulatory pressures mount, the profile of the performance team will only continue to grow within investment firms. Particularly as the focus moves to forward-looking capabilities that aid front-office decision-making, it will be essential to avoid the discordant collection of systems that some firms rely on.

Overall, the themes discussed most by the panelists and professionals in the room were the management and validation of data across the firm in a centralized manner, and the consolidation of many performance activities into the fewest possible number of systems. It is pleasing that we at Eagle have similarly identified these themes as key areas of focus. We have made and continue to make considerable investments to help managers grow assets efficiently through the deployment of our holistic, data-centric performance platform.

To find out more about Eagle’s performance solutions, please take this opportunity to read our PBOR whitepaper as well as other performance thought leadership pieces like this one on Eagle Exchange.

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