Taking Control of Your Investment Operations

Ravi Patel, Solution Specialist


Operating under cost pressures, reduced margins and tough competition, the manufacturing industry has constantly adopted lean operations to eliminate waste of resources and time. Adopting automated process governance across stock control to bill of materials & final packaging, provides an early diagnostic, helps eliminate defects and improves overall operational efficiency for manufacturers. Ultimately this helps them to control costs, meet quality standards, and maintain consistency and reliability of their end product

Lean operations in the manufacturing industry is an example that many Investment Managers could benefit from when it comes to their middle and back office operations. This understanding resonated well with the assembled crowd at TSAM London, where I presented Eagle’s Control Centre. My conversations with various delegates at TSAM confirmed that the reality for investment operations and accounting teams today is very different. Due to silos of disparate legacy systems, they are forced into adopting fragmented manual workflows, which are causing considerable data quality challenges and reconciliation overhead.

Resource intensive manual intervention such as ledger to sub-ledger reconciliation, NAV impact checklists, NAV reconciliation and market data variances regularly cause delays to the valuation process. The reactive nature of such manual workflows often reveals upstream data quality issues once valuations are calculated. Today, these issues are identified late in the process by performing in-depth root cause analysis, causing loss of productivity and often missed SLAs.

Not only are these processes labour intensive and serve to strain resources, they increase the risk of delivering inaccurate information. Regulators are increasingly taking a dim view of manual workflows and have emphasised their willingness to fine companies that still rely on manual record keeping, premised on the belief that this heightens the risk of delivering inaccurate daily valuations.

So how can investment managers achieve operational efficiency when it comes to producing valuations, while also ensuring the quality and accuracy of the sub-processes that go into the entire valuation process? The answer to this question can be found in the lean manufacturing operations example, as it directly relates to the process of producing fund or portfolio valuations. Make no mistake, automation and transparency are key.

It is far better to quality check individual components early in the process as they go into NAV production, so issues can be dealt with proactively as they arise. Such an approach delivers operational efficiencies, while streamlining processes and workflows to facilitate an efficient operating model; while also complying with the regulatory requirements throughout the process.

For instance, a car manufacturer does not setup its production line to build an automobile in its entirety and then conduct just one final road test upon completion to identify production faults. Quality control ensures there are proactive checks on each individual component as it’s introduced into the production process. This maximises the chances of isolating defective parts and being able to address them before they make their way into the production lines. This also minimises the risk of producing a faulty car that then needs to be stripped back until the defect is found, holding up production and wasting time in the process.

Eagle’s Control Centre has been designed based on these core lean operating principles. It automates investment operations while providing oversight and transparency over the valuation process via a real-time dashboard.

The application is configured with a rules-based process that flags exceptions using a “traffic light” monitoring system (see example below). In this way, users are able to proactively identify data exceptions and errors at a glance, as they occur at each stage of the process across the organisation.

In the image above, red identifies an issue, yellow a warning, and green indicates that tests have been applied and cleared.

Automated tolerance and threshold checks ensure users are only required to review legitimate issues, meaning they can quickly and accurately process more portfolios or funds in less time. With a centralised view of all processes in one place, operations supervisors and staff are able to make more informed decisions about where resources are needed to unclog bottlenecks and remove impediments to the efficient completion of the valuation cycle.

By using Control Centre, firms are able to meet the demanding operational due diligence requirements and increase team productivity. It also significantly reduces their day-to-day operational overhead, allowing users to focus on additional value add services.

Overall, by introducing an automated and manage by exception process, our clients are able to scale their business and grow AUM while achieving cost efficiencies at the same time.

One Response to Taking Control of Your Investment Operations
  1. alan.thureson

    Being able to quickly identify the exceptions is a great advantage! It enables you to focus the immediate attention needed to correct them and then continue with your daily workflow.

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