September 12, 2013
“We expect firms to have devised adequate contingency plans which are viable, robust and realistic and set out a clearly defined exit strategy in the event of a termination of outsourced activity under any circumstances, including stressed market conditions.”
– Clive Adamson, Director of Supervision at the FSA, as it was then.
It has been 9 months since the FSA (now known as the Financial Conduct Authority or FCA) issued its “Dear CEO” letter regarding the “Review of Outsourcing Arrangements in the Asset Management Sector”. While the letter did not spell out specific time frames for asset managers to review their current contingency plans and address deficiencies, the letter did raise awareness to potential risks and encourages asset managers to develop and implement solutions as soon as possible.
The FSA’s concerns outlined in the letter have an underlying common thread focused on who is responsible to the end client. Even though the asset manager is outsourcing some or all of the middle-and-back office operational services, the fiduciary and regulatory responsibilities are in the hands of the asset management organization. They are accountable to their clients and must ensure clients are protected and continually serviced, in the event of a “severe disruption”.
So what is the best way to provide an adequate recovery and resolution strategy that has:
- an acceptable exit strategy, allowing a quick and efficient change in providers if needed, reducing dependency on a provider
- a strong disaster recovery solution, ensuring no matter what the reasons for the failure, clients can be serviced without interruption
- immunity to potential financial industry failures?
Many asset managers are finding a cost efficient solution, by using established systems such as SS&C PORTIA to shadow their accounts. Keeping a shadow book of records in-house creates an extra level of assurance and confidence for the asset manager and their clients. It gives the asset management organization the control over data and information should there be a failure of some sort on the part of the outsourcing provider. In addition, it goes a step beyond what the FCA is looking for, having a shadow book helps the organization verify that the information the provider is sending is accurate.
SS&C PORTIA provides asset managers the strong contingency solution they need:
- a shadow book of records that puts the asset manager in control of their data and reduces the dependencies on outsourcing providers
- an easy to maintain, fully functional accounting system so they can continue to service their clients should the outsourcing provider have some type of failure
- a quick implementation allowing asset managers the ability to address the FCA concerns without a strain on their resources
- a truly global system to support complex investment strategies
- a data agnostic solution that can take in information from any system and deliver information up and down stream
- an independent provider that is not part of a complex banking group, to limit risk should the financial markets fall into distress
Outsourcing is an important piece of an asset management organization’s business strategy. The cost and efficiency advantages provide a great benefit to companies of all sizes. But in the end, you can outsource some of the tasks but you cannot outsource your responsibility to your clients. That is what your organization is built on.
- Paul Yarnell, Regional Business Development Manager, EMEA
August 7, 2013
Being in the asset management industry, we are all fully aware that investment management involves the storing and administration of extremely sensitive, high-value information. As threats to financial data and applications continue to evolve and become even more sophisticated, asset management organizations need to understand and implement the right combination of technologies to help mitigate the risks. These solutions can extend from the protection of user identities to the validation of transactions themselves. In looking at these risks, every organization needs to ask itself: “Do we have the right infrastructure and resources to balance security, usability and cost requirements?”
As your organization thinks about your current environment and whether your infrastructure truly protects your customers, there are some key areas to be considered:
- Reliability and Security: Is your office designed to store and protect mission-critical production servers? Do you have fire protection, biometric security, 24/7 monitoring, and redundant Internet connections? What happens in the event of theft, tornado, power blackout, fire, water damage, and Internet connection problems?
- Maintenance: Who is maintaining your server and software? What nightly and weekly maintenance is being performed on your database? Do you have a full-time systems administrator that keeps up on the latest software patches and upgrades?
- Cost: Purchasing, maintaining, and upgrading your own hardware and software can be very expensive. Facilities management can double in cost if your environment is not configured for growth and redundancy. Are you taking advantage of the latest virtual technology? Can your underlying applications be replicated in real time between redundant sites so that they can resolve requests at any site at any time, ensuring that data is current?
As we discuss these issues with clients and prospects alike, more and more asset managers are coming to the conclusion that outsourcing the facilities management of their operations allows them to focus their resources and effort on what they do best, managing money and building customer relationships.
By outsourcing these functions to a service provider who primary business is software and operational services, organizations can be assured that there is a dedicated team comprised of certified product and database experts who are available to maximize the performance of their middle-to- back office operations.
SS&C PORTIA has been in the outsourcing industry for over 15 years and in the investment management software solutions industry for over 25 years. This experience allows us to understand the unique needs of all our clients and work directly with them to determine the areas where they can benefit most from our outsourcing solutions.
Our services provide our clients with:
- Physical and environmental security with problem management controls certified under Service Organization Control (SOC 1) in accordance with SSAE No. 16 and the ISAE 3402. A best-of-breed infrastructure with redundant generators, cooling systems and fire suppression systems, ensuring the reliability and security of customer data.
- Full time, experienced database administrators (DBA) who possess the expertise needed to keep databases running smoothly and direct access to the technical resources of the Product and Development teams, allowing clients to concentrate on critical operational activities without increasing workload or size of your IT staff.
- State of the art data center facilities which utilize VMware’s superior virtualization technology providing increased reliability and availability. This technology allows for near real-time replication of all data, allowing data to be easily backed up and recovered quickly to eliminate down-time in the case of a disaster. In addition, the virtual technology creates a flexible and scalable environment that allows clients to efficiently grow without impacting their operations or infrastructure.
As a leader in hosting services, we have maximized economies of scale to provide the most cost efficient and reliable services to our clients.
PORTIA’s Outsourcing Solutions provides complete, data-centric protection for the most critical areas of financial service environments, enabling customers to securely implement new business while effectively managing risk and achieving regulatory compliance.
- Edwin Gaines, Director, Technical Managed Services
We are pleased to announce that PORTIA is live on SS&C’s Investment Intelligence Solution (click here to see recent press release).
For investment managers, getting the data they need, when they need it, is essential to making smart and timely decisions. SS&C Investment Intelligence enables users to turn data into actionable insights by aggregating information from multiple systems, providing easy to use tools for analyzing data, and enabling access to reliable information.
Now that PORTIA is connected to this platform, firms can combine the investment information from PORTIA with pertinent data from other sources and deliver it in a customizable format to address the unique needs of all types of users.
The combination of PORTIA and SS&C Investment Intelligence:
- Provides easy, consolidated access to financial information from PORTIA, other SS&C products and third-party solutions
- Delivers customized and dynamic dashboards that convert raw data into clean and customizable visual insights
- Optimizes your business intelligence for browsers and mobile devices, providing access to reliable data anytime, anywhere
Click here to view a video demonstrating the power of PORTIA and SS&C Investment Intelligence.
Contact us to learn more about how PORTIA solutions are helping investment managers around the globe increase operational efficiency throughout their organization.
May 30, 2013
Today’s markets offer great challenges to asset managers, pension funds, wealth managers and other types of investment firms. Companies need to focus on strategic initiatives, while challenged with resource constraints, margin pressure and mandates to reduce fixed costs. To help address these challenges, many firms are choosing to partner with an outsourcing provider to run the “non-strategic” parts of their business.
Integrating an outsourcing solution into your overall IT strategy allows your organization to:
- Contain middle and back office costs, particularly for technology infrastructure, and tie cost to variations in revenues and volumes
- Gain access to external knowledge, expertise and talent
- More effectively manage and distribute operational risk
- Successfully utilize more sophisticated technology
- Achieve the flexibility to address ever-changing client needs while also meeting regulatory requirements
- Focus on traditional core client-facing strengths
As your organization begins to analyze whether an outsourcing solution is right for you, there are a number of decisions you will need to think about such as:
- Why should we outsource?
- What do we want out of the relationship?
- How do we choose an outsourcing provider?
Thinking through these concepts before engaging with vendors helps ensure you pick the right solution to benefit your organization, but it can be overwhelming. To help you start the process, we invite you to download our whitepaper “Middle-to-Back Office Outsourcing: A Guide for Front-Line Strategic CFOs”
When choosing an outsourcing provider, it is critical to find a vendor with deep experience in financial technology, with firms similar to yours, and with a history of success offering outsourcing services. Investment firms should be skeptical of software vendors who only dabble in outsourcing – we advise against using vendors who lack consistent, independent outsourcing credentials and certifications (such a SSAE 16 Type 2 review), who rely on third-parties to provide services and infrastructure, or who are just launching outsourcing solutions.
SS&C PORTIA has been in the outsourcing industry for over 14 years and in the investment management software solutions industry for over 25 years. This experience allows us to understand the unique needs of all our clients and work directly with them to determine the areas where they can benefit most from our outsourcing solutions.
Contact us today to learn more about how PORTIA Outsourcing Services can help manage and service some or all of your middle-to-back office operations, enabling you to better allocate resources and control costs.
- Munther Haddad, Vice President, Global Implementation and Outsourcing Services
April 10, 2013
We are pleased to announce the newest release of PORTIA, the industry’s most trusted accounting solution. This release changes the paradigm of traditional systems by bringing the information users need most to the forefront of their workspace, simplifying activities by providing immediate visiblity into tasks that need to be completed. To review the official press release, please click here.
Developed in collaboration with PORTIA’s diverse and global client base, this latest software release combines the deep functionality PORTIA is known for with an intuitive interface that allows operations teams to make smarter decisions and reduce risk.
The easy to use, customizable interface enhances the way PORTIA users access information and conduct day-to-day tasks by presenting views that alert them to data issues, processing requirements and other activities that need attention. Each user can customize their work space so that the functions used most can be quickly launched, allowing them to work more efficiently.
This latest release is part of PORTIA’s expanded software development plans under SS&C, which will provide clients with numerous releases that enhance workflows, expand functionality and take advantage of new technologies so that PORTIA continues to help its clients enhance operational processes and improve efficiency.
We invite you to learn more about our latest version by visiting our website to download a factsheet and view a short video of all the new features, or contact us to learn more about the advantages of partnering with SS&C PORTIA.
March 26, 2013
“The long-awaited final Foreign Account Tax Compliance Act (FATCA) regulations have arrived and while much analysis still needs to be done, the US Department of Treasury and the Internal Revenue Service (IRS) provided welcome relief on a number of key issues for the asset management industry.
That being said, significant implementation challenges still remain for the asset management industry and substantial work must be undertaken through the course of 2013 in order for asset managers to be compliant by January 1, 2014. Failure to undertake the necessary tasks in 2013 could expose investment managers to a variety of business and investor relation risks.” – PwC, Global IRW Newsbrief, Feb 6, 2013 – read full brief here.
On January 17th, 2013, the US Department of Treasury and the IRS published the final version of the Foreign Account Tax Compliance Act (FATCA). Even though the regulations were delayed from their original timeline, the January 1st, 2014 effective date is now approaching and asset management firms need to prepare.
FATCA’s reach is one of the broadest of all regulations. The legislation applies to any entity which has U.S. clients on its books (with account limit thresholds), including banks, investment managers, custody banks, etc. It was passed into law in order to compel foreign financial institutions to disclose U.S. account holders’ information to the IRS. It is intended to increase transparency for the IRS with respect to U.S. persons that may be earning income through non-U.S. institutions.
Within asset management organizations, the impact of FATCA is just as far reaching – from the on-boarding of clients (and Know Your Customer rules) all the way through back office operations and associated systems. Financial firms need to be working throughout their organization to make the necessary changes to policies and procedures and preparing their systems to assist in adhering to new legislation in a timely and efficient manner.
At PORTIA, we have been monitoring the regulations and requirements as they evolved, and have published a paper to help our clients understand the main provisions of FATCA and the reporting requirements this legislation will involve. The paper also provides suggestions on how PORTIA can be configured to store and report on the information needed for FATCA. (Current PORTIA clients can click here to access the paper from the PORTIA Client Service Portal.) With PORTIA’s data management and reporting flexibility, our clients have the ability to report on the information necessary to adhere to the FATCA regulations, without any new releases or versions being implemented.
In addition to the FATCA paper, we also offer our clients a service specifically designed to help them address FATCA regulations, where we:
- Assist in the identification and storage of key data items
- Identify best practices for data storage and usage
- Create reports that capture FATCA holdings and transaction information
- Calculate withholding amounts on qualifying transactions
The work to be done to comply with FATCA will impact every aspect of asset management organizations. Companies and their end-clients will benefit greatly from a full understanding of this regulation and how it affects the organization, coupled with a comprehensive plan of what processes, procedures and systems need to be addressed to fully comply.
- Rosemary Cook, Project Manager/Product Consultant
As I reviewed the results of the latest Spaulding Group survey of investment managers and financial advisory firms around the globe, I was surprised to see that while 78 percent of the firms claim compliance, that number actually represents a drop of nearly 4 percent between 2009 and 2012.
Why would this number decrease in a tough competitive environment, where clients are demanding transparency and compliance to the global standards is viewed as a competitive advantage? There are a few hypotheses but the most common reason is perceived cost. The survey suggests investment firms spend an average of $61,000 for GIPS verification. In the unstable economic period of 2009 -2012, where firms were monitoring and managing margins very carefully, the cost to the companies may have outweighed the advantages.
But, as you read deeper into the survey, it also discusses forward trends in GIPS compliance. In contrast to the decrease in firms that are compliant, the survey revealed an upward trend in firms that plan to verify GIPS compliance in the future. This echoes what we hear from our clients and prospects. As GIPS standards become more widely accepted and commercially known they are becoming a “must-have” stamp for investors and consultants. As global asset managers of all sizes vie for the same piece of the market, GIPS compliance is a growing factor in keeping current clients and gaining new ones.
For an asset management firm to claim GIPS compliance there are a number of factors involved – one key piece is having the right performance measurement tools. At SS&C PORTIA, our clients use PORTIA Perform, a performance and attribution platform to compile, calculate and present performance information effectively and accurately, and with the transparency required by GIPS and regulators to ensure compliance.
- Michael Savage, Product Manager
January 17, 2013
The discussion of corporate actions processing as a “pain point” for financial services (FS) back-office operations has been an on-going conversation. We even blogged about it a few years back (see blog here) where we noted a Security Technology Monitor article titled “5 Top Data Nightmares of 2011” named “Correctly Notifying Investors of Corporate Actions” as #3. The issues seem to heat up and have a lot of buzz but then die down and gets put on the back burner, until now, maybe…
In a recent Bobsguide blog (Evolving Corporate Actions: The Drivers of Transformation), it is suggested that a confluence of events may be the push FS firms need to address the increasing risk around corporate actions. The blog points to three drivers of the change; increased event complexity, enhanced scrutiny of risk and the change in the consumption of information.
As the industry engages in more complex and global investment options, the complexity of the corporate actions grows with it. FS organizations are responsible for gathering the information, properly processing it and disseminating it to their shareholders and throughout their organization in an efficient manner. Keeping on top of the events and understanding the intricacy of how to process and apply the actions is a nearly impossible task. Couple that with the fact that in many organizations much of this is still done manually and you have a recipe for a processing nightmare.
In addition, a stricter regulatory environment and an increased push for transparency are putting added pressure on every FS firm. Investors, compliance officers and regulators alike are reviewing and monitoring the risk associated with all types of transactions. Corporate actions are being particularly scrutinized due to the effect they can have on liquidity and trading decisions. It is imperative that the event information is both timely and accurate to avoid large risk exposure and costly mistakes.
The last driver, changing consumption patterns of the data is, in my opinion, what will prompt change more than anything else. As the blog suggests, the front-office is becoming more attuned to and scrutinizing the implications of events and the affect they have on their portfolios. Their customers are expecting accuracy and reassurance that their portfolios are being monitored and actively managed. Customers today, still feeling the sting of the 2008 financial crisis, are pushing more to understand risks associated with their investments. This is driving the need for more transparency and making any mistakes in processing more apparent and costly to firms (in both a monetary sense as well as in reputation and image). The demand from the end-client and the front-office will drive the transformation in the middle- and back-office.
While the customer push will be the primary driver, all of the factors noted are forcing companies to rethink their corporate action processes and put proper controls in place to get the needed information disseminated throughout the organization. At PORTIA we consistently monitor the changing nature of corporate action events and processes and continually incorporate the changes into our software solutions. We have made a significant investment in our Corporate Actions functionality to ensure our clients can reduce the time and risk associated with the manual entry and processing of corporate actions events. Our solutions offer a centralized corporate actions workflow, flexible processing solutions and automated feeds to the providers our clients work with, to drive efficiency in the processes. Automating the back-office and creating accurate data allows our clients to feed reliable information to their front-office and to the end-client in a timely manner providing the insight needed to make informed investment decisions.
- Claudine Martin, Product Marketing
September 5, 2012
A recent Harvard Business Review (HBR) blog post, Turning Customer Intelligence Into Information, provided an interesting look at the value of converting customer data into intelligence to drive innovative solutions. The post focuses on how Procter & Gamble, a huge global consumer-products company with thousands of brands, uses sophisticated anthropological approaches to anticipating customer needs. While this methodology for transforming customer information into game-changing innovation may be unique to P&G, the importance of customer information in fueling product development is immeasurable for all businesses in all industries.
The blog suggests three phases that can help companies “intertwine customer intelligence” into successful innovation:
- Discovery: to define the problem or issue
- Blueprint: to address the identified problem
- Iteratively test: to ensure the solution solves the issue and can be reliably delivered
While the article focuses on consumer products, we think the basic concept of gathering customer feedback throughout the development process is relevant for any business. At PORTIA, we gather client input for our development efforts through multiple touch points, such as our dedicated Client Operations Managers, a 24×7 support desk, on-line access to product experts and numerous client engagement programs. These touch points give us multiple avenues to gather and include customer feedback into our development process and help define our product roadmap.
Recently we began deeper and more directed client engagement process, similar to the phases the HBR blog presents, to ensure we are consistently exceeding our clients’ needs and expectations. After completing our divestiture to SS&C Technologies, we hosted a series of presentations focused on our strategic vision and product roadmap, engaging our client base in a conversation of the future of PORTIA. Following these presentations, we extended our “discovery” phase with an outreach program from our Product Management and Development teams. The PORTIA Product teams contacted over 50%of our clients around the globe and had general discussions about each client’s business needs and ways that PORTIA can better support them.
Our next step was to take this information and fine-tune our “blueprint” or roadmap to ensure we are addressing the issues and evolving needs of our client base and the industry in general. Specifically, we used the client feedback to confirm our vision or “blueprint” for each of our roadmap initiatives – solidifying the prioritization of features within a given theme and confirming the sequencing of projects across the roadmap. Building from this vision, we’re creating a set of detailed functional requirements to assess scope and determine which features will be delivered in each upcoming release. Client engagement will continue throughout the “iteratively test” phase to ensure that our detailed designs reflect client workflows and solve the business problems that were conveyed during “discovery”.
This process not only helps drive product development, but it also reinforces the value of strong client relationships and increases client satisfaction. It highlights that success is driven by partnership and collaboration, and that the comprehensive collection of information and expertise from internal and external resources is critical to our development efforts.
Clients know their needs best, and our job is to exceed those needs. We take what clients tell us, add it to what other users are saying, and marry that with our internal knowledge and research – this drives product development in a way that streamlines user workflows to increase efficiency and provides product features that support global operational and regulatory needs. All of this collaboration results in strong relationships and innovative products that help PORTIA clients differentiate themselves in an increasingly competitive business environment.
- Denise Ornell, Director of Product Development
May 30, 2012
In their recent blog, “Middle Office for The Middle” Citisoft discusses the trend of middle office outsourcing for mid-sized asset managers (“…those with approximately $20B-$100B AUM”). The blog was interesting in that it brings out the growing importance of the middle office and mirrors what we are hearing from the global asset management community. Traditionally, the middle and back office operations of asset managers have been grouped together and viewed as the “operational arm” of the business. But this view is changing as the middle office becomes a more strategic part of the organization, reporting to executives beyond operations, such as Chief Investment Officers and Chief Risk Officers.
We see various reasons for the growing trend; from increased scrutiny of regulations and demand for more accuracy, transparency and customized reporting to the intense focus on investment performance analysis, custodial reconciliation and cash flow management. The traditional tasks performed by the middle office are becoming the key points for gathering information and making strategic decisions. (see related blog “Where does the Performance Measurement Team Belong?”) But, as the middle office plays an increasingly important role, it is also coming under more scrutiny to ensure it is working as effectively and efficiently as possible.
It is this scrutiny that leads us back to the trends discussed in the Citisoft blog. One way asset managers are looking to increase the efficiency of the middle office is through outsourcing. Outsourcing back office operations has been an accepted trend with steady growth over the past decade, but middle office outsourcing has had a slower uptake. Some of this can be attributed to the traditional service providers not initially offering customizable middle office solutions for key functions such as performance reporting, reconciliations and reporting on complex assets. But now many of the custodial outsourcing vendors have teamed up with niche service providers to handle the middle office functions. And technology service providers have been addressing the need by bringing together the appropriate systems, managing them in their data centers and putting services and experienced personnel around them.
An example of this is SS&C PORTIA’s Outsourcing Services. We provide a full array of solutions and services for middle office functions. Our clients can work with us in a “conversion model” where our personnel run the systems needed and the client’s middle office takes the data, analyzes it and disperses it throughout the organization to drive decision making. This reduces the IT footprint at the asset manager and lets them keep control of key functions that are critical to their business. We also offer full outsourcing services, where our staff becomes an extension of the asset manager’s organization, performing some or all of the middle office functions such as; performance and attribution reporting, custodial reconciliations, corporate actions processing, reporting, etc., allowing the company to reorganize its resources to focus on revenue generating functions and other core competencies.
We see the middle office continuing to reshape and grow as a value-add organization within the asset management workflow. We also see this time as an opportunity for asset management firms to review and possibly redesign their operations in a way that positions them for long-term growth and differentiation. As this trend progresses, it will push service providers to continue to evolve as well, enhancing their systems, services and deal structures to fit the needs of the growing market.
If you would like to learn more about the trends of the middle office, here are some articles I found interesting: Global Trends in Investment Operations Sourcing (Cognizant) and Industry Perspectives: Middle Office Outsourcing: Evaluation Suitability (Citisoft).
- Techee Cheung, Business Development Director – Asia, SS&C PORTIA