The Newest Release of SS&C PORTIA Changes the Way the Middle-to-Back Office Manages Operations

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.

Preparing for FATCA

“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 17^th, 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 1^st, 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

GIPS Compliance Drops Among Asset Managers – According to Spaulding Group Survey

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

Corporate Actions Processing: Is Now the Time to Automate?

 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

The Client Role In Product Success

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:

1. Discovery:  to define the problem or issue
2. Blueprint:  to address the identified problem
3. 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

The New “Middle-Age” (Middle Office That Is)

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

Where Does the Performance Measurement Team Belong?

Last week I had the opportunity to attend the 5^th Annual Performance Measurement Conference, sponsored by Financial  Technologies Forum LLC (click here to view their website).  It was an informative day with impressive speakers and provoking discussions about all aspects of performance measurement.  From regulations and reporting standards to technology advancements and challenges, the day covered all of the topics firms need to think about when managing performance measurement within their organizations.

Throughout the program, the question of “where performance teams belong in an organization?” was asked repeatedly.  For years, performance measurement has been considered a back-office function, pulling together information, crunching numbers and generating reports.  But, as performance measurement expands into more analytics and deeper attribution analysis, there is an argument to be made that this team should be more aligned with the risk department, closer to the portfolio managers and with a dotted line to CFO.   

Phil Lawton, an analyst for Aite, moderated an excellent discussion titled “Performance Organizations and the Rise of the Middle-Office.” (click here for a related blog from Mr. Lawton).    The panel discussed the ever-expanding role of the performance measurement function.  With the enhanced systems available, performance analysts now have the capability to dig into portfolio performance and analyze the underlying risks and rewards of the portfolio construction.  By creating, understanding and supplying this deeper analysis, the performance team has the ability to provide information that can continuously improve the decisions made by portfolio managers.  

In addition, bringing in the risk team to work with the performance team creates an invaluable coordination, allowing the performance analysis to execute the appropriate checks and balances to the risk models used.  Thus there is a strong case for the performance team to be associated with the middle-office, where it is working with both the portfolio managers (providing them analysis of their portfolio construction) and the operations team where the accounting system that feeds performance is managed.

Working with asset management firms around the country, I consistently see growth in performance measurement teams driving IT requirements.  From the data requirements and the logical workflow processes that need to be established to the end-client reporting and analysis abilities needed to satisfy clients, performance measurement is driving many system decisions.  To address this, PORTIA offers a multitude of options for dealing with performance measurement.  Our PORTIA Perform solution provides detailed analysis and attribution calculations to value the complex assets companies are investing in.   The system can pull data from multiple sources to ensure all information is being accounted for and that analyses are comprehensive.   On top of that, our flexible client-presentation tool links seamlessly with the performance system to provide high quality and customized reports for clients, regulators and management.  The reporting tool also includes a workflow process to streamline report generation and ensure timely and accurate reporting.  Lastly, we offer performance outsourcing, a service that provides organizations with reporting and analytics so their personnel can focus on what the analysis means and how this impacts their organization.  By letting our expert staff do the back-office work, outsourcing puts the performance team clearly in the middle-office.

I would like to thank FTF for hosting an educational and insightful conference.  I look forward to continuing the discussions and hearing from you – Is the role and importance of your performance team increasing?  If so, where do they best fit in your organization? Do you see any risks associated with performance measurement moving to the middle-office?

 -  Michael W.G. Fix, Regional Sales Director, Americas & Canada

The Next Big Trend in Client Reporting – Workflow Processes

As we’ve discussed before, client and management reporting is becoming increasingly important in asset management organizations from both a regulatory perspective and as a primary client servicing tool.  While presentation quality, customized reporting has always been a primary requirement, equally important is the need for data governance, efficient workflows and accessibility.  From complying with new regulations and providing timely and accurate data throughout the organization, to providing clients the transparency they are demanding, organizations are investing more resources into the best reporting systems available to ensure maximum efficiency. This trend was recently evidenced at TSAM EU (Europe’s primary event focused on improving buy-side services, performance, operations and technology) where one of the main tracks focused on Client Communications and Reporting, including a workshop dedicated to “how to maximize efficiency in your client reporting production runs – the critical workflows.”

At PORTIA, we have seen interest in reporting from both our clients and prospects and have adapted our client presentation tool, PORTIA eReports, to handle reporting workflows in the most efficient manner.  From the start, eReports was built with a flexible, customizable report designer that allows firms to create client ready statements and reports (Click here to view a sample eReports Report Package).  In its latest version, eReports enhances this functionality to include a deeper and more customized workflow for an organization’s reporting processes, providing the appropriate checks and balances to ensure the integrity of data. 

Important steps in the report creation process include:

Workflow models:  define a strict process that a document must flow through before completion. Workflow models consist of specific steps, associated actions, and user groups that have permissions to take those actions.

click here to view the workflow model screen in PORTIA eReports

Pre Validation:  set up pre-defined data checks that must be verified before a document is produced. Pre-validations can return passes or failures.

DataCheck:  verify whether data is being returned to a report. If data is not returned, the user can specify the action that should be taken.  For example, the user can decide to stop the production of the document and mark the status as ‘Datacheck’ or the user can have the document produced based on report level defaults. 

click here to view the PORTIA eReports jobs monitor

 Each of these new enhancements provides the appropriate points of control for the client to make well-informed decisions.  With these workflow enhancements, eReports provides users with confidence in their data and allows them to decide on the best way to manage their operations.

 The new version of eReports also introduces a client portal, which allows an organization’s end users to have access to online reports and statements.  Built on the workflow processes discussed above, firms can now take data and post it to a portal for clients to review in real-time allowing firms to enhance their capabilities and improve engagement with clients.

click here to view a sample eReports client portal page

 With PORTIA eReports, firms can provide reports to clients quickly and efficiently, with confidence in the integrity of the information.  To learn more about the features and benefits of PORTIA eReports click here or contact us at portiaupdates@thomsonreuters.com to find out why over 200 asset managers in more than 40 countries rely on PORTIA to run their middle-to-back office operations.

 - Claudine Martin, PORTIA Product Marketing

Data Governance and Client Reporting

Recently there was an interesting post on the site “Data Quality Matters…”  by Jeff Willems about the importance of “timely, accurate and ultimately reliable information” as a key enabler to service excellence (click here for access to the entire blog).   Many of the opinions in this post coincide with a PORTIA blog posted last year, The Importance of Reporting, where we discuss how high quality reporting can help differentiate asset managers and ultimately win clients. 

Jeff Willems discusses many points that match what we hear from our clients and prospects, complete and reliable information will help exceed clients’ expectation and win business.  Accurate reporting has always been essential but it is becoming increasingly important as the regulatory environment heats up and there is a continued demand for transparency from regulators and clients alike. 

What stood out to me in this post was the importance he put on “data governance”.  While quality, clear and easy to read reporting is a key requirement, the accuracy of the reporting is equally if not more important.  Presenting error free data the first time provides a client the assurance that the information used for decision making is based on the cleanest data.  This kind of precision is only possible with the appropriate data governance systems in place.

At PORTIA, we think the data governance is a significant aspect to client and management reporting.  The newest version of PORTIA eReports, our client-presentation reporting tool, includes a robust automated workflow module that allows each organization to integrate the proper checks and balances into all their reporting processes;  ensuring accurate data, appropriate review and consistent monitoring.   While this level of control is vital to client reporting, there is concern that this extra scrutiny and process will add time to delivery.  I would argue that by automating and monitoring the process, businesses could actually increase the timeliness of delivery.  By building SLA’s into the process and monitoring the workflow, bottlenecks can be quickly identified and resolved in a timely fashion.

As clients are getting more sophisticated and demanding, client reporting has become a key requirement and can be an important differentiator in the highly competitive asset management market.  You need the right tools and processes in place to meet and exceed the expectations of your clients and win new customers.

Are your clients demanding more from your client reports?  Do the reporting tools you use help you provide for this? 

 - Damon Schrotberger,  Senior Sales Consultant

Outsourcing Moves to the Middle Office

Ernst & Young recently published an excellent “Viewpoint” paper titled “Second Generation outsourcing in the asset management industry” (click here for access to the entire paper), which discusses how asset managers and service providers have changed based on hindsight and changing needs.  While the article focuses on the European marketplace, it reflects what we have heard from our clients and prospects globally. 

Though outsourcing over the past decade has become an integral part of many asset management firms’ strategies to control costs, implement regulatory and technology changes and manage continuing pressures on margins, many of the contracts and partnerships in place have failed to live up to expectations. The E&Y article suggests that as the market has matured, asset managers are finding that their current arrangements are not bringing them the cost savings and efficiencies originally promised.  As those contracts are coming up for renewal, asset management organizations are scrutinizing what they are getting from their arrangements and are putting more pressure on vendors to provide the services and service models asset managers need, and the vendors are complying. As service providers are expanding and changing their models, asset managers are starting to rethink their outsourcing strategies but, even with these new conditions, there is still caution about inherent risk in transitioning vendors.  

Service providers are reducing this risk by providing more migration choices.   Instead of the traditional “lift-out” scenarios, vendors are starting to offer more stand-alone options and services especially in the middle-office functions. By offering services in a “component” model, asset managers can move smaller pieces of their operations, helping to smooth the transition.   

PORTIA Outsourcing Services has always focused on the ability to provide “component outsourcing”, allowing our clients to choose what pieces of their business make most sense for them to outsource.  Our clients can start with areas such as performance measurement and/or reconciliation services, letting them transition middle-office functions without disrupting their entire operations.   We also provide customized service level agreements, allowing our clients to structure how our services work with their organization to reach their organizational goals and helping to reduce risk.

As service providers broaden their offerings there is opportunity for asset managers to take advantage of competing vendors and more favorable terms, but to do this asset managers need to be prepared.   The E&Y paper states that preparation by asset managers can help to reduce risk and shrink the barriers to transitioning.  To ease the process E&Y suggests that asset managers:                  

• Monitor changing requirements of the business and keep the details of SLAs under constant review – to be able to articulate the service level you are expecting
• Understand key differentiators among service providers up front – to accelerate the decision-making process and reduce overall cost
• Be prepared to bundle middle-office functions with other outsourcing mandates – to encourage providers to offer more favorable terms

Finally, asset managers need to be confident that their vendor has a track record of success offering outsourcing solutions, a robust infrastructure and underlying products that are powerful and versatile.  Despite shrinking barriers, it is critical that outsourcing vendors can scale with growth in their clients’ businesses to ensure that a firm’s outsourcing vendor can meet their long-term needs.

How do you see barriers shrinking in the financial services outsourcing industry?  What are the key rules to transitioning between outsourcing vendors?

If you would like to learn more about outsourcing solutions and how to manager vendors to mitigate risk, we invite you to join us at the Knowledge Congress webinar  “Mitigating Outsourcing Risks in Banking and Finance”  on March 1st.  The attendance is free of charge courtesy of PORTIA.  Click here to learn more and register.

 -Daniel Schlossberg, Director of PORTIA Outsourcing Services