Where Does the Performance Measurement Team Belong?

March 28, 2012

Last week I had the opportunity to attend the 5th 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


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