Four Ways to Establish Best Practices in Investment Data Management
Today’s financial markets put tremendous pressure on teams responsible for managing investment portfolios, and the need for up-to-date investment management software is more important than ever. When stakeholders research best practices to manage their investment information, they often find that accuracy, transparency, and functionality are lacking in their current data management solutions.
Investment managers are searching for improved ways to quickly access automated and consolidated investment information to make strategic trades, monitor performance and compliance, and respond to auditor inquiries. Whether a data management solution is built in-house, purchased, or outsourced, implementing a best-practice model requires more effort than merely deploying new software.
There are four investment reporting best practices to consider when selecting a new data management system: consolidation & consistency, speed & agility, automation, and scalability. Together these will collectively streamline operations and allow companies to maintain focus on serving clients.
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Consolidation and Consistency
A consolidated view of data allows portfolio managers to track investment policy compliance and overall performance daily. Consolidation also makes operational tasks much more efficient and client reporting more flexible and consistent.
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Speed and Agility
Timely data is vital for making strategic and informed trades. It also enables investment managers to identify and correct mistakes throughout the month, so they don’t pile up at month-end. Investment operations data should be reconciled and validated to custody banks and the trading system. The right system can perform this daily reconciliation in hours as long as it works from a consolidated data source with access to consistent data throughout the month.
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Automation
Manual data entry affects data integrity because it is prone to human error and requires significant time and effort to manage effectively. Errors compound throughout the month, and operations teams end up spending more time excessive time tracking them down. Automation empowers investment managers to reclaim time and effort and focus on core competencies.
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Scalability
Scalable systems are built to handle changes in investment strategies, on-board new clients, and add new and complex asset types without stressing IT resources. Scalable systems also prevent firms from over-committing to outsourced solutions with long-term contracts, especially when those systems can be unreliable, difficult to use, and quickly become outdated. Software as a service (SaaS) solutions, in particular, can be quickly implemented and are ideal for a rapidly evolving investment environment.
Updating and implementing a framework for investment data management best practices is more critical than ever. By establishing these four best practices described above, your firm can streamline operations and maintain its focus on serving clients.