9 Questions You Need to Ask When Changing Your Investment Management Solution

An outdated investment management solution can cost you time and money while simultaneously making your services appear less attractive. When this is the case, then it is time to find a new investment management solution.

Once you have decided to change providers, it can be challenging to find the perfect match for your business. It is important to take the time to weigh your options and use a methodical approach to making the decision.

In this blog, we’ll explore nine questions to ask when you are considering a new investment management solution.

1. What references does the investment management solution have?

Find out about the investment management tool’s references and current client base, as well as the type of businesses the provider primarily serves. It’s best if they already serve clients like you, as they will have a better understanding of how your business operates.

You can simply go to vendor websites and look at case studies, relevant press articles, blog posts, and industry awards, but few things are more revealing and objective than feedback from other customers. When in doubt, ask for several references you can contact.

2. Does the tool integrate easily with existing and future systems?

Investment management solutions that implement cloud usage, microservices architecture, and API technology can help integrate easily and securely with your existing systems, without costing a fortune or disrupting your workflow. Native and advanced connectivity with your business ecosystem (asset servicers, market data feeds, brokers, trading tables, etc.) is also critical: ask vendors about their connectors’ functional and technical coverage with your key counterparties, and the extent of their API catalogue.

In addition to your existing systems, a cloud-based platform will allow you to easily integrate with any external services you may implement in the future.

3. How does the technology maximise security and minimise risk?

Choose an investment management solution that makes cybersecurity a priority and protects your company’s data adequately. Regular monitoring and continuous improvement to keep up with changing security challenges should be a key feature.

You should also ask whether the system provider meets your regulatory requirements, has been audited for compliance, and follows industry standards. The International Organisation for Standardisation issues and publishes international standards to improve operations and regulations.

4. Are production backup and Information Technology Outsourcing (ITO) services offered?

Regardless of whether you currently need data and IT backup services, it is important to know from the beginning of your search whether your provider can offer these services, as this is an area which typically requires additional support in the future.

Business and IT backup services can help your company to successfully tackle unexpected challenges or projects (e.g., a transformation of your target operating model or a process digitalisation project) without having to bear excessive additional costs.

In general, it is better to have a provider with too many services and functionalities than not enough, even if it means taking a ‘lite’ version at first and expanding it later.

5. How often are product updates released?

It is important to choose a supplier that anticipates future challenges and is committed to keeping its solution at the cutting edge, both functionally and technologically. Ask the vendor in question how often they update their solution, and how much time and money they invest in research and development.

The more frequently they make significant improvements, the more likely they are to become your trusted partner for years to come.

6. What does the implementation process look like?

Before approaching suppliers, you should first ask yourself whether you want to adopt the solution wholesale (use the solution’s standard processes and forget about your own) or adapt it (set up the solution to meet your own needs). This will determine the type of solution and implementation. Then see how quickly they can implement their solution and make it operational. A solution with an extensive library of standard settings (ratios, controls, reporting, imports, etc.) will require less manual configuration and waiting time.

If you are moving from a legacy system to a new solution, you will also want to ask how complex the changeover process is, how it works with your current infrastructure, and how your daily workflows will change.

7. What are the “hidden” costs?

Hidden costs such as maintenance, updates (version upgrade prices), user training, max license counts, and integration fees can add up over the system’s lifetime, and it is important to understand these before choosing a solution.

Devote funds to investment management software that can grow and evolve with your business while saving you money and frustration. While the up-front costs of one system may seem attractive or more competitive than another solution, you need to understand the overall costs to avoid unpleasant surprises.

8. Does the tool align with your long-term goals?

Instead of just comparing the price tags of potential investment management solutions, you want to choose a provider that will help you achieve your long-term goals.

For example, if you are considering implementing new asset classes, new functionalities, or working in new countries or with new counterparties (asset servicers, brokers, management companies, ESG data feeds, etc.), you want to make sure that the new system can accommodate these upcoming strategies with the necessary technology and regulatory compliance features for the investment manager of today and tomorrow.

9. How good is the customer service?

This is a question that will be answered indirectly. It is up to you to test and see how their service team is structured and how well they answer your initial questions about their investment management software.

Ultimately, you want an investment management solution with a team of people behind it who treat you as a partner and make your goals their goals.

Do you have other questions about investment management solutions?

Clearwater Analytics offers award-winning investment portfolio planning, performance reporting, data aggregation, reconciliation, accounting, compliance, risk, and order management. We aim to meet the current and future needs of our customers.

If you are interested in learning more about industry trends or concepts, schedule a call with a Clearwater expert today.