• Blog
  • 4 Min Read
  • January 4, 2016

What Your Reconciliation is Missing

Written by:
The Clearwater Team

Investment managers depend on accurate and timely investment data every day. However, the method for acquiring, processing, and verifying this data can be unnecessarily difficult. As firms grow, the investment data management and trading systems they rely on become outdated and inefficient. Firms are unable to scale their operations to their greater data and organizational demands because they have more data to manage and less time to verify its accuracy.

Reconciliation is the critical step for validating investment data is correct before it enters your trading and accounting systems. Many reconciliation processes are manual and can’t deliver the accurate and timely investment data you (and your clients) need. Clearwater’s web-based investment accounting and reporting solution provides daily detailed reports that enable your internal staff to explore new opportunities and focus on core values.

So, what are the key differences between legacy reconciliation solutions and Clearwater’s solution?

Legacy Systems vs. SaaS

AUTOMATED AND MANAGED DATA ACQUISITION

Legacy reconciliation requires you to track down data from multiple custodians and systems and enter it into software or spreadsheets. Manual activity as part of the data entry process is generally infrequent, incomplete, error-prone, and it ties up your operation’s team when they should be focused on more important, strategic work.

SaaS solutions streamline this entire process to be efficient, accurate, and managed by a team committed to your firm’s success. Furthermore, SaaS systems extract and aggregate holdings data from hundreds of separate financial institutions daily. Instead of tracking down errors, your team will spend time working on other important tasks.

AUTOMATED AND MANAGED DATA VALIDATION

Investment managers work daily with transaction data from three sources: your trading system, custodians, and your investment accounting system. It arrives in different formats and the values often don’t match, so the process for comparing and merging each of these sources with security master data is challenging and time-consuming.

Web-based accounting solutions identify the most accurate investment data by comparing and validating information generated from your trading, custody, and investment accounting systems. This streamlined process automatically reconciles investment data, even if it arrives in different forms and formats.

Not only do SaaS solutions provide accurate cash, position, and transaction-level details, they enrich this with leading third-party sources to build a complete profile of the data you need. The security master is fully formed, analyzed extensively, and contains all the data necessary for core reconciliation, accounting, and reporting processes, all without your operations team ever needing to manually intervene.

THOROUGH, DAILY DATA PROCESSING

Many firms only reconcile their cash, position, and transaction data weekly or monthly for core trading purposes. By delaying the reconciliation of important data like income, amortization, yield, market value, factors, corporate actions, and late payments, investment managers have an incomplete view of their clients’ portfolios, which can lead to potential trading risk.

SaaS systems reconcile every day, processing transactions and all the vital data you need for trading and accounting purposes. This way, you gain immediate access to the information you need for daily trading and a clearer vision of your clients’ portfolios.

STREAMLINED, PAINLESS EXCEPTION RESOLUTION

Many investment managers manually track and resolve exceptions and data discrepancies in separate spreadsheets or databases, which requires them to investigate these exceptions on their own. Tracking and resolving reconciliation exceptions can be a time-consuming challenge for already overloaded teams.

SaaS technology streamlines the exception resolution process. Best-in-class SaaS systems automatically reconcile cash, positions, and transactions in all your portfolios. Any exceptions that the solution cannot reconcile are flagged and individually investigated by experts dedicated to your account, with no burden on operations team.

TRUE SCALABILITY

Outdated reconciliation systems inhibit your ability to take on new business and explore new investment strategies because they have trouble scaling as your firm continues to grow. While operations staff can take on more data management tasks, develop temporary workarounds, bolt on additional software solutions, or even hire additional staff, these are ultimately short-term fixes that don’t solve your core scalability challenges, and can actually make things worse in the long run.

SaaS solutions streamline the entire data management process and enable your firm to easily scale. This allows you to do three things:

  • Take on additional portfolios without adding new processes or staff
  • Support your clients in a much more meaningful way
  • Consider new investment types and areas of growth

Clearwater’s scalable reconciliation and data management solution allows you to focus on what you do best, giving your organization a key advantage in a highly complex and competitive environment. Clearwater enables true scalability for today’s—and tomorrow’s—data management challenges.

To learn more about best-in-class reconciliation, read Clearwater’s white paper, Redefining Investment Reconciliation for Asset Managers.

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