The right system is key to efficiently managing multi-sleeve accounts

By: Paul Mendoza

It’s hard to efficiently manage and track performance on multi-sleeve accounts. What technology do you need to ensure your operations are as efficient as possible?

Let’s first look at some basic account types.

Brokerage account

  • charges commissions for trading

Managed account

  • owned by an individual and overseen by a money manager acting as a fiduciary
  • tailored to the specific needs of the account holder
  • charges an annual fee that covers the account’s administrative commission and management expenses

Separately managed account

  • professionally managed account
  • contains just one type of investment instrument  
  • rebalances often

Unified managed account (UMA)

  • single account that is professionally managed
  • rebalanced regularly
  • can encompass any investment vehicle (e.g. mutual funds, SMAs, stocks, etc.)

Managed accounts have several benefits, including customized strategies, better controls, daily valuation, lower fees, and transparency of portfolio holdings. However, managed accounts are hard to administer efficiently.

A unified managed account can hold any investment vehicle. The management style and asset allocation is determined by client need and management expertise. The complexity starts when a manager decides that he or she would like to manage a portion of the assets allocated to a particular style and brings in an outside money manager to manage the other portion of assets allocated to that style.

Many systems cannot track performance of individual managers. Typically, an aggregate level of performance is provided for the total portfolio - possibly for all the securities that are in a particular style - but performance is not provided for individual sleeves.

If further performance detail is required, often the manager must rely on the performance of the model portfolio, which is not an accurate measure of the client’s performance relative to their actual holdings. This makes it difficult when wealth managers assess which SMA managers to keep and which to fire. It also makes it hard to explain why there might be discrepancies in portfolio performance.

Global Wealth Platform (GWP) from SS&C effectively manages and tracks performance at a UMA’s individual sleeve level, which helps to track and report results accurately by specific style. In addition, since each sleeve maintains its own cash balance (as stipulated by GIPS), it can be included in your composite performance. GWP also provides high-volume rebalancing, compliance with the concept of substitution workflows, integration for outside money managers’ models, cross-blotter functionality, and more.

The front- to back-office capabilities from GWP allow managers to automate their day-to-day portfolio activities. Offered as a SaaS/Cloud service, GWP is a multi-currency, multi-asset class solution with several functions including portfolio and order management, trading, compliance (pre and post), portfolio accounting, data management, performance measurement, client reporting, contact management, custodial data aggregation, and more.

To learn how GWP can automate your investment operations, download our brochure, request a demonstration, or email pmendoza@sscinc.com.