As institutional portfolios become more complex, putting a strain on legacy systems, staff resources and costs, asset allocators benefit from outsourcing some or all of their investment operations. Asset allocators are responsible for deciding how and with whom to invest capital on behalf of their stakeholders, and this includes researching and monitoring fund managers to ensure they are delivering the expected results. However, increasing complexities like more diversified investments and asset classes that create added layers of accounting complexity, coupled with the volume of data and documentation of allocators’ investments can be overwhelming.
Asset allocators and their legacy providers (like custodians) often have not invested enough in infrastructure to keep pace with escalating volumes of data and the need for timely information, and the operational overhead required to make those improvements in-house can be unappealing. Outsourcing is an attractive alternative. Allocators can outsource complex and time-consuming investment operations activities to a provider with the technology infrastructure and industry expertise to support institutional portfolios. Outsourcing frees up staff resources, allowing them to focus on more critical responsibilities and decisions.
As a long-time outsourcing provider to allocators and fund managers, we have identified four areas where institutions can achieve rapid efficiency improvements through outsourcing.
- Document Management—The 50-60 documents per investment per year can quickly add up to thousands of documents, often delivered through multiple channels without standardized formatting. Downstream processes rely on these documents and their data. An outsourcing provider who has invested in AI-powered solutions for document management will help allocators bring greater efficiency and data accuracy to those processes.
- Data Aggregation and Analysis—Allocators need to collect and collate data on all their fund investments and separately managed accounts, which can be an enormous task when many external managers, custodians and counterparties are involved. Allocators need a technology solution capable of aggregating and standardizing data from multiple sources to deliver a consolidated view of investments, performance and risk metrics across an entire portfolio.
- Operations Support—In the face of high turnover and a talent shortage, outsourcing investment operations is a way to access operational expertise and stability without increasing headcount.
- Accounting Support—Allocators can improve the timeliness and accuracy of accounting results to stay compliant and achieve better reporting.
Through outsourcing, asset allocators can gain better scalability, enhanced risk management, specialized expertise and peace of mind. Working with an outsourcing provider that understands your objectives, offers a range of solutions and services and has the flexibility and expertise to adapt to your operating model will spare you the expense of adding staff as your assets increase in volume or complexity. Outsourcing also relieves the burden of continually making infrastructure investments as technology advances.
SS&C’s Asset Allocator Services is a team of experts in investment management operations, accounting and related functions. By partnering with SS&C, allocators will have access to a team that helps clients track and report on their investment portfolios and underlying holdings across various asset classes; collect analyze and store fund-related documents; and ensure that all operations-related activities are managed and completed securely.
To learn more about the areas where outsourcing brings the most significant impact, and how SS&C can help you achieve greater efficiency through outsourcing investment operations, download our "The Benefits for Asset Allocators in Outsourcing Investment Operations" whitepaper.
Written by Chris Kundro