Best practices in investment reconciliation

Friday, May 18, 2018 | By Scott Whittle

Best practices in investment reconciliation

Organizations have different ideas and requirements for their asset management reconciliation.  Despite these varying viewpoints,  what everyone ultimately needs to know is if their security holdings and cash balances have breaks and if so, why.  There are many tools and applications that can assist operations teams to reconcile transactions; however, we believe that Recon has some unique benefits and strategies to deliver the reconciled accounts to the investment management team sooner, with less effort and with a higher level of accuracy. 

The key to getting better, faster results? Reconcile your transactions first and then validate that they account for the security holding and cash balance breaks.  This may appear to be a longer process but it has proven to be quicker than hunting for transactions to justify the amount the holdings or cash is missing.  Some of the key benefits to using Recon with a focus on transactions are:

  • The reconciliation can run early in the morning when files arrive to ensure the operations team can start reconciling as soon as they get arrive to work. Late files can be processed while the team is reconciling the processed files.
  • The Match Engine can automatically identify the reason for over 90% of your breaks.
  • Transactions that are immaterial, such as sweeps, can be filtered out so they don’t create unnecessary noise in your reconciliation.
  • Recon’s cash proof and holdings proof modules highlight the material breaks so you can work on accounts with the biggest risk first.
  • Correction transactions or new transactions can be generated by Recon to be sent to your accounting system to fix a break.  This valuable process reduces manual entry, saving time and eliminating errors.
  • Reconciliation statuses can be used to define when accounts have been completed and are ready for trading.
  • Reports can be generated at the end of the process or the data can be archived so the reconciliation status for the day is always available for auditing.

Using this approach will provide more accurate results to the investment management team much sooner than the traditional reconciliation method.  With standard break reasons and a proper approval process, reconciliation results are cleaner and more understandable.  Reasons for transaction breaks can automatically be assigned to over 90% of instances leaving only a small percentage that needs to be manually reconciled.  Clients that have chosen to reconcile this way have significantly reduced the amount of time spent on manually processes so staff can focus on more strategic, value-add initiatives.

To find out why more and more operations managers are using our Recon solution for their reconciliations, watch our "A Client's Perspective - Best Practices in Investment Reconciliation" webinar. Hear firsthand from operations executive, Brian Hughes, how CBRE Clarion has gained efficiencies and reduced risks since implementing our solution.

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