Business 101: know who your client is


Wednesday, April 7, 2021 | By David Moffat, Chief Proposition Officer, Funds

Business 101: know who your client is

Put any letter before “BOR,” and you land on the latest revolutionary functionality that every asset manager needs… or so it can seem.  

While you might take issue with our industry’s love of acronyms, the rise of the Accounting Book of Record (ABOR) and Investment Book of Record (IBOR)—and now the Client Book of Record (CBOR)—is not a marketing fad. Instead, they reflect the potential value of data in a digital world and show an industry that is finding ways to realize that value.

So what is a CBOR? To answer that, you need to consider what a “client” is. In fund management, the ultimate client is the investor. After all, they are the source of all funds and they decide where to invest those funds. Investor behavior matters greatly to all service providers in the fund management ecosystem. However, if you asked a fund manager who their client is, they would likely point to the distributors and intermediaries that sit between them and the end investor.

There are good reasons for that, including compliance risk. But it creates a highly problematic blind spot for the fund manager, who cannot see the investors that their success relies upon. In a data-driven world, the idea of a business not knowing who they are selling to is jarring—and it is problematic for fund managers. Enter, the CBOR.

A CBOR captures and delivers enough data to illuminate the blind spot without increasing compliance risk. The holdings and flows data tell the fund manager which types of investors hold which funds, which distributors are selling them, which funds are doing well from a sales perspective, and which are doing less well; all essential information in building a sales, marketing and distribution strategy.

Despite huge potential value, the CBOR has not yet been incorporated into portfolio or order management systems and is still in the early stages of development. SS&C recently wrote a whitepaper “The Client Book of Record; The key to customer-centric fund managers” which further builds the use case for a CBOR, and considers how firms can actually build one. Where does the data reside? Which existing service providers can pull the data together? The whitepaper offers concrete answers to those questions and serves as a detailed guide to the CBOR for the funds industry.



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