3 Must-have Features When Automating the Last Mile

There’s no doubt that automation is the best way to eliminate last-mile risks. Automating the last mile is easy and cost-effective. There are lots of options. You can develop in-house software, purchase and install on-premises applications, or sign up for cloud-based services.

No matter which approach you choose, make sure your automated solution:

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3 Last-Mile Questions Every CCO Should Ask their Marketing/Operations Staff

Operation due diligence staff at asset owners—and their consultants—have become aware of last-mile issues at investment management firms, and many are now asking asset managers probing questions about how they handle the last mile.

Our advice: Forewarned is forearmed! Don’t let your firm be caught off guard by inquiries into your last-mile policies and procedures. Your marketing/operations staff should be able to answer the three questions below, address any flaws in their processes and procedures, and craft good answers for use in DDQs/RFPs and client/consultant meetings:

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Last-Mile Riddle: What takes 20 years to build and 5 minutes to ruin?

Your firm’s reputation. And when an investment firm’s reputation for accurate, reliable reporting is called into question, revenue-producing AUM takes a direct hit. Reputational risk stemming from regulatory missteps is a given. But operational risk can be just as damaging—and more insidious.

For example:

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The CCOs #2 Last-Mile Problem: Sloppy Operations

Regulators don’t like sloppy operations. Inadequate internal processes lead to performance-reporting mistakes in marketing and sales documents. And a pattern of operational mistakes invites regulatory scrutiny.

No CCO wants that.

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The CCOs #1 Last-mile Problem; Marketing and Advertising Errors

People. Your people. All those hard-working, well-meaning folks who support your firm’s marketing presentations.

And every one of them is just a fat finger away from making a last-mile mistake.

And that’s a problem for you as compliance professional. Because while to err is human, regulators don’t care. And they aren’t likely to be forgiving, either.

Consider these 2 common human-introduced data errors:

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The Biggest Regulatory Threat You Never Heard Of

Every CCO’s worst nightmare is the unidentified compliance problem waiting to happen.

The National Society of Compliance Professionals, the Investment Adviser Association and the CFA Institute have highlighted one of them: The Last-Mile Problem. As the IAA Newsletter’s Compliance Corner noted:

“[The last-mile problem] should be on the radar of chief compliance officers at investment advisory firms. By neglecting the last mile, investment advisory firms leave themselves susceptible to a variety of very real risks in a part of their reporting process that regulators are focused on: marketing presentations.”

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Stale Data in eVestment?

When it comes to submitting your firm’s data to manager databases, time is of the essence. Consultants and asset owners won’t wait for you to update your data when hundreds of other managers have timely information ready to review. In short, being late with data updates will cost you mandates.

While eVestment Omni does a great job of populating manager databases for you, it’s still up to you to submit your data on time. Manually preparing Excel files required by eVestment puts a strain on a firm’s resources at the busiest times in their reporting cycle, and can also introduce “last-mile” errors. Being late and/or inaccurate will cost you mandates from institutional clients.

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Inaccurate Data in eVestment Can “Red Flag” Your Firm

Inaccurate information in manager databases raises a big red flag for consultants and asset owners reviewing your firm. In the worst case, it can take your firm out of contention for new mandates. But even minor errors—especially a pattern of errors over time—can lead to embarrassing questions during client reviews or marketing meetings, and trigger operational due diligence probes by consulting firms.

eVestment Omni does a great job of populating manager databases for you, but it’s still up to you to make sure the data you submit is accurate. Manually preparing these input Excel files can introduce “last-mile” errors that cost you mandates from institutional clients.

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