We were industry pioneers when we first defined the “Last-mile problem” in 2015—calling out the failure of most asset management firms to fully automate all data entry into client reports and marketing presentations, and the operational and regulatory risks it poses by allowing errors in key data like performance and GIPS information to slip through the cracks into the very material regulators focus on. Our work has been highlighted by organizations like the National Society of Compliance Professionals, the Investment Adviser Association and the CFA Institute.
Operation due diligence staff at asset owners—and their consultants—have been listening, and many are now asking current and prospective asset managers probing questions about how they handle the last mile at their firm.
Here are the types of questions they may ask you:
Please describe the processes used to calculate investment performance and portfolio attribution data for this product. Include systems used.
- Does your firm employ any additional manual or desktop technologies in your performance measurement calculations? If so, please describe. (For example, if a portfolio accounting system is used to calculate performance, but GIPS statistics are calculated in Microsoft Excel by importing performance data from the accounting system, the MS Excel-GIPS process would be considered use of an “additional technology.”)
- Please describe the quality assurance review process to verify accuracy of calculated data.
Does portfolio performance and attribution data flow directly into client reports and marketing presentations through a fully automated source-system-to-output process?
If the answer to #3, above, is “no,” please answer the following:
- Describe steps taken to include portfolio performance and attribution data in client reports and marketing material.
- Describe the quality assurance review processes to verify accuracy of data presented.
If the answer to #3, above, is “yes,” please answer the following:
Describe the automated system you use. Was it developed in-house? A purchased and install on-premises application? A cloud-based service?
- If you developed an in-house system or purchased an on-premises application, describe personnel, policies and procedures in place to monitor and protect the system from cyberthreats.
- If you use a cloud-based service, including a system hosted for you by a third party, describe the vendor’s cybersecurity policies and procedures.
- Describe your policies and processes for verifying accuracy of output.
- Describe the automated system you use. Was it developed in-house? A purchased and install on-premises application? A cloud-based service?
- If the answer to #3, above, is “no,” please answer the following:
Our advice: Forewarned is forearmed! Don’t be caught off guard by inquiries into your last-mile policies and procedures. Begin by asking these questions internally, addressing any flaws in your processes/procedures and crafting good answers for use in RFPs and client/consultant meetings.
If you think you might have a last-mile problem at your firm, give us a shout! We offer cloud-based solutions designed to fully automate your last-mile problem so you can create error-free client reports and marketing documents.