In Real Time, Assess Your Quarter-End Data Management Systems

In some of our previous pieces on investment data management, we’ve focused on things you should be doing to promote efficiency and effectiveness in the middle of the quarter.

We’ve also written extensively on best practices and strategy – here’s our eBook on the topic, detailing the 4 components to an effective data strategy.

Regardless of whether a manager has been doing their investment data management and distribution in-house, or if they have engaged a service provider to assist, it can be difficult to know whether or not your processes and/or relationships are working as they should.

While the 2nd & 3rd months of each quarter are a good time to assess the results of your work and the challenges you are facing, now is the time to identify exactly what those shortcomings are and where they clog your firm’s data management and distribution process.

If your data strategy goals are to grow AUM, retain clients, and remain compliant with the latest SEC Marketing Rule, then what are some tell-tale signs that your process is not as efficient as it needs to be?

Here are 5 questions to ask as the process unfolds in the coming days:

Does it take more than a week or two (or 3 at the most)?

It is common for managers to work diligently for 2-3 weeks to assemble, organize, and prepare data in very specific ways to promote effective, efficient distribution to the databases, due diligence questionnaires, and fact sheet automation.

Here are some things to which you should pay attention:

  • How long does it take to assemble the data?
  • By the end of the first week of a new quarter, do you have your preliminary returns data, as well as the preliminary holdings used for those calculations
  • Are your portfolio characteristics data readily available?
  • How often are you doubling or tripling up certain tasks by restating your data?
  • If using an automated solution, how much of the work do you still have to manually handle, especially as it relates to AUM and breakdown calculations?

If it takes more than a couple of weeks to have your data ready for distribution, there are inefficiencies somewhere in your portfolio management system and/or your data assembly, warehousing, and distribution process.

Is the work being adequately checked?

Nobody is perfect, which means firms always need to have their data reconciled – even during the assembly process.

Relying on the integrity of the data (i.e.: making sure it is correct) is a cornerstone of the due diligence process for consultants and other database subscribers. These users must be able to trust that the data accurately reflects a manager’s past work and offers evidence they can maintain the quality of that work into the future.

Incomplete and inaccurate data can be seen as misleading data, which not only puts you in the SEC’s crosshairs, but also runs the risk of raising the ire of database subscribers and internal consultants who rely on accurate, timely data to make the best decisions they can.

Unreconciled data can be like a typo on a resume – for some, it is not a great look, but not a deal breaker. For others, it is immediately disqualifying. Either way, unreconciled, inaccurate data is unprofessional and should be avoided at all costs.

If a firm is managing the process in-house, and reconciliation is a secondary (or tertiary) consideration, it’s time to either devote additional resources or identify a service provider who can help. Automation and outsourcing provides managers with the time and resources to manage their data professionally.

Is it stressful for your employees?

Quarter-end data tasks should be no more or less stressful than other aspects of running the business. If you find your data liaisons and operations team stressed out because they are spending weeks upon weeks managing data while ignoring emails, calls, and neglecting other components of their job (which, not coincidentally are usually the parts of their job that they actually LIKE), it’s time for a rethinking of how you are managing the process.

Without the right tools and automation, manually managing and publishing data puts tons of pressure on a firm’s staff, which is why the reconciliation and verification steps are often short-changed. But as we’ve noted, there are serious consequences to publishing erroneous or misleading data.

If a firm determines that expert help is needed, here are some suggestions for finding a reliable external partner.

Does the firm’s operational efficiency break down in the first weeks of a new quarter?

If your firm manages data in-house, how much marketing actually gets done in January, April, July, and October? What areas of the firm’s administrative workflow become interrupted, and for how long? A firm that slows essential operations for 25% of the year due to data management and distribution tasks will never maximize its internal resources or competitiveness.

If you are using a service provider, here are a few more potential items to note:

  • How much of the process burden does you vendor actually lift from your team?
  • Does your vendor actually manage all of your database profiles, or only a segment? If so, why?
  • Are you routinely assigning your team to cover for deficiencies in your vendor’s work, just to ensure your marketing and compliance stay on point? If so, we’re here to tell you that’s not how it should work.

Does it feel like you’re barely hanging on?

One of the most important keys to effective investment data management and distribution is to have a process that is logical, repeatable, and most importantly, documented.

Data can be messy and complicated, in both the organization and the distribution. We cannot stress enough how important it is to have a repeatable plan that makes sense for your organization, which is why we work with clients in our onboarding process to build out a data manual that spells out how data is to be managed and published quarter-to-quarter.

In the end…

In today’s investment management industry, nobody discounts the importance of data.

But most often, it’s the use of data to make portfolio management decisions that gets all the love. In comparison, internally-generated data that results from those portfolio operations is much more underappreciated for its role in a firm’s marketing mix.

But today, data drives the due diligence process, and so data must play a central role in investment management marketing.

Without a professional, repeatable data management & marketing distribution strategy, firms will struggle against their more forward-thinking peers.