Leading IT solutions for fund managers and family offices
During 2017 Permian group has studied available IT solutions for fund managers and family offices What is available? What is new? What can be achieved by utilising the new systems?
New technology is solving challenges and create opportunities
It is hard to catch up with the ongoing in the fund industry changes, especially with the development of the IT systems, which is happening on an almost daily basis. For fund managers and family offices, new areas of IT development and functionalities represent a wide range of opportunities, if taken into use. However, if not assessed thoroughly, they can be seen as threats to the operation of the business. The risks of not being technologically- and regulatory compliant have never been higher than they are nowadays.
Permian observed development that makes it possible to reuse data, a – z end-to-end solutions, new levels and opportunities for interaction and collaboration, easy sharing of information, automation of traditional manual procedures, focus on data security and personal information safety with new ESMA reporting format requirements embedded. New solutions seem to be scalable to a level never experienced before.
End-to-end solutions have arrived
The fund management and family office businesses are typically carrying out sequential business activities through:
- Deal flow and pipeline management
- Marketing of funds towards investor communities
- Collection and storing of sensitive personal information
- Investing and investment decisions
- Calls and distributions
- Follow up and development of investments
- Reporting and monitoring
- Accounting, tax and FSA reporting
There are local system solutions as well as regional and international system providers that cover these business activities. Some provide standardized solutions, other tailor-make each system setup to the needs of the clients. Some provide end-to-end solutions and other offer solutions that are covering parts of the sequential business processes. Some promote to integrate standalone solutions where each element is specialized in that part of the business process.
Traditional use of IT is insufficient
Many fund managers are traditional in their use of IT. They employ various standard IT tools for carrying out their sequential business activities. For example, CRM tools in deal flow, pipeline management and marketing activities. They use Word processing tools and Excel spread sheets for preparing investment decisions and following up portfolios of investments. Excel, e-mail and presentation tools are being used in preparations, distributions and presentations of reports to investors and owners. Accounting tools are applied for accounting and tax reporting. Some tools the managers source externally and some are licenced for internal use.
There is nothing wrong with such traditional practise, except for the low efficiency, inefficient communication and the relatively high risks for errors or regulatory non-compliance.
There are many opportunities available out there for efficient reuse of data throughout the whole string of sequential business processes. There are IT solutions that secure efficient data entry as well as securing report generation and distribution.
Promoters for efficient use of new IT technology
The buy-out and venture businesses are promoters of efficient use of new IT opportunities among their portfolio companies. The same focus should be put on the fund managers and family offices’ own implementation and use of new IT opportunities. The owners and investors demand that their money is being managed in the most efficient way. This is a challenging responsibility for any fund manager and family office these days. Fund administrators like Permian group provide alternative solutions to meet these responsibilities.
What should the owners and investors require from their managers?
- Automation of all processes that can be automated
- Efficient single entry of data with re-use of data throughout all steps in business processes
- A – Z integration of processes
- All investment classes into the same portfolio management solution
- Back office support seamlessly working in the same solution as the investment teams
- Integration with external data sources, i.e. company registers, banks, tax authorities, investors, suppliers, etc
- Efficient generation of reports and basis for decisions
- Accounting integrated with the portfolio management
- Owners, investors and investment teams should easily make drill downs and requests
- Efficient sharing of information and reports via portals
- All data and solutions should be cloud based
- Solution open for being integrated with other external web-based functions/applications
- Highest level of safety and security of information
Only few of these requirements are met with a traditional use of IT in the fund management and family office businesses.
Decisions to be made
The fund managers and the family offices need to proactively address the new opportunities that IT supported solutions represent. Should the business invest in systems and develop the required level of user competence itself? Or, should the business source these investments and services from a third-party provider?
We observe clear international trends in the industry where fund managers source their support functions from expert third party providers who deliver not only competence and capacity but also efficient procedures and top-notch IT technology.
In the end, these are decisions ensuring that the owners and investors are getting the best possible returns on their investments.