Fund management software: How to select the right provider in 2017

It is evident that the volume of information and level of analysis available to investors and portfolio managers in 2017 puts even greater emphasis on selecting the right fund management software. Fintech providers are constantly looking to improving the technology available to investors, in order to provide them with the fastest, most accurate, analytic data …

by | February 20, 2017 | bobsguide

It is evident that the volume of information and level of analysis available to investors and portfolio managers in 2017 puts even greater emphasis on selecting the right fund management software.

Fintech providers are constantly looking to improving the technology available to investors, in order to provide them with the fastest, most accurate, analytic data to inform decision-making.

But what factors should financial institutions and portfolio managers prioritise when considering purchasing new fund management software? Bobsguide asked several of the leading figures in the fund management industry to give us their perspective on the critical tech issues currently facing financial services.

The industry view

Kostas Kotsiopoulos, Global Sales Director, Profile Software

Numerous reports ranging from CapGemini to McKinsey indicate that the evolution and collaboration wave in the wealth management industry is now a fact. PwC fintech report findings demonstrate that asset management and insurance industries are the next to experience the emerging effect of modern technologies. As presented in the report, the majority of AWMs (90%) consider that sophisticated data analytics and automation of asset allocation are very significant since they allow them to control and analyse risk more accurately and better manage compliance, while omnichannel models help them excel their performance.

In addition, in the EY report: Wind of change it is highlighted that the relationship improvement of wealth management strategy and clients expectations by providing better and more frequent interaction (52%) and by meeting the requirements of investment performance (61%), are becoming very important differentiators. These were highlighted in the response to “how would the wealth managers bridge the gap between their strategy and clients expectations?”. The digital transformation is playing a crucial role by offering greater operational effectiveness and exceptional client service. To accomplish this, firms interviewed stated that they would need to have “real time performance reporting for clients” with “advice and research delivery”, as well as “transaction execution and client service”, when asked “where do you need to make additional client-focused digital improvements?”.

Taking these findings further, there are some top trends focusing on risk management, innovation, productivity and client centricity. The collaboration between incumbent and fintech, the growing demand for digital tools and the changing habits of investors, create a landscape for change and integration and a need to adopt technology platforms, which improve efficiency across operations and integrate data to deliver a unified approach to customers and the business.

Interpreting the trends affecting the industry, there is also the increasing regulatory pressure for MiFID II that will be enforced next year. These concerns make organisations seriously re-evaluate their technology systems and the benefits derived, so as to achieve competitive edge through advanced client experience, operational agility and compliance.

In order to select the right provider each firm would need to consider the technology expectations to be aligned with the business objectives. For example, wealth management firms of a significant size or specialisation might find it beneficial to collaborate with a fintech company to provide a differentiated type of service in the market, which would add value to their services and help them gain insights into the new technology. For this venture, it is necessary for the firm to select the provider that has the experience and the functionality to support such an approach, not only in terms of front-end tools, but also in terms of security and back office support. It is also essential to evaluate the past work, the client experience, and the team involved.  There should be the possibility of customisation or tools to do this at a later stage, as well as assessment of the technologies used and their evolution to the business purpose.

In another case where a wealth management firm is small and wants to reduce operational cost, while providing an unequal level of service to their clients, they should consider cloud technology for deployment of the wealth management platform and to offer  a secure location that can be accessed at all times.  The users are able to amend and report just like any other advanced system. Their clients would have the same level of access to information from their mobile devices. The company would be able to modify and white-label the system to meet their business objectives.

A third case could be firms which are foreseeing the market changes and the impact these would have on their business, so they select an end-to-end platform or a front-end system that will seamlessly integrate with their  existing systems to deliver digitisation and agility covering client’s and market’s expectations.

Compliance with the regulatory framework is an essential inclusion in the new technology platform to be utilised. This is essential when selecting an IT supplier; to help firms be compliant at all levels, now and in the future.

Thus, to succeed in today’s digital age, financial services firms should shift from traditional business models towards the modern financial technologies. The FinTech or digitisation opportunity is delivering better productivity and growth rates to the sector. How financial firms will respond to the new approach may be the key differentiator that will distinguish the ones to maintain or gain a competitive positioning to the ones that will follow.

Profile Software is a leading financial solutions provider with successful international implementations and industry recognition developing cutting-edge, client centric and reliable FinTech offerings that fully meet the evolving needs of the banking, investment management and alternative finance institutions.


So many aspects of the financial world are in flux today that you need to use extraordinary judgment when choosing an asset management solution for your financial services organization. Let’s take a brief look at three major trends affecting the market and then three considerations to make sure the solution you choose can meet the challenge.

In testimony to the U.S. Senate Banking Committee February 14, Federal Reserve Chairwoman Janet Yellen strongly indicated an interest rate increase as early as next month. As reported by MarketWatch, Yellen said: “At our upcoming meetings, the Fed will evaluate whether employment and inflation are continuing to evolve in line with…expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.” This will continue the upward trend after a prolonged period of near-zero rates and could lead to higher net interest margins and profits, creating more capital expenditures.

Later this year, on September 5, the settlement period for securities traded on the secondary market in the U.S. and Canada will move from trade date plus three days (T+3) to trade date plus two days (T+2). This will create significant operational changes that firms need to prepare for now.

Changing demographics—especially with the increasing dominance of the Millennials—means an increase in demand for information delivered digitally as well as a general demand for more transparency, availability, and immediacy of information.

How can you respond to these and other disruptive trends? Nothing less than business process transformation is needed. Here are three key considerations when choosing a solution.

Leverage outsourced or hosted technology

If you’re like most financial services firms, 60% to 70% of your resources are engaged in non-alpha- and non-capital-generating activities. To free up resources to focus on developing new product offerings, moving into new geographical markets, and responding creatively to new challenges, outsourced or hosted solutions can fill skills gaps, allow for staff redeployment, and shift your firm from a capex to an opex model.

Streamline your operations and get essential insights

You know that data is the business of financial services organizations today. Accurate, real-time data drives decision-making and meets growing customer expectations for immediate transaction information. By eliminating manual processes that invariably result in errors—and integrating and centralizing systems for simplified management and a deeper and more accurate picture of the entire business—financial services organizations can create a virtuous cycle of less labour-intensive auditing and greater trust in data and processes.

Future-proof your front and back office

As your organization grows and acquires new businesses, adopts new investment strategies and moves into new markets, your solution must address your needs today and into the future. Make sure the solution you choose is scalable for seamless growth. Choosing a hosted solution is one way to get that scalability without a big capital investment.

In a complex world where the rules seem to change almost daily, you can survive and prosper with the right technology solution.

Jean-Luc Freymond, CEO, Sage Group SA

Fund Administration is an essential service that presents an increasing importance and sensitivity in the financial industry. Institutions offering this service bear mounting responsibility as a result of more complex pricing methodologies, taxes and fees, as well as stricter regulations.

Historically, such service has been organised in silos with many human resources involved, and it has been a widely-accepted fact that Net Asset Value (NAV) validation requires a high volume of manual work. At the same time, the industry is getting more competitive and the pressure to increase margins requires fund administrators to increase their productivity while continuing to fulfil their tight Service Level Agreements (SLAs).

Attempts to automate this system have often failed due to cultural and human obstacles as well as the lack of scalability and flexibility of the systems that were proposed. Organizations looking for systems to help them automate this process need to look for solutions that address both these issues by retaining simplicity in user interaction despite the complexity of the task while simultaneously providing the required flexibility to adapt to each fund’s specificities.

Reduce costs and risk

Generating Net Asset Values and unit prices is a time-critical process which requires a high degree of control and efficiency to meet pre-set deadlines. Only an effective end-to-end process with appropriate controls and automation can guarantee the consistent level of performance required.

Portfolio accounting

The ability to keep the fund’s portfolio inventory up to date is a critical function to look for. While it is expected that most systems will perform this function, organizations need to ensure the adequate handling of all the asset classes that their funds are invested in.

Corporate actions

Systems should also offer the possibility to automate and dramatically simplify the time-consuming and error-prone process of manually tracking, calculating entitlement, and processing of corporate actions. An integrated and comprehensive corporate actions solution that can process all corporate action types and is flexible enough to allow the definition of new types, is the best option.

Pricing of instruments

Pricing of financial instruments is a key process where systems differ in their level of efficiency and accuracy. Mark to market prices need to be fed automatically into the system from major data feeds. Quality and plausibility checks should be available to minimize the risk of errors and reduce the time to investigate pricing issues originating from the price source.

Fees processing and accrual accounting

Organizations should also ensure the system has the ability to automate the calculation, accrual, and posting of all types of fees. Performance fees are generally more complex and few systems fully automate more advanced functions such as equalizations.


A key step in fund administration is the reconciliation of daily trade information, settlement data, transactions, and positions. Systems need to be able to automatically download this data from the custodians and perform the reconciliation and highlight discrepancies.

NAV validation and publication

The transfer agency function also needs to be fully integrated in the system to simplify the process and avoid heavy and potentially costly interfaces. It should be possible to automatically import subscriptions and redemptions from external systems or capture them using the system’s UI.

George Xenofos, CEO, PCS

The fund management industry is a fast-changing marketplace due to technological, economic and regulatory changes. The institutions that best harness the tools of technology, data and analytics will be the long-term winners in funds administration.

There are several factors that institutions should take into account in order to select a portfolio/fund management software that can best meet their expectations and ensure the value of the investment, such as:

Rich functionality/modularity – The software should cover comprehensively the company’s fund management, administration and accounting life-cycle  and enable the institution to deploy as many modules and features as required.

Agility – As the business requirements change and evolve, the platform should be flexible and scalable in order to match the company’s growth in assets and operations.

Automation – The platform must be able to consolidate data and eliminate manual touch points in order to drive operational costs to a minimum and alleviating risk, cost and service effort.

Dynamic parameterization and flexibility – Although a Private Banking client or an Institutional Client or a Mutual Fund or a Closed-end Fund or Insurance Company might have the same basic needs (e.g. daily evaluation of their portfolio and performance calculation), in practice the actual needs are very different. It is very important to be able to use a single software platform to cover different aspects of the Portfolio & Funds Management business.

Vendor credibility – It is a mistake to assume that a vendor’s credibility is related to a company's size, history, revenues or the size of its staff. Talk to references and ask if their expectations were satisfied, if they have an effective customer service, etc.

Neil Smyth, Marketing and Technology Director, StatPro

In a world where management fees are under relentless pressure, and client demand for better service levels is growing, along with external regulatory requirements, how does an asset manager maintain profitability levels? How can they increase productivity levels and have an acceptable cost/income ratio?

Technology is the key strategy many asset managers are implementing as they look to replace legacy systems and move to smart, scalable and automated platforms. One such area targeted for productivity gains is the middle office and the data processing and analytics operations that have to be performed every day.

When looking to replace legacy performance and analytics systems, what are the key areas to consider?

The technology platform

What is the technology delivery platform for the new system? Do you want to maintain locally installed software or do you want to move to a Software-as-a-Service model? It is well documented that SaaS based platforms have a lower total cost of ownership than on-premise systems. Cloud-based solutions also offer far superior scalability and are not constrained by legacy architecture and server hardware limitations. Data security and sovereignty are crucial issues when thinking of a cloud-based solution. Make sure your chosen vendor is an expert in these fields backed up by external audits and info-sec certifications.

Functional depth and the ability to consolidate

Can the new platform enable a consolidation strategy? Many asset managers have multiple performance systems depending on the underlying asset class being analysed. Can you combine analytics disciplines such as performance and risk into a single service? Can the system manage complex investment strategies and then bring all the data requirements into one place?

Flexible and intelligent

Are you able to remove costly manual processes with the new system? Portfolio performance measurement is a good example. The large data management requirements of daily transaction-based performance across thousands of portfolios can lead to many manual workarounds to fix data issues. This reduces the time available for value-add tasks such as the performance analysis itself, supporting clients and the front office. Look for next generation systems with the ability to spot data management issues and intelligently correct them while managing the entire performance workflow.

Visual analysis and reporting

How can you ensure that the data becomes information? How can it add value and be part of a decision-making process? The best systems visualize data in clear and effective ways, allowing quick and easy analysis at the top level, but with the ability to drill down into the details. Reporting and data extraction is also a key factor to consider. How can you efficiently extract calculated data from the system? Does it have an API that you can work with from other applications? Can you produce reports in the right format, are they multi-lingual, can it be part of your existing reporting processes?

Global support and expertise

Implementing any new technology requires an expert guide and partner to be a success. Cloud-based platforms don’t require large IT projects so the focus can be purely on the functional and data requirements needed for a successful outcome. Make sure your vendor becomes a partner and doesn’t just focus on software implementation.

For more information on the fund management software available in the market, or for details on how to contact fund management software providers, visit the bobsguide fund management software directory.

For more information on the wealth management software available in the market, or for details on how to contact wealth management software providers, visit the bobsguide wealth management software directory.  



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