The performance measurement reporting quandary: buy, build, or rent?

By Bill Bormann

Investment managers expect more than ever from their asset servicers. What were acceptable services a decade ago,monthly reporting, and investor statement distribution, has changed drastically. What are the new challenges faced by today’s managers and how do they affect what’s expected of asset servicers?

New Investment Challenges Changing the Manager/Servicer Relationship

The many new challenges investment managers must tackle range from detailed regulatory reporting requirements, complex investment strategies, expanding trading volumes, changing technology, and increasing investor demand for clear and fast information, and more. To smoothly and effectively meet these challenges, have begun to turn to automated, comprehensive, robust performance measurement reporting as an integrated capability.  This type of reporting includes better, faster, and more valuable information for decision makers. This in turn, improves reporting for senior management and investors, and increases competition for assets among managers, and validating stated returns among regulators.

Currently, much of this work is done on legacy systems, with disparate data sources. These are often manual systems with plug-ins and spread sheets, creating multiple points for error. The results can be slow, inaccurate, and difficult to manage. Reports are often incomplete and portfolio managers have to wait for corrected ones, creating much handwringing and unnecessary anxiety.

Managers evaluating their performance reporting needs and planning next steps have three options:

  • Buy – acquire an industry standard, integrated, GIPS compliant system and hire industry expertise, ongoing maintenance, and support. This option is expensive as it requires a large initial investment as well as ongoing payments for product maintenance and support.
  • Build – custom develop technology that requires significant investment, expertise, and ongoing support for deploying new releases and updates.
  • Rent – outsource performance reporting to an independent third party.

Each of these options has its pros and cons as well as varying degrees of investment and risk. To some investment managers, maintaining an in-house (or hosted) market-acquired or custom-built solution is the preferred route.

However, more and more managers are turning to third party providers (e.g. asset servicers) to deploy and manage this need. Servicers have the accumulated technology, connectivity, expertise, and capacity to handle this level of reporting. Servicers have the accumulated technology, connectivity, expertise, and capacity to handle this reporting. In addition, the solution does not involve a large initial investment. Ongoing, the manager does not need to hire expertise or manage technology. So, they can focus on raising assets and returns; the rest is the asset servicer’s job.

To learn more about performance reporting and the options available, read our latest whitepaper, The evolution of the asset servicer: Performance measurement reporting in the age of value add, or contact us at

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