Investment Management outsourcing has moved forward from the late 1990’s and is now a maturing science. Contracts are being renewed for the first time and in some cases for the second time. There is a realisation that the relationship with the provider has to mature into a true partnership.
ISC has recognised that the operating models of administrators are becoming true multi-client platforms, looking to provide a more comprehensive service than just fund accounting. To achieve efficient and reliable outsourcing, the point of isolation (the functional and technical division between the parties) must be truly understood, robust and flexible to change. Geoff Edwards, ISC partner, explains, “Providers of outsourced services want to demonstrate an improved ability to handle complex asset types, fund structures and regulatory change.
Additionally these providers want to deepen relationships by offering a broader service, demonstrating an ability to service more middle office functions and provide an extended range of post-accounting functions such as; collateral management, performance measurement and client reporting, either as bundled or unbundled services. ISC understand these issues and have an extensive history of delivering change to this market.”
ISC have therefore launched a new service targeted at Asset Managers that have outsourced, or are reviewing the option to outsource and the administrators that provide such a service. The Outsourcing Review Service provides a fast-tracked operational and structural review against established metrics, best-of-breed models and peer groups. The review will provide critical advice to three groups.
Investment Managers reviewing the option to outsource:
The review will identify the appropriate points of isolation for the Investment Manager given the operational structure of the organisation; Where in the lifecycle of a transaction does outsourcing occur and what are the most appropriate mechanics at that point. Further, the analysis will identify the set of functions that can be most efficiently bundled as part of the initial transition. Where no point of isolation is evident the review will identify the roadmap to this point, as a foundation to the outsourcing decision.
Investment Managers who have outsourced:
The review will recommend any changes to existing structures that provide operational advantage, economy of scale or cost efficiency. The process will identify improvements to data structures, processes and technology that deal with manually intense tasks, points of duplication and error in order to reduce operational risk. Again the review will provide a roadmap for change and a commentary on how the two parties (outsourcer and administrator) can deepen relationships and move up the value chain by transferring other functions not outsourced at present.
Administrators providing outsourced services:
ISC will use their extensive and demonstrable knowledge across all functions of investment management to provide a fast-tracked analysis of how to; improve the management and provision of data, strengthen or change the points of isolation, recommend solutions to functional challenges and how to move clients up the value chain through the provision of additional services.
