Media Contact:
Robert Minicucci, Warner Communications, 603-488-5856, robert@warnerpr.com

“EXTREME MAKEOVER: BACK-OFFICE EDITION?”

INCREASED DEMANDS FOR TRANSPARENCY AND CONTROL
WILL CAUSE FUND ADMINISTRATORS TO RETHINK
OPERATIONS IN 2010, SAYS CONFLUENCE

(Pittsburgh, PA – December 9, 2009) Confluence, the global investment management industry’s leading provider of automated data management solutions, expects 2010 will bring significant changes as fund administrators rethink their back-office infrastructure to deal with new demands for transparency and risk control and the promise of complex regulatory changes.

According to Kirk Botula, Executive Vice President and Chief Operating Officer, “The aftermath of the credit crisis is hitting squarely in the back office. Understaffed and antiquated operations lack the control, flexibility and scalability to stand up to new demands for transparency and control. Fund administration leaders must redefine their strategic objectives, and rethink the way they leverage their people, processes and technology to deal with these new challenges.”

Mr. Botula is available for comment on the new fund administration landscape, as well as the following issues:

• Back-office staffing levels won’t be restored, and retention will become a challenge. Fund company and service provider back offices will continue to be short staffed, as the priority for hiring in 2010 will likely focus on positions that lead to revenue generation. Talent retention will pose new challenges for the industry as employees, unhappy with salary freezes and bonus cuts look for new positions. Turnover introduces additional risk in manually intensive work environments as inexperienced new employees increase the potential for errors.
• Rebuilding investor trust and confidence will be a top priority, resulting in additional regulation to ensure greater transparency through investor disclosure. Fund companies understand that, whether mandated by regulation or voluntarily, they will need to provide more investor disclosure. As they await new regulation, such as the final requirements of the Money Market Reform Rule which would involve new liquidity and credit quality standards and additional disclosure, many fund complexes continue to struggle with recent requirements such as FAS 157 or FAS 161.
• Demands for real-time availability of critical information for management and investor decision making will drive technology adoption. In 2010, firms will increasingly automate data management as investors and management expect more real-time access to useful information for strategic decision making. One example is expense control, where fund managers require better visibility in order to budget effectively. The SEC’s XBRL Voluntary Holdings Filing Program, which began in July 2009 to make it easier for investors to search and use SEC filings information, is another example.
• IFRS/US GAAP convergence will take on heightened attention in 2010. At September’s G20 Summit in Pittsburgh, the leaders called on “international accounting bodies to redouble their efforts to achieve a single set of high quality, global accounting standards within the context of their independent standard setting process, and complete their convergence project by June 2011.”* While some argue the timeline will be extended, it is clear that a global accounting standard is coming, and fund administrators must begin planning now.
• Risk control will be a top priority and will drive IT investments. In the new age of accountability, firms can no longer tolerate errors propagated by spreadsheets and manual fund administration processes. In a new regulatory environment that demands greater flexibility, scalability, and accuracy, use of spreadsheets will only exacerbate these challenges. An example is the automation of post-trade compliance activities to meet the need for more frequent portfolio testing.

Journalists who would like to speak with Kirk Botula may contact Robert Minicucci, Warner Communications, at 603-488-5856 or robert@warnerpr.com.

About Confluence

Founded in 1991, Confluence is a global leader in fund administration automation. Confluence helps investment management companies gain unprecedented control by automating every step of the fund administration process—including the collection, creation, confirmation, and delivery of investment product data. Results are lower costs, reduced risk, decreased reporting turnaround times, and the scalability to automate more processes without additional resources. Confluence solutions are used by 40 percent of the leading global investment managers, and more than 60 percent of U.S. mutual funds. The Unity™ platform from Confluence addresses a wide range of problems from performance measurement to customized reporting for a full array of domestic and international managed investment products, including mutual funds, funds of funds, collective funds, separate accounts, and variable products, as well as hedge funds and other alternative investments. Major fund companies such as the Principal Financial Group®, T. Rowe Price, and Russell Investments; and service providers such as U.S. Bancorp Fund Services rely on Confluence. Headquartered in Pittsburgh, PA, Confluence serves the international fund industry with key locations in London and Luxembourg. For more information, visit www.confluence.com or e-mail info@confluence.com.

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* http://www.pittsburghsummit.gov/mediacenter/129639.htm