Why and How Investment Management Performance Teams are Looking for a Way Forward

Date: February 23, 2021

In July 2020 we participated in a Financial Technologies Forum (FTF) webinar in called “Performance Teams Under Pressure”, where fund and asset management professionals and service providers were asked about the key issues around the data tools and technology they use to gauge performance and report it to their clients.

Why and How Investment Management Performance Teams Are Looking For a Way Forward - quotePerformance has always been the industry’s yardstick for measuring investment effectiveness; whether for a single security, a portfolio or for a firm-wide look, asset managers need to capture the right data and then accurately calculate, analyze and report on their performance and risk exposure.

The answers to those poll questions provide a window into the current challenges and concerns, and suggest a roadmap for a way forward as the industry looks to improve how it measures and reports in a constantly-changing regulatory landscape.

What is the key operational challenge that performance teams need to navigate in the current market conditions?    

The size, scope and complexity of the performance measurement task has grown exponentially since the financial crisis of 2007-2008, and it is paramount that investment managers are able to react with the right tools and technology. But to do that, they must first correctly identify the challenges they face.

Respondents identified “timely delivery of performance information to various stakeholders” (41%) as their main concern. On the surface, this might look like just a request for greater speed. In reality, this represents increased demand to provide managers and investors with more daily and granular performance analysis that also keeps in mind the end consumer of the data being tracked.

A further 26% named maintaining effective communication with the front-office and the CRM teams”. This should be seen not just as a warning to not let technology get in the way of human interactions, but also as an opportunity to enhance and effectuate those all-important connections.

Four months into the COVID-19 pandemic, just 11% chose “new working arrangements, remote access to systems and services” as the biggest challenge. While this might seem like a low number, it’s not surprising when you consider the success of the adjustments that had been made to that point; kudos to investment management teams for quick and effective action in the crisis.

What is the most serious issue with performance measurement technology currently faced by your firm?

Participants were next asked to look closer to home and move from the challenges of the industry environment to technology concerns at their own firms. Half of respondents (50%) named “Systems integration and data complexity” as the most serious issues they faced with performance measurement technology. The increases in the complexity of capital markets and the pressing demands for more intelligence to be delivered faster is the reason for the growing popularity of the performance book of record (PBOR). PBORs form a superset of all relevant data, including investment information, integrated performance results, risk exposure analysis, reference data and adjusted data, plus a variety of external benchmarks and peer data. To address the complexity challenge firms need to employ best-of-breed technology that gets the front, middle and back offices on the same page, and to provide transparency and visibility into investments, and all facets of performance and risk analysis. An open architecture concept enabled by APIs is a cornerstone of the kinds of ecosystems this technology makes possible.

Close behind at 35% was “Data quality management”. With data coming from so many different sources and derived from a spectrum of systems, performance teams are clearly concerned about the ability of technology to ensure accuracy and robustness at a time when speed and efficiency can seemingly be the primary focus of the c-suite. While speed and efficiency must always be top-of-mind, they cannot be allowed to obscure the need for a single dataset across the entire investment lifecycle – not just for the generation of performance information, but also for the purposes of analysis and regulatory risk reporting. To get there requires transparency and a holistic approach that includes automated exception reporting.

That “Data volume and ready access to data” only claimed 5% of those surveyed tells us that there’s little concern that the amount of data is overwhelming in and of itself.

How is your organization preparing to tackle the challenges presented by a PBOR?

To remain competitive, firms are modernizing key parts of their investment operations, including their performance and analytics systems and processes. In some cases, they are developing their new resources in-house; in others, they are leveraging commercially available solutions from vendors. This process is well underway, with just over half (51%) saying they already have a PBOR in place. (This figure includes the 39% of respondents who say that they “already have a PBOR in place” and are investing further in the ecosystem, as well as the 12% who have a PBOR but “no plans to invest further in these types of projects”.) More than a quarter (26%) say they are “exploring outsourcing options for PBOR”, with a further 5% saying they “already outsource PBOR-related functions”.


Performance teams are indeed under pressure, as the title of the FTF webinar in July reflected.

The overarching problem faced by managers and their performance teams is a persistent lack of enterprise-wide visibility into asset performance and risk exposure. Data, and access to it, can be separated by legacy organizational structures, outdated technology and even office politics. To address the challenges identified in the webinar and survey, businesses must use the same data for both performance and risk to ensure consistency, efficiency and traceability. The good news is that firms are working to address and overcome their enterprise data management challenges and the increase in the volume of data, the number of sources of data, and the granularity of data available. From data warehouses to Data as a Service to PBORs, managers, performance teams and their technology partners (both in-house and outside) are working to modernize their systems and methods.

The investment management industry is at an inflection point. While performance is still performance, and risk is still risk, the paradigm the industry uses to capture, measure and understand these perpetual metrics is fundamentally changing. Firms are finally moving away from their legacy systems and toward flexible, scalable and automated open-architected, API-enabled cloud-based systems, positioning themselves for long-term success and growth.

While these are major changes, there are market-tested and proven ways now available to help make the transition. While performance teams are under pressure – to modernize, to report accurately, to be more efficient – there is agreement across the industry as to what those challenges are, how technology can help and how to keep the end investor in sight at all times.

Disclaimer: The information contained in this communication is for informational purposes only. Confluence/StatPro is not providing, legal, financial, accounting, compliance or other similar services or advice through this communication. Recipients of this communication are responsible for understanding the regulatory and legal requirements applicable to their business.