Workday typically follows a semi-annual release schedule, with updates rolling out approximately twice a year. The spring update was released on the first weekend of March. The release introduced new features, enhancements, and fixes to the Workday platform to improve user experience, functionality, and overall performance.

These updates are important for Workday customers as they ensure that their systems remain up to date with the latest features and improvements, helping them to stay competitive and efficient in their operations. In this article, we specifically review the new Payroll and Compensation updates introduced by the Workday 2024 R1.

Payroll

Prior Period Tax Adjustments

Prior Period Tax Adjustment Calculator to reduce manual effort. PPTA is accessible through the related action icon of an original completed pay result.

• Select Prior Period Tax Adjustment > Run

PPTA Calculator streamlines the process for retro tax authority adjustments. If multiple pay results need to be adjusted, always start with the earliest completed period first.

PPTA can be used anytime users are retroactively adding, changing, or deleting the following for an employee:

• Primary home or work state
• Tax elections for work or home city
• Local other authority
• County local taxes
• Home school district
• Domicile state

The new Prior Period Tax Adjustment (PPTA) calculator will help to calculate tax and wage differences effortlessly due to retro tax authority changes in completed periods. This provides greater efficiency when adjustment for wages or taxes is needed due to retroactive tax authority changes.

Payroll Insights

Real-time smart tool for reviewing payroll results. It has multi-faceted filtering capabilities:

• Once a pay calculation has been run, the Payroll Insights report will pull predictive pay data.
• Allows easier review of historical payroll results to identify what are true abnormalities and what is not.
• Feedback can then be provided on predicted results to improve accuracy over time.

New Tasks:

• Maintain Payroll Insights Configurations
• Maintain Payroll Insights Custom Tags

New Reports:

• Payroll Insights Results Report
• Historical Payroll Insights Results Report

Payroll Insights provides a real-time prediction and evaluation tool to analyze payroll results based on historical payroll result patterns. This feature helps to reduce the amount of time and effort spent manually reviewing and identifying payroll exceptions.

Payroll Third-Party Payments

Generate and Settle Payments for Deduction Recipients of IWO and Court Orders. Workday can now process payments for IWO and Court Orders:

• When a pay calc is run, Workday generates a payable item for the deduction recipient’s line result.
• A new tab is produced on the pay result “Payroll Third-Party Payments.”
• After payroll is completed, the payable will be available to pull into Settlement Run using the new filter “Payroll Third-Party Payments.”
• Payments can be processed electronically via integration or through the print check feature.

Utilizing the normal payroll processing and settlement methods, Workday can now identify, process, and produce payments to deduction recipients. Previously, customers were required to handle these payments manually outside of the payroll process or rely on third-party vendors to complete them. Customers can now produce these payments internally with Check Printing or utilize their existing bank integrations. This feature is a time and cost-saver for clients currently managing the maintenance of their IWOs.  

Compensation

Workday Docs for Compensation Statement Layouts. With Workday Docs, users can now create a custom Compensation Review Statement layout within Workday:

• Workday Docs for Layouts is a visual editing tool for designing, creating, and previewing document layouts for use with custom advanced reports in Workday.
• Users can insert data fields and even apply condition rules to any piece of the layout.

As one of the more highly anticipated updates, users can now completely customize the compensation review statements without the need for any outside reporting tools.  Once created, users will be able to make updates to the compensation review statements more easily year over year.

Total Rewards Statement Redesign

Design for Increased Customization. Redesigned Layout:

• Users can now configure section groups that will display on the statement as cards. 
• Each section group can include lists, tables, and calculated values.
• Users can arrange the cards on the statement in any order they like.

The updated design of Total Rewards Statements will allow users to customize how they show employees their compensation. This will allow employees to understand their compensation more easily and how it is broken into different components.

Percent-Based Calculated Plans

Manage Complex Percent-Based Compensation Plans. Target Percentage or Ceiling Amount:

• Manage complex percent-based compensation plans to configure and report on a target percentage and a ceiling amount for amount-based calculated plans and process them in Payroll.

Calculated plans can now be included in salary-dependent Primary Compensation basis calculations for workers managed by Basis Total. New display text for Calculated Plans with ceiling calculations or percentage calculations.

Dynamic Plan Type Display

Dynamic Compensation Transactions. Propose Compensation Change:

• Workday 2024R1 makes it easier to assign employees compensation during the Propose Compensation Change process by displaying only the relevant plan types for the employee.

By only seeing what is relevant to a specific employee when processing a Change Job or staffing transaction, the processor can decrease manual error while condensing what it sees and maximizing efficiency.

Grid Profiles for Compensation Review

Grid Configuration Profiles. Grid Profiles & Conditional Calculations:

• There is increased flexibility of grid configurations in compensation reviews. Users can now configure multiple grid configurations for the same compensation review process.

Flexibility within the Compensation Review Grid Configuration allows Planners to view fields that are more relevant to the participants in the process.

Conclusion 

The Workday release will have a major impact on your current Workday environment, and new features will enable better user adoption for your team. It is critical that your team thoroughly researches and tests the new updates in your Preview environment.

Getting the most out of these features will require a thorough understanding of what you are trying to get out of Workday and how Workday will work within your organization. With FinServ, you have a trusted advisor with experience in both Workday and the industry to help you make informed decisions about what functionality to leverage, ensuring that you make the most out of your Workday investment. FinServ has advised both Workday HCM and Financial clients through Major Semiannual releases. In addition to release consultations, FinServ Consulting offers operational assessments and Workday implementations. FinServ has experienced HR and Finance consultants who have worked with clients on vendor selections and implementations of various HR and Finance platforms. 

In the dynamic world of finance, where data is fundamental for informed decision-making, seamless and accurate data migration is essential for organizations like hedge funds, private equity firms, asset managers, and fund administrators aiming to transition their systems and workflows. With technology progressing rapidly and industry dynamics constantly evolving, the importance of robust systems and workflows cannot be overstated. Data migration emerges as a complex challenge in such a landscape, especially for entities handling intricate financial instruments, detailed investor allocations, and diverse portfolios. Successfully navigating this challenge demands strategic planning and meticulous execution to achieve desired outcomes.

This comprehensive blog post explores the intricacies of data migration tailored for financial firms, specifically hedge funds and fund administrators. Focusing on these firms’ unique landscape, we delve into their challenges, explore best practices for successful migrations, and propose potential solutions to navigate the complexities of transferring financial data seamlessly.

FinServ Consulting draws upon its extensive experience and cultivated expertise forged through partnerships with similar funds and entities. This strategic approach allows the company to successfully support its clients in the dynamic realm of data migration projects.

Challenges in the Data Migration Process:

Data migration is riddled with numerous challenges, especially when grappling with substantial data volumes or transitioning to a new system. This segment will delve into the complex hurdles faced by financial firms during data migration, addressing issues ranging from maintaining data integrity and managing compatibility disparities between source and target systems to mitigating the risks of downtime and disruption.

Data Quality Issues:

The importance of data quality cannot be emphasized enough, considering the significant consequences of incomplete or inaccurate data, duplicate entries, and improperly formatted information.

Accomplishing precise Net Asset Value (NAV) and investor allocations, the primary goals in every data migration project, depends significantly on the completeness and accuracy of the source data. This involves meticulously examining various data components, including trade and open lot files, non-trading and cash activity reports, and financial statements. FinServ Consulting highlights the crucial need to validate data samples for accuracy before migration, emphasizing a proactive approach to identify and rectify any inconsistencies. This ensures the preservation of data integrity throughout the entire migration process.

Disparity between Source and Target Systems:

A critical challenge during data migration arises from compatibility issues between the source and target systems. These systems may operate on distinct platforms or employ diverse data formats, creating obstacles to seamless data transfer.

For example, in the source system, certain asset classes like Collateralized Loan Obligations (CLOs), Loans, and Collateralized Mortgage Obligations (CMOs) might be uniformly treated as Notes or Bonds due to system limitations. However, the target system may support these distinct asset classes, requiring a thoughtful transition that accommodates these variations. In another scenario, the source system might lack an automated method for handling complex investor allocations, resorting to manual management through Excel spreadsheets. Conversely, the target system may feature a sophisticated calculation engine designed for these intricate allocations.

FinServ Consulting excels in crafting migration plans, which include testing and validation of these variations, ensuring a smooth transition that not only addresses system limitations but also effectively leverages the capabilities of the new environment. This tailored approach is essential for mitigating issues arising from differences in asset treatment, automation capabilities, and overall system functionality.

Downtime and Disruption:

Data migration often introduces downtime and disruptions to regular business operations. Throughout the process, systems may experience offline periods, and access to real-time and live data could be restricted, potentially impacting business operations and customer service. Mismanagement of the migration process can exacerbate downtime, leading to errors and potential data loss.

To counter the challenges of potential downtime and disruptions during data migration, FinServ Consulting adopts strategic measures. This includes scheduling migrations during less busy periods, conducting migrations in Quality Assurance (QA) environments, or implementing controlled setups with dummy entities in live production environments. FinServ emphasizes the importance of maintaining regular communication and updates for stakeholders throughout the entire process. This commitment to transparency and collaboration contributes to a smoother and less disruptive data migration experience for financial firms.

FinServ Consulting Recommended Best Practices for Successful Data Migration

FinServ Consulting’s recommended best practices serve as a comprehensive guide for financial firms undertaking data migration. By incorporating these practices into their migration strategy, businesses can navigate the complexities of the process with confidence and achieve successful outcomes.

Creating a Comprehensive Data Migration Strategy:

Formulating a well-defined data migration strategy is crucial for ensuring success in financial firms. This strategy encompasses various elements such as a detailed project timeline, a comprehensive list of deliverables, key milestones, roles and responsibilities, effective communication channels, and contingency measures to address unexpected challenges during the migration.

This involves conducting detailed sessions with the head of operations and accounting to understand how to achieve the end goal effectively. There are several approaches to data migration, each with its advantages and considerations:

1. Migrating historical open lots and journal entries true up for all other entities, including cash and non-trading items, up to an agreed-upon Cut-Off Date. This method is the quickest and most cost-efficient solution. However, it may result in the loss of historical Realized P&L or journal entries.
2. Migrating granular data, including all trades, cash activity, and journal entries. This approach provides a comprehensive solution with access to all historical P&L and ledger entries. However, it can be extremely time-consuming and expensive.
3. Migrating open lots while maintaining granularity on cash and non-trading data. This option strikes a balance between the first two approaches. It is less expensive than option 2 and provides more historical data than option 1. Additionally, it can be cost-efficient and significantly quicker than option 2.

By carefully considering these options and aligning them with the organization’s goals and resources, financial firms can devise an effective data migration strategy tailored to their specific needs and objectives.

Ensuring Data Integrity and Systems Compatibility:

Data integrity is a critical consideration in achieving a successful data migration. This involves identifying discrepancies like missing or inaccurate data and creating a comprehensive plan for resolution. Utilizing data profiling tools is advantageous in detecting inconsistencies and determining effective approaches for resolution.

Additionally, verifying compatibility between source and target systems is essential for a seamless migration process. Given potential differences in data structures, formats, and standards, this involves mapping source data to align with the target system, identifying necessary data transformations, and validating data format accuracy.

Leveraging Automated Tools:

Automated tools play a pivotal role in enhancing the efficiency of the data migration process while simultaneously reducing the likelihood of errors. These tools encompass a spectrum of solutions, ranging from quick VBA scripts for data transformation to more comprehensive system-supported tools. Their primary objective is to automate key tasks such as data extraction, transformation, and loading.

For instance, consider a hedge fund with a substantial trading volume leading to a vast history of open lots and transactions. Once the source data formats are established, creating quick Excel macros can significantly expedite the loading process. This automation minimizes the need for manual intervention, resulting in notable time and cost savings while concurrently reducing the risk of errors.

Risk Mitigation and Contingency Planning:

Identifying potential challenges is crucial in data migration, and employing strategies to mitigate risks is essential. Developing comprehensive contingency plans ensures a swift response to unforeseen issues, safeguarding smooth project execution. This involves proactive risk assessment, ongoing monitoring, and agile responses to emerging challenges, all aimed at preserving project success.

It is crucial to have rollback options and restore points established during the data migration process to ensure that the previous accurate version is restored in case of unforeseen issues.

Documentation and Knowledge Transfer:

Creating thorough documentation is pivotal for future reference and ensuring effective knowledge transfer within the organization. This practice guarantees that insights gained during the data migration process are well-documented, facilitating seamless continuity and providing a valuable resource for future efforts.

Post Migration Support:

Establishing feedback loops is crucial for ongoing improvements after data migration. Continuous monitoring for post-migration issues allows for the identification of potential challenges, enabling the organization to address them swiftly. This involves creating mechanisms for gathering feedback to inform iterative enhancements and maintaining vigilant oversight to ensure a successful post-migration phase.

Conclusion 

In conclusion, data migration remains a critical process for businesses aiming to stay competitive, enhance operational efficiency, and achieve their strategic objectives. While it presents inherent complexities and challenges, these hurdles can be overcome with the right strategies and considerations. By proactively addressing potential obstacles such as data quality issues and system incompatibility and adhering to best practices like meticulous planning, thorough testing, and vigilant monitoring, businesses can ensure a smooth and successful transition.

At FinServ, we understand the nuances of data migration, particularly within the realm of the asset management industry. Leveraging our deep expertise in diverse data types, workflows, and processes, we provide tailored solutions to meet each client’s unique data migration needs. Our methodologies and frameworks, supported by technical proficiency and a robust project management model, guarantee effective resolutions for data migration challenges. Whether you require a push-start, ongoing support, or leadership in complex migration projects, FinServ stands ready to assist your firm at every stage of the journey. With our assistance, you can confidently navigate the complexities of data migration, ensuring that your migration aligns seamlessly with your objectives and contributes to your overall success.

In today’s rapidly evolving financial landscape, data has become the lifeblood of decision-making for hedge and private equity funds. As the volume, velocity, and variety of data continue to increase, so does the need for a modern, scalable, and agile data management solution. Enter Snowflake – a cloud data platform revolutionizing how organizations manage and analyze their data. In this blog post, we’ll explore why hedge and private equity funds should consider leveraging Snowflake to stay ahead of the curve and drive better investment outcomes. In this post, we have focused on the front-office-related aspects of a fund’s data. Still, the same advantages apply to the investor relations/business development, HR, and middle and back-office operations of your fund.

Scalability and Performance:

Hedge and private equity funds deal with massive amounts of data, from market trends and economic indicators to company financials and portfolio performance. Traditional on-premises data warehouses struggle to handle the scale and complexity of this data, leading to performance bottlenecks and scalability challenges. Snowflake’s cloud-native architecture allows funds to scale their data infrastructure on-demand, ensuring fast and reliable access to critical insights, even as data volumes grow.

Agility and Flexibility:

In today’s fast-paced financial markets, agility is key to seizing new opportunities and adapting to changing conditions. Snowflake’s decoupled storage and compute architecture enables hedge and private equity funds to decouple their data storage from compute resources, allowing them to independently scale and optimize each component based on their needs. This flexibility enables funds to quickly spin up new analytics workloads, experiment with new data sources, and iterate on investment strategies without being constrained by their underlying infrastructure.

Security and Compliance:

Data security and compliance are top priorities for hedge and private equity funds, given the sensitive nature of the information they handle. Snowflake provides industry-leading security features, including end-to-end encryption, role-based access controls, and data masking, to protect sensitive data and ensure compliance with regulations such as GDPR, CCPA, and SEC Rule 17a-4. Additionally, Snowflake’s built-in audit trail and governance capabilities provide funds with full visibility into data access and usage, helping them maintain trust and transparency with investors and regulators.

Advanced Analytics and Insights:

In the competitive world of finance, the ability to extract actionable insights from data can be the difference between success and failure. Snowflake’s integration with leading analytics and machine learning tools, such as Tableau, Looker, and DataRobot, empowers hedge and private equity funds to uncover hidden patterns, identify investment opportunities, and optimize portfolio performance. By leveraging Snowflake’s scalable compute resources and support for diverse data types, funds can perform complex analytics tasks, such as risk modeling, scenario analysis, and predictive modeling, with ease.

Cost-Efficiency:

Traditional data warehousing solutions often require significant upfront investment in hardware, software, and maintenance, making them cost-prohibitive for many hedge and private equity funds. In contrast, Snowflake’s pay-as-you-go pricing model allows funds to pay only for the resources they consume, eliminating the need for costly infrastructure investments and providing greater cost predictability and transparency. Additionally, Snowflake’s automatic scaling and resource optimization capabilities help funds minimize wasted resources and optimize their cloud spend, further driving cost-efficiency and ROI.

Conclusion 

In conclusion, Snowflake offers hedge and private equity funds a modern, scalable, and agile data platform that can unlock the full potential of their data assets. By embracing Snowflake, funds can gain a competitive edge in the market, drive better investment outcomes, and future-proof their data infrastructure for the challenges ahead. It’s time for hedge and private equity funds to harness the power of Snowflake and take their data capabilities to the next level.

How FinServ Can Help

With close to twenty years of working with the top 100 Hedge and Private Equity funds, FinServ is uniquely positioned to understand the data requirements of your fund from Front to Back-Office and everywhere in between. Our consultants possess the technical skills and industry expertise to help you design and implement an effective Snowflake strategy. Our familiarity with all the other systems you will need to integrate your Snowflake data into makes FinServ the ideal Snowflake Partner to help you unlock the Power of their platform today.

Staff Augmentation, a strategic approach to workforce management, has gained significant traction in the Alternative Investment industry.  This staffing approach is designed to meet short-term project goals and is a flexible, cost-effective means to fill skill gaps. Staff Augmentation has never been more relevant than now in the post-COVID labor environment, as employers and employees look to hybrid and remote working models as changing perceptions in work/life balance and technological innovations drive the need for staff with specialized skillsets without geographical limitations. 

There are many advantages to using temporary staff for project work or to supplement staffing for cyclical increases in workloads.  Utilizing temporary staff allows employers to scale up or down based on seasonal needs, and hiring for certain durations eliminates the risk of overstaffing during slower periods.  

These individuals bring highly specialized skills and years of industry experience. In most cases, they can be onboarded quickly and efficiently to scale a workforce for project work and other short-term staffing needs without a long-term commitment.  Projects typically consume precious time from experienced employees, requiring them to backfill their line roles. 

In addition, many firms opt to augment their project staff with experienced temporary project resources to assist with project management and business analysis.  Often, firms have subject matter experts for a project but lack individuals with strong documentation and the expertise to optimize the utilization of the firm’s resources to complete the work on time and within budget. 
 

The benefits of temporary staff are summarized in the chart below: 

Accessing specialized temporary staff in the Alternative Investment industry will allow access to a broader array of skills and experiences. Firms can access individuals who have worked at peer firms and benefit from seeing how other organizations operate.   Experienced temporary staff can provide an objective, independent, third-party view of a company’s operations. 

Employers are turning to temporary staff to manage costs more efficiently in today’s uncertain economy. Despite low unemployment nationally, many financial services firms, including most major banks, have decreased full-time staff in 2023 and 2024.  When headcounts are being reduced, firms can often get internal approval to hire temporary staff when workloads dictate without administrative restrictions.  By filling critical roles with experienced staff augmentation resources from consulting firms, employers can manage costs and risks more efficiently while eliminating payroll taxes, employee benefits, and other administrative burdens associated with managing and mentoring full-time employees.  

Conclusion 

Staff Augmentation offers a variety of benefits that empower organizations to adapt to changing market dynamics, optimize resource utilization, and achieve strategic objectives. 

FinServ Consulting has a broad range of full-time consultants and independent contractors with extensive experience in the Investment industry available for staff augmentation engagements. The establishment of this network of professionals is a direct result of years of experience working within the industry.  Our knowledge of all aspects of front-to-back-office operations will immediately positively impact your business.   

To learn more about our services and how we can help, contact info@finservconsulting.com or (646) 603-3799. 

As we near year-end, there are several year-end Workday activities that our clients go through that revolve around extending integration schedules, creating pay periods, and ensuring that Workday is ready for the following year. In addition to these activities, we recommend conducting an Absence / Time Off Plan health check to ensure the plans and balances are correct, align with employee expectations, and comply with regulatory bodies. The following tasks form the basis of the health check:

• Verify unused time off balances.
• Verify that employee time off balances are correct.
• Verify that employee leave statuses are correct.

Unused Time Off Balances

Looking at each employee’s year-end vacation balances will reveal any outliers or out-of-the-ordinary balances (Hint: Use the Extract Time Off Balances report to view these balances). We’ll want to find any out-of-the-ordinary balances as that can indicate more significant underlying issues that should be addressed sooner rather than later. For example, workers may not have taken any time off, and their full vacation balance will stand out. Having such a sizeable unused balance can indicate issues such as:

• Is this a cultural issue? At many investment firms, front-office employees may not be able to utilize their days, and this may be the accepted norm that requires a more extensive discussion to resolve.
• Is this a process issue? At these same firms, front office / senior management is not inclined to go into Workday to do data input. The discussion would then shift to setting up delegates to enter time off on behalf of select employees or reinforcing the correct time off process with those employees. (Hint: Use the All Worker Time Off report to view all time off requests submitted to see if they are being inputted and approved on a timely basis).

Correct Time Off Balances

Time Off balances are affected by numerous factors such as accrual rates, carryover amount, carryover caps, balance caps, employee tenure, position, office location, manual overrides, etc. The sheer number of dependencies can cause incorrect balances, and it will be essential to catch these scenarios early before the employee notices any discrepancies, uses days they don’t have, or vacation payouts are done on incorrect balances. To identify these situations, verify employee time off balances using future effective dates that are 1-2 years in the future. As the balances span years, any expiration or cap issues will become apparent.

Consider an incorrect carryover cap in Workday for a terminating employee in California. This cap is meant to dictate the maximum number of hours an employee can carry over, and without it, the carryover accumulates to an unexpectedly high amount. This will become an issue if that employee is terminated, as California requires that any unused vacation be paid out.

Confirm Employee Leave Status

Incorporating checks on leaves of absence is highly recommended, as leave status and dates can affect functionality in Workday and possibly have payroll implications. Regardless of whether Leaves are maintained manually or by a third-party leave administrator, leave status needs to be reviewed. Manual updates often get skipped, and leave administration by third parties is not always correct.

Consider the example where an employee was on primary caregiver leave and has returned to work. However, their leave status in Workday was not updated, so their delegation settings were not updated when they returned. This would result in the business process approval not being sent to the correct employee. Furthermore, depending on how the employee is paid while on leave, they can be paid under an incorrect rate if the wrong employee status is sent to the Payroll provider. (Hint: Use the Leave Results for Organization report to get a holistic view of all employees on Leave and their Leave dates).

Conclusion 

By making absence a routine focus, you can proactively catch any issues before they happen and become more significant. Once the problem occurs, it becomes more complicated to fix from a Workday configuration perspective and manage employee expectations. For example, an incorrect vacation payout will be much easier to fix before it is paid out. Verifying the health of your Absence setup is good practice and will avoid employee frustrations that happen when pay is affected.

Data is the backbone of success for all asset managers. Those who lack data governance policies are at a high risk of facing data breaches, privacy violations, and misuse, each risk capable of deteriorating a firm. Beyond immediate repercussions, longer-term risks can damage the firm’s reputation and can lead to a potential loss of investors. The need for having an effective data governance framework is not merely a choice, but rather an indispensable strategy. Data governance empowers asset managers to uphold data quality, navigate risk threats, and exceed regulatory requirements, all necessary for a robust organization in today’s market.

Data Governance Overview

At its core, data governance is the systematic approach to managing data assets within an organization. The structured framework encompasses policies, processes, and controls to ensure data issues are accurately defined, resolved, and audited to meet the firm’s overall strategy and business goals. By establishing clear lines of data ownership, defining meticulous standards, and rigorously upholding data integrity, data becomes a pathway for organizational growth. In data-dependent industries such as asset management, a robust data governance strategy is not merely an option, but rather a fundamental necessity.

Data governance in asset management firms promotes cross-departmental collaboration, ensuring that data is coordinated and consistent and that all parties are aligned on data understandings and goals. Data within the organization becomes easily accessible and increases accountability, productivity, and trust within the organization. Firms that focus on having a robust data governance framework can better leverage their firm data as an asset, enabling them to improve decision-making and gain a competitive advantage.

Data Governance Amongst Asset Managers

Data governance amongst asset managers is vital due to the complex nature of their business operations, stemming across the trading, operations, IT, compliance, risk, and other firm departments. In the United States, data quality issues cost $3.1 trillion per year across the board (Webinar Care). Furthermore, low data quality and availability can cause employees to spend 36% of their time on non-value-added tasks in Finance (McKinsey & Company). 55% of asset managers have already recognized the benefits of data governance and have taken initiatives to enhance data governance and quality within their organizations (Accenture). Having a dedicated data governance team not only increases data quality but also increases data confidence by 42%. (Webinar Care)

It is crucial for asset managers to recognize the benefits of data governance and focus on it. A lack of focus is costing firms money and decreasing their employees’ productivity. In an industry where it is imperative that each resource is provided with the tools they need in an effective manner, the lack of data governance policies limits this. Not only does a lack of data governance hurt an asset management firm internally, but it also negates its ability to compete within the market. Front-office investment analysis slows down, middle, and back offices face operational delays, and investor data becomes vulnerable. This cannot only have an impact on the firm’s rate of return, but it can also lead to increased regulatory risk and a loss in investor trust.

High-Level Data Governance Framework

Implementing a data governance framework as an asset manager can seem daunting at first; however, following a well-structured and adaptable general framework can make the process seamless and effective. FinServ’s general framework incorporates key learning from previous clients and ensures a comprehensive approach to kick-starting the data governance initiative.

Conclusion & Suggested Next Steps

Successfully implementing a data governance framework can be challenging for many alternative asset management firms, as there is a need for an objective framework and subject matter expertise. Recognizing, documenting, and strategically resolving key data issues are critical to a firm’s success. Not only does this increase the operational efficiencies within the firm, but it also provides the firm with a competitive advantage. Asset managers can engage with subject matter experts to gather insights into implementing a data governance framework properly, but they must still have the know-how to ensure proper implementation for their firm.

FinServ has experience researching, developing, and working with clients on their custom-driven data governance requirements. We have extensive knowledge of the different data types, workflows, and processes that exist among leading asset management firms. Our methodologies and frameworks allow us to provide objective and high-quality solutions for our client’s data governance issues. Our technical skillsets and comprehensive project management model ensure the proper resolution of data governance issues. FinServ can help kick-start, support, or lead your unique firm through its complex data governance projects.

To learn more about how we can help and our services, contact info@finservconsulting.com or (646) 603-3799.

Private equity firms and hedge funds of all sizes should leverage customer relationship management (CRM) software to drive fundraising, maintain investment pipelines, and establish seamless operational processes. Salesforce is the leading and best CRM platform to help you achieve these goals. Each organization that uses Salesforce has its own instance that can be customized in powerful ways to meet its investor relations and operational requirements. Because of Salesforce’s customizable nature, specialized skill sets are required to get the most out of the application. This means that the firm’s size will dictate the resources required to ensure its Salesforce instance is utilized to its full potential.

As smaller firms grow their assets under management (AUM), it often finds that Salesforce will require more customization to meet its growing needs. Additionally, the administrative burden of managing users, data, and the user interface will grow beyond what most small firms can provide without a dedicated Salesforce resource. These firms then find themselves at a crossroads. Do they assemble a team internally to maintain the system, or do they engage with a managed service provider?

This article details the pros and cons of both options and outlines how FinServ’s Salesforce managed service can immediately benefit growing firms.

How to Know When You Are at The Crossroads

A few key indicators often arise when a firm has outgrown its current Salesforce administration process. The factors listed below highlight the most common reasons that firms need to reevaluate their current approach.

Data and Reporting Gaps – Salesforce has a powerful, user-friendly reporting engine that is relatively easy to leverage to gain huge benefits and invaluable business insights. However, the way that your Salesforce data is set up and organized will dictate how much value you will get from your reports. Therefore, it is critical that when first designing your system, you have a specialist who understands alternative investment data as well as Salesforce data modeling. Leveraging a managed service provider like FinServ, a Salesforce partner specializing in alternative asset management, ensures your success at this critical step.

Administrative Burden – New user creation, access management, user deactivation, and user profile customization are just a few of the day-to-day tasks that need to be carried out. Salesforce has one of the most powerful security models in the software marketplace. It allows you to ensure users only have access to the data they require while ensuring compliance with all regulatory agencies. However, with this power comes a level of complexity that requires someone who has been trained in Salesforce’s security model. Trying to use an internal team member without the proper training and expertise could be costly, not just because of compliance issues but also because of the amount of time they will spend trying to configure the system. Using a Salesforce-certified administrator will help to ease this burden at a reasonable cost.

Automating Key Business Processes – Salesforce has an incredibly powerful workflow engine called Flow, which can be used to automate your most important business processes. However, setting up the automation requires specific Salesforce skills and some development-level expertise. In addition, FinServ consultants have the advantage of seeing many other private equity and hedge funds and knowing how they have automated their key business processes. Leveraging best-in-class solutions provides priceless benefits to your firm.

Lack of Integrations – Often internal firm resources will not be aware of other 3^rd party applications available through the Salesforce App Exchange that can quickly and easily enhance the power of the Salesforce instance. Since your managed service provider is a Salesforce Partner who spends their time making sure they are up on the best solutions in the Salesforce environment, they are in the best position to recommend cost-effective 3^rd party applications to integrate with your Salesforce environment.  Integrations with commonly used generic systems like SharePoint Online, or industry systems like Preqin are critical to ensuring your Salesforce instance is operating in the most efficient way possible. If your firm’s Salesforce instance lacks key integrations, engaging a managed service provider like FinServ will provide an immediate benefit.

What Does a Salesforce Managed Service Provide?

In order to compare a managed service provider to in-house resources, the scope of the provider’s services must be outlined. A Salesforce-managed service provider will generally perform the tasks listed below:

While many firms without dedicated Salesforce resources can handle their account maintenance and some aspects of their system configuration in-house, most do not have the expertise to deal with the other aspects included in a managed service agreement. Some of the largest firms may choose to hire a dedicated Salesforce resource or build out an entire team. However, hiring dedicated resources is not always a feasible option for firms that are growing rapidly from small to mid-sized. This is the most common scenario in which FinServ’s Salesforce-managed services can provide an immediate benefit.

Overview of Managed Services Compared to In-House

The table below analyzes utilizing a managed services partner compared to developing an in-house team to maintain your Salesforce instance. These are all factors to consider when surveying your potential options.

Conclusion

Recognizing when a lack of proper resources is limiting your alternative investment fund is critical. Once the firm has come to this realization, the next step is to engage a managed service provider or build a proper in-house team. Compared to hiring an in-house team, managed service providers will almost always generate a more immediate benefit for small and mid-sized firms. These benefits include a reduction of administrative burden, access to a wider breadth of Salesforce expertise, and the implementation of key industry benchmarks. Additionally, engaging a managed service provider is more cost-effective and allows for greater scalability. Growing firms will have their service grow along with them, which reduces wasteful spending and potential resource chokepoints.

FinServ Consulting is an experienced Salesforce partner and managed service provider who is always available to help growing firms identify their best path forward for Salesforce administration.

To successfully address these complex challenges, investment firms are actively searching for trustworthy and reputable partners with in-depth expertise in post-trade execution. These partners have the ability to seamlessly navigate the intricate network of transactions and provide unwavering assurance to clients in their post-trade activities. 

This blog explores the intricate landscape of trade confirmation and settlement, unravelling the six pivotal steps underpinning these essential processes. Our aim is to demystify the intricacies and shed light on the crucial stages that culminate in the seamless execution of trades within the financial realm. 

Key Stakeholders in the Trade Settlement Lifecycle 

Navigating Trade Settlement Complexities 

Although the trade settlement process aims for efficiency, its complexity arises from various factors. Let’s delve into some of these intricacies and examine why clients frequently rely on external institutions (such as custodian banks and clearinghouses) for assistance in trade settlement: 

• Regulatory requirements: Different geographical regions and financial markets adhere to distinct regulatory frameworks for trade settlement. Complying with these regulations adds intricacies that require specialized expertise to navigate effectively.  
• International transactions: Cross-border deals introduce additional complexities related to foreign exchange dynamics, tax implications, and adherence to global legal regulations. 
• Trade volume and frequency: Institutional investors and traders often handle a high volume of trades. Managing settlement for such a large volume of transactions can be time-consuming and prone to errors. 
• Trade types and instruments: Financial markets host a variety of trade types and instruments, including equities, bonds, derivatives, and more. Each instrument’s settlement process possesses unique characteristics, contributing to overall complexities.
• Time sensitivity: Timely settlements are crucial to prevent trade failures or penalties. Ensuring all parties meet deadlines requires efficient communication and execution. 
• Risk management: Trade settlement involves counterparty, operational, and market risks. Inadequate risk management could lead to financial losses. 

In response to these challenges, investment firms are actively seeking reliable and proficient partners who can confidently manage post-trade execution activities. This is where expert consulting firms come to the forefront, offering comprehensive trade settlement services tailored to the unique requirements of investment firms. 

These firms understand the pivotal nature of the settlement process and the financial and reputational consequences of errors. With a team of experienced professionals, cutting-edge technology, and a profound grasp of the financial sector, these firms are well-prepared to handle the complexities and intricacies of trade settlement. Through meticulous attention to detail and stringent quality control, they ensure accurate and efficient processing of each trade, mitigating the risk of errors and reducing potential losses for clients. 

Conclusion: 

Trade settlement facilitators play a pivotal role in aiding clients with their trade settlement needs. These facilitators offer an array of services aimed at streamlining and speeding up executing and finalizing trade transactions. Their services typically encompass trade matching, clearance, and settlement. Harnessing cutting-edge technologies and established networks guarantees accuracy, transparency, and security in trade settlements. Clients reap the benefits of minimized operational risks and expedited error-free settlement cycles. Moreover, these facilitators provide valuable insights and reporting, empowering clients to make informed decisions and optimize their trade activities. 

Hedge funds strive to attain strong investor returns through varied investment approaches. They must establish structured fund management, compliance, and reporting systems to accomplish this goal. This is crucial to satisfy investor demands, maintain competitiveness, mitigate risks, adhere to regulations, uphold transparency, improve efficiency, and prevent regulatory issues.  

Efficient middle and back-office operations play a critical role in ensuring seamless operations of the fund, and adherence to regulations, resulting in the generation of accurate and reliable reporting. Systematic middle and back-office operations form the backbone of a well-structured and successful hedge fund by managing the operational aspects that underpin the fund’s activities. 

Fund managers understand that it can be difficult to support and scale their operations team; instead, they are moving to outsourced providers to satisfy critical requirements.  The right Managed Services Partner will streamline their middle and back-office operations, allowing them to focus on core business activities and capitalize on service level agreements, which include expanded coverage across multiple time zones.   

This article explains the advantages of outsourcing middle and back-office functions and how it enables fund managers to enhance their operational efficiency and competitiveness in the market. 

Expert Middle & Back Office Support 

Outsourcing middle and back-office operations provides hedge funds with the benefit of utilizing a team of skilled professionals equipped with specialized knowledge. By harnessing this expertise, fund managers streamline their processes, improve productivity, and enhance risk management practices. 

• Optimizing Hedge Fund Efficiency – Hedge funds employ diverse investment strategies to achieve returns surpassing traditional market benchmarks and align with investor expectations. However, the intricate nature of middle and back-office operations can strain a fund’s resources and time, because it requires meticulous attention to tasks such as trade execution, risk assessment, and regulatory compliance. The shift in focus from operational tasks to more investment-focused tasks allows fund managers to make more informed decisions, adapt quickly to market changes, and seize lucrative opportunities.
• Adaptability – Partnering with a service provider with diverse asset class and accounting expertise equips hedge funds for swift adaptation to market shifts and strategies. This seamless flexibility facilitates scaling in trading new asset classes, bolstering the fund’s ability to navigate market fluctuations and make informed decision-making confidently. Fund managers gain reassurance that their daily middle and back-office operations remain unaffected by altering strategies and trade volumes. Expert service providers adeptly accommodate changes, minimizing implementation time and managing the learning curve effectively.
• Advisory – Choosing the right managed service provider is of utmost importance. A reliable service provider surpasses the responsibility of guaranteeing precise daily middle-office and back-office activities. They proactively collaborate with fund managers to enhance workflows and provide advisory support. This approach involves identifying challenges and offering tailored solutions, like incorporating automated swap settlement and reconciliation processes. This is supported by implementing complex tasks like reconciling performance and financing interest against broker files; and adapting tax lot reconciliations to align with specific client preferences, ensuring accurate Profit and Loss (P&L) and General Ledger Providers play a crucial role in delivering valuable expertise and encouraging the adoption of best practices among their clients. This is achieved through a structured series of workflow assessments that are designed to enhance the efficiency and effectiveness of their client’s operations. The provider’s commitment transcends contractual obligations, validating the decision to outsource by delivering extra value. Such dedication reinforces the partnership and cultivates a successful, efficient, and productive relationship with the hedge fund.
• Utilizing Time-Zone Difference – Asset managers collaborating with overseas outsourcing partners gain access to a dedicated and efficient support team available around the clock, spanning pre-market and early trading hours. The time zone disparity enables hedge funds to receive continuous support and real-time aid, even during their non-working hours. With a local presence in the US office, clients enjoy 24/5 coverage. Moreover, the US-based team collaborates closely with fund managers and operations heads, directly streamlining workflows and executing new strategies. This setup ensures rapid issue resolution and seamless operations, minimizing downtime and maximizing productivity. The presence of a dedicated support team empowers hedge funds to tackle operational challenges and sustain uninterrupted functionality. This dynamic contributes to their overall success and competitiveness within the market. 
• Customization and Scalability – It is imperative that outsourcing partners recognize the distinctiveness of each hedge fund and understand the importance of catering to their unique requirements. Consequently, the right partner will offer tailored solutions to accommodate individual needs. This necessitates that the outsourced partners possess functional expertise and a technical understanding of the client’s preferred systems and technology. Customization may include curated portfolio reporting, specialized tax lot services, portfolio re-balancing, manual journal entry setups, handling swap and borrow financing adjustments, and other ad-hoc requirements unique to the fund’s operations. This level of personalized service ensures that the outsourcing partner can efficiently address the fund’s individual demands, providing comprehensive and bespoke support that enhances operational efficiency and accuracy. The ability to cater to such diverse and specific requirements further validates the value of outsourcing for hedge funds seeking a highly adaptable and dedicated partner. 
• Risk Mitigation & Better Governance – Efficient outsourcing partners play a pivotal role in assisting hedge funds to navigate risks and enhance governance practices expertly. Their valuable service involves adeptly managing and mitigating operational risks while meticulously monitoring Net Asset Value (NAV) and discrepancies stemming from Fund Administrators’ inputs. This comprehensive process encompasses tasks like calculating dividends, swap accruals, and other non-trading calculations, alongside routine daily and month-end checks. The primary goal is to swiftly identify and rectify potential errors, thus minimizing the chances of financial complexities or regulatory issues emerging during audits. This consistent dedication to compliance and regulatory standards nurtures a deep sense of confidence within hedge funds, highlighting the integrity and professionalism that characterize their partners’ operational approaches. 

FinServ Consulting’s Role in the Middle and Back Office Industry 

FinServ Consulting’s managed services team provides efficient trade, cash, and position reconciliations, allowing front office and operations teams access to reliable, updated, and error-free information.  Accurate positions and NAV data allow portfolio managers and traders to confidently focus on order generation, including sizing and position allocations. 

In addition, our service offering includes daily P&L checks, tax lot reporting, swap financing and dividend accrual assistance, hands-on systems entries, and overall guidance with the goal of ensuring efficient month and quarter-end accounting closes.   Any discrepancies or differences with fund administrators, prime brokers, and other counterparties are resolved quickly and remediated in real-time.   

FinServ Consulting places significant emphasis on five critical service areas, enabling the delivery of quality reconciliations and back-office reporting. This is achievable due to FinServ’s extensive expertise in various aspects of hedge fund operations and a deep understanding of systems and technology. 

Conclusion

Outsourcing middle and back-office operations offers hedge funds a strategic advantage by allowing them to focus on their core business, access to specialized expertise, utilize time zone differences for non-working hours support, receive prompt responses, and benefit from tailored solutions. It enhances risk management practices, improves operational efficiency, and ensures better governance, ultimately supporting hedge funds in their pursuit of excellence in the highly competitive financial landscape. 

Private Equity (PE) firms’ operational efficiency is critical in determining their success, especially against shifting market conditions. PE firms typically have complex inter-departmental processes managed through Excel spreadsheets, email communications, and other disparate applications. While Excel and Outlook are essential tools, an Enterprise Task Management system is far more effective in organizing tasks, providing a centralized place to see the status of critical path items, and creating an optimal Private Equity foundation for your overall success.  

FinServ has spent 18 years working with our clients to enhance their business processes. In the past few years, we have focused on assisting our Private Equity clients in Private Equity in leveraging task management software to address some critical areas of their operations. From this experience, we have gained great insight into how a PE firm’s internal operations can be classified into six main stages and how task management tools can optimize their operations on a day-to-day basis: 

Through our work with several Private Equity clients, we have found that the success of implementing an Enterprise Task Management system comes down to a few critical success factors. 

• Ease of Use & Implementation – Sophisticated workflow tools can provide great automation to operations. However, these tools are highly complex and take many months to implement. They often require very technical resources to set up and code solutions. Task management tools offer a simple, intuitive setup that results in implementing a solution in days or weeks, allowing users to see results quickly. 
• Super Users Drive Adoption – Business users can quickly learn how to set up their projects in a Task Management tool, becoming early adopters who share their successes with other groups. Users have set up issue-tracking projects that have quickly spread to several other departments when they share their success stories. 
• Cross-Departmental Collaboration – One client was struggling with the coordination of onboarding employees between their HR and IT departments. The HR team leveraged the Task Management tool to share the new hire process with the IT team. The IT team created its project, which tracked each detailed step of setting up a new employee, including communications with external parties. The new process resulted in a streamlined process where every new employee gets what they need to succeed, resulting in a great first impression of a process often filled with issues at many other firms.
• White-Glove Support – Even if a system is simple to implement, it does not mean every user can handle it independently. Our firm focuses on providing users with all the support they require, including helping them to model their project if desired and providing them with helpful best practice approaches to everyday task management items. When a client has a question about how to do something in the system or something is not working the way they expect, we respond immediately, ensuring they maintain their enthusiasm for the system. Eventually, the users become self-sufficient, but early on, we make sure they have a large degree of handle holding and support.  

The Task Management Tool Marketplace and Deciding What Tool is Right for Your Firm

Different types of task management software tools are available in the marketplace. While some are free and relatively simple, others need to be bought and can be deployed firmwide. We have found that the best Task Management tools provide these core capabilities:

Outside of the key benefits from our extensive work in this area, we have found that there are three main benefits of using task management software for a PE firm: 

Greater Transparency:  

Given that PE firms receive information from various sources – third-party vendors, market data providers, disparate internal systems, and ad-hoc data dumps – it is essential to translate all the relevant information into clearly defined workflows in a task management system. The structured workflow enhances operational efficiencies and provides greater transparency, which is especially important when multiple tasks require inter-departmental cooperation, e.g., when a deal closes, in addition to the Deal Execution team, Tax, Legal, Valuation, and Cash Management teams, etc., need to be notified. Different teams can track their combined workflow and easily compare each other’s progress in the task management system.   

Task management systems can also accommodate the underlying dynamics of a workflow by providing capabilities such as approval tasks, dependencies, etc. For example, if the post-deal closing workflow cannot be started until a deal is closed, the workflow can be structured for the post-closing workflow to be triggered only after a deal is closed. Similarly, approval tasks can be created so that unless a task has been approved, the user cannot progress to the following task. Typically, these are ‘soft blocks’ that can be overridden but are crucial in preserving the workflow structure.  

Greater Integration:  

Private Equity firms use multiple tools to track their operations. For example, many PE firms track the Deal from inception to its funding in Salesforce or other CRM systems.  

Most of the clients we have implemented task management systems used to track this info in their email systems which could have been more efficient and decentralized.  After our implementation, the task management tools connect with different software, such as Salesforce, to ensure the Deal information flows automatically into a central place where all deals and statuses are tracked.  When a Deal is funded, it flows into the task management system in a pre-defined workflow and alerts the relevant teams to complete the assigned tasks.  

Where email can come in handy is to notify a person when they have something important to take care of in the task management system. Task management systems provide more intelligent connectivity with email communications. Through their built-in integrations with Outlook, Gmail, etc., emails can provide detailed information from the task management system and link the user directly to the task they must act upon.  

Some PE teams, like Investor Relations, constantly receive emails from investors and prospects. Many task management tools allow emails to be forwarded to a specific project. They can intelligently scrape critical information from the email to automatically create a task for the IR team to act upon. By providing the ability to translate emails directly into tasks, the task management systems significantly reduce the manual effort required to distill the information into actionable items and assign it to individuals as needed. 

Task management tools can also integrate with file-sharing software such as SharePoint Online. Private equity internal operations rely heavily on spreadsheets housed in a central location, e.g., SharePoint. Task management software can integrate with SharePoint, allowing users to attach their files, located in SharePoint, to the workflow as needed. Users can easily be redirected to the SharePoint file through the task management software whenever they need to access the files while completing their tasks. Task management tools can maintain the same privacy rights as SharePoint, thus protecting the security of sensitive documents. 

Greater Reporting:  

Practical task management tools report essential metrics in real-time, allowing users to draw insights about any workflow’s progress. For example, a task management system can produce graphics and visualizations on multiple metrics, such as the number of tasks completed, the number of tasks assigned to a specific user, etc. This allows an executive to quickly see projects or processes in trouble or critical staff members whose workload is too heavy. 

Teams can use these reports to easily track the overall project’s progress and gauge individual members’ performance. For example, through sorting and filtering capabilities, the task management systems allow the users to filter the tasks by an assignee and check if they have completed them on time. Additionally, if a task remains incomplete beyond the due date, it will be highlighted, and the assignee will be notified accordingly. 

Moreover, these reports can easily be exported from the system. Flexible reporting options allow users to customize the reports according to their needs. This provides a quick and effective way to fully understand the workflow’s progress and ensure that delays can be identified promptly.  

Conclusion

Private Equity firms have complex internal operations and continue to rely too heavily on spreadsheets, email, and disparate application software to track their internal operations. These methods could be more inefficient and error-prone, and valuable energy and time are often spent searching for the data to verify its accuracy.  

Adopting a task management system can streamline the workflows across multiple teams and provide greater visibility of each team’s performance. Centralizing all tasks in one system makes it easy for line-level staff or senior executives to get the information they require quickly.  Greater transparency ensures that any bottlenecks can be easily identified and addressed, strengthening organizational transparency and efficiency.