Whether you are implementing Workday for the first time or are an existing Workday user, proper support is needed to ensure your Workday experience is a success. To realize the system’s full potential and adequately support your business users, Workday must be supported by resources capable of taking on many tasks. These tasks can vary from answering how-to questions, troubleshooting issues, administering recurring events, updating calendar/schedule periods, liaising with Workday, and analyzing/deploying Workday release features.

When building your support team or enhancing it, it is essential to look for the following key characteristics. These characteristics are attributes of individuals who know Workday in and out and how the industry operates. These attributes will result in a support team that can efficiently handle any Workday request.

1. Resources with Industry Experience – Support personnel with experience in the industry are more efficient than newer resources without the requisite background. In addition, these resources can understand and diagnose issues quickly and accurately as they have been through similar situations before.
2. Less Specialization – Resources knowledgeable in multiple Workday modules provide more comprehensive solutions to issues. In addition, cross-module expertise enables these resources to know what components are related, how they impact each other, and what is part of any total solution.
3. Documentation Skills – Resources that know how to create well-written documentation provide value beyond configuring Workday. The documentation they produce will be invaluable to retaining institutional and contextual knowledge, mitigate against staff turnover, and provide a knowledge base for others to leverage.

Resources with Industry Experience

It is important not to fixate only on what resources know in Workday. Knowing the ins and outs of the industry is just as valuable. This knowledge is gained only through experience and provides a perspective on how things are supposed to work regardless of the kind of system.

For example, it is quite common for terminating employees at Asset Managers to be subject to a Garden Leave policy where the terminated worker is essentially paid not to work for a set amount of time after their termination. Workday does not come pre-configured with the means to put someone on Garden Leave; it will be up to your firm to configure this. Resources with experience administering and using Garden Leaves will know how to configure it properly. In Workday, the easy part is setting up the Garden Leave itself so that the terminations could go on leave and not terminate until the end of their Leave. However, there are additional considerations to review regarding whether Garden Leave terminations should be included in active headcount, where they should sit in your organization, or whether they should be visible to employees outside of HR. Support resources knowledgeable about Garden Leaves would know how to configure Workday optimally, focusing on the pitfalls to look out for and specific reporting requirements.

This is just one specific example; however, with so many moving pieces for a feature commonly used by Asset Managers, it is critical to vet resources on their knowledge of Workday and how they have applied Workday to meet HR policies at other firms in the same industry.

Less Specialization

Having less specialization in a specific Workday component may seem counterintuitive, but in our experience, it is quite the opposite. Sure, a specialist in a particular Workday module can expertly configure its module. However, this specialization comes at a cost where they cannot configure other modules or realize the more significant impact a request may have on other areas of Workday.

As a result, a specialist may not be able to implement a comprehensive solution. Or, their lack of knowledge of other Workday components would introduce complexities when handoff and coordination are required between multiple resources.

For example, in Workday Financials, you can set up a Punchout where Workday integrates with a vendor allowing you to purchase items (like office supplies or computer hardware) directly from the vendor, and the order information would flow directly into Financials. Setting this up would involve creating a Purchase Order, matching the invoice, capitalizing the asset (if applicable), and setting up a depreciation schedule. Again, a resource that was knowledgeable in multiple Workday components would be able to advise you on what to watch out for and the best path to implement the solution.

Documentation Skills

The most overlooked attribute when evaluating Workday resources is the mindset and ability to document everything and do it well. Documentation is critical as resolving Workday issues is often an involved process involving researching the subject, implementing the solution, and testing multiple scenarios. Furthermore, many types of problems and projects repeat themselves (i.e., an employee thinks their Time Off Balance is incorrect, Performance Cycles happen twice a year, annual Open Enrollment, and new time off plans). Documentation can prevent having to research and resolve the same issues more than once.

Proper and well-written documentation will preserve the work done, allowing you to retain institutional knowledge, lessen the impact of any resource turnover, and enable work to be done more efficiently. The team will spend less time re-examining common issues, attempting to understand past decisions, and more time resolving the actual problem.

Retaining knowledge of your existing setup is particularly relevant across the alternative investment client base, where firms often devise complex allocation rules to determine the true profitability of each business line.   These rules result in a ‘fully-loaded’ P&L by business line and can be used in some cases to determine the compensation of portfolio managers, traders, or other essential employees associated with the business. In some cases, firms will want access to this P&L but not have it truly posted in the general ledger and instead use it for reporting purposes. This necessitates customized reporting that may exclude or include these allocations depending upon the view of the person running the report. When troubleshooting or modifying these reports, it may take a resource that is unfamiliar with the setup much longer and may lead them to recommend modifications that are not appropriate. It may also require lengthy explanations from the business that is not the best use of time and could otherwise be avoided.  

Conclusion

Successfully supporting Workday is not easy, as there are many types of users to deal with and a wide array of issues to resolve. Therefore, selecting the proper staff to support Workday is in your best interest. Your support personnel must be capable of working with multiple Workday components, documenting solutions and decisions well, and having knowledge of the business to create solutions that fit within the industry. By recognizing and evaluating resources against these critical traits, you will be well-positioned to field the right Workday support team for your organization.

FinServ’s long history servicing the world’s top Alternative Asset Managers, combined with our deep Workday expertise, make us a natural option to help you find a world-class Workday support team.

There are many reasons for an asset management company to undertake an operational assessment. The most common are that firms grow assets under management, change or add the types of assets traded, expand the range of strategies and/or funds it manages and have a more complex investor base with different requirements for shareholders. All these changes mean systems and processes set up at the beginning of the firm’s life cycle may no longer be fit for purpose.

FinServ Consulting leverages all its experience and expertise gained in working with similar funds or businesses to help support its clients in this exercise. This has given the company unique insights into how assessments can be conducted and what asset management firms will gain from the process.

Identifying Problem Areas

The first step in the process is to look at and analyze an investment firm’s full operations and processes to identify inefficiencies that are holding back the growth of the firm. This process can also reassure investors that the firm is doing everything it can to use its resources effectively while at the same time having processes and controls in place to ensure that operations from front to back office are running smoothly and are fit for the present as well as the future.

The assessments can highlight a variety of areas where firms may want to make changes. This strategic initiative looks at how technology is being used, whether service providers deliver in the most effective way and if teams are structured for optimal efficiency.  The review can expose bottlenecks, suggest areas where best practice can be implemented and show how to streamline a business. Ultimately, a target operating model is defined and presented with a path to get there.

Although operational assessments are routinely conducted by many firms, lately there has been an increase in requests for these evaluations. This is due to several reasons. For example, because of the pandemic, some technology investment has been delayed however, firms have only grown in complexity. Inefficiencies caused by manual processes may be exacerbated as the fund grows its assets under management (AUM).

Many firms still use Excel or have many operations done manually when there are more eloquent automated solutions available. The frequency of this can be a direct result of the infrastructure set up at the beginning of a firm’s life cycle. As it grows, those processes may no longer be adequate, particularly if it has experienced changes in the types of asset classes traded, the size and volume of trades or other factors. These factors mean existing infrastructure is less optimal. The systems used at the start of a business may not be scalable or the most efficient as it grows.

Identifying Where Efficiencies Can Be Made

Once the parameters of the operational assessment are established, everyone involved in a specific process in a fund are interviewed using a set list of questions. This helps identify ways to streamline work – such as trading workflows.

For instance, portfolio managers do not always have all the information they need at their fingertips. There may be a lot of manual work before a trading decision is made. Interviews with portfolio managers, traders, operations, finance, and anyone from the technology side involved in these processes are interviewed to identify areas where there may be ways to update work streams or plan for future expansion.

A list of predetermined questions also gives the conversations a focus and helps identify areas of inefficiency that can be improved.

The resulting list of projects – ways a firm can change processes, technology and even people to be more efficient – can be daunting. These projects can be small or large, complex or simple, easy to implement or difficult.

While it is always up to the firm to decide which projects it wants to tackle in the short or long term, some like to focus on quick wins that may be relatively inexpensive while others put together a program aimed at gradual transformation of processes and procedures.

FinServ Consulting has developed a project impact/effort matrix that helps identify which actions will have the most impact on the business while also judging the difficulty or complexity in implementing these compared with those that are much easier to do but have less overall effect on the business.

This assessment is a snapshot, giving the firm an overview of inefficiencies and what the impact of fixing them will be. Quick wins could include things like reorganization of the folder directory, discontinuing daily reports or giving Bloomberg access to more people. Key improvements that may take longer to implement might include hiring more people, like a tax director, implementing new systems like a portfolio management system (PMS) or a data warehouse.

The addition of new strategies and funds may also put a strain on existing infrastructure. Likewise, the introduction of managed accounts, funds of one or onshore/offshore structures to accommodate a wider range of investors will necessitate different procedures and processes.

Operational due diligence by investors can also identify red flag areas where improvements need to be made.

A Path Forward: Recommendations

At the end of the operational assessment there are usually five to six strategic areas where change is recommended. These range from relatively inexpensive projects to more long-term changes.

The assessment gives a timeline and costs to help firms make decisions on what to tackle first and what it may want to consider in the longer term. It is the firm’s decision what to do next and how.

By using FinServ for this exercise, unlike other consultants, the job does not end at giving the firm recommendations. FinServ is available to help implement all the suggestions, provide assistance in choosing the right technologies, service providers, processes and procedures to ready the firm for present operations as well as for the future.

While the operational assessment does not look at whether and how a firm might go into another business, like loan servicing, the process does look at operations where targeted improvements will make jobs more efficient and scalable. Some growing firms worry that every time they add a new fund or strategy, they will need to hire more persons, adding to the costs and making it difficult to scale the business. For them, outsourcing options and third parties that can assist them and make more staff unnecessary may be better options than adding to the employee list.

Assessments are also made on third party providers, like fund administrators. By looking closely at what a fund administrator provides, they could request more services and gauge whether the amount of money the administrator is charging is close to the costs for similar businesses. The assessments are holistic, looking at all the processes of the entire firm.

Whether the need for an operational assessment is necessitated by operational due diligence by investors, a more complex investor base, firm growth or just a health check after a few years of operations, the process is geared to help tighten processes and procedures, streamline controls, and get the firm to the desired future state where it is capable of being more efficient and making more informed decisions. A fund’s infrastructure should never dictate what trading strategies are permissible or impede a business decision.

Even firms that believe they are relatively straight forward as they only do a small number of investments or trades may be challenged by the complexity of regulatory filings, the different types of data needed for a variety of purposes and a complex investor base.

Conclusion

FinServ Consulting, with years of experience working with a wide variety of asset managers, brings its knowledge and expertise to the operational assessment process – and does not leave the client with a list of “to-dos”. It helps in the implementation of the suggestions to create a firm fit for purpose now and in the future.

To learn more about FinServ Consulting’s services, please contact us at info@finservconsulting.com or (646) 603-3799. 

FinServ is pleased to announce the opening of a new office in Mumbai, India. Shaurin Jobalia, who has worked with leading hedge funds and alternate asset management firms globally, will lead a growing team in India, which has more than two decades of collective middle- and back-office experience in fund accounting. The Indian team includes professionals who have previously worked at industry-leading firms such as Enfusion, SS&C Technologies, GlobeOp, Morgan Stanley Fund Services, and Bank of America.

The office will serve funds in a broad range of areas, including:

• Assisting with daily trade positions and cash reconciliations with custodians, prime brokers, and fund administrators.
• Providing break analysis for any issues
• Assisting with corporate actions and swap financing accruals and setup.
• Providing complete shadow NAV with clients’ third-party administrators, including balance sheet and income statement reconciliations.

FinServ’s Managed Services aims to provide fund managers with customizable and scalable solutions to tailor their firms’ operations.

The opening comes at a time when two key trends are converging. First, alternative asset managers are under increased pressure to reduce costs. Fees fell to new lows in 2020 according to Hedge Fund Research, as investors pulled roughly $46 billion from funds.  Secondly, COVID-19 has disrupted day-to-day operations and provided a new set of challenges for asset managers in keeping their businesses functioning effectively. A silver lining has emerged, however. The global pandemic has accelerated the use and adoption of remote workers among fund managers.  With teams working remotely, managers have leaned on service providers and recognized that they can support operations and technology through outsourcing.

With a team in India, FinServ can meet those requirements and deliver new benefits, such as reduced costs and more flexibility. The FinServ team is unique as they bring systems expertise which allows for detailed analysis and problem solving.  In addition, the team is staffed by experienced resources that have a deep understanding of different asset classes.  If a fund trades equities, credit or privates, the team brings the appropriate knowledge to assist in the processing.  By leveraging the team, funds can efficiently scale their operations by eliminating the need to increase headcount for non-core activities, or job functions.  The new India office will support FinServ’s core consulting business across specialized middle and back office managed services, software customization and implementations, industry systems integrations, and bespoke systems development.

At a time when funds are accustomed to receiving what has historically been a commoditized service, FinServ’s team takes it a step further. The teams are well-versed in each client’s unique needs and deliver on those requirements through both a hands-on and customized approach.

To learn more about FinServ Consulting’s services, please contact us at info@finservconsulting.com or (646) 603-3799.

In order to understand the capabilities of Power BI, it is best to start with the fundamentals of Analytics & Business Intelligence (“ABI”) and data visualization. The combination of ABI and data visualization allows Power BI to articulate information in a digestible manner that is supportive of intelligent decision making.

ABI tools are user-friendly data management platforms that emphasize self-service and provide analytical functionality ranging from data preparation to insight generation. Business Intelligence (“BI”) leverages historical information while analytics employs modeling and statistics to anticipate future events. Generally speaking, BI is focused on what happened, and analytics is focused on why it happened.

Data visualization is the presentation of information through graphical mediums like charts, diagrams, dashboards, and more. Dashboards are an amalgamation of components designed to inform stakeholders in an aesthetically pleasing manner like the sales dashboard below. The goal is to provide an informative platform that is far easier to comprehend than traditional resources such as a spreadsheet with thousands of rows.

Power BI and Its Key Features

Power BI is a business intelligence solution that enables companies to draw organizational insights by using data visualizations, performing analytics, connecting to hundreds of data sources, and embedding content into external applications & websites. An additional benefit enjoyed by users on the Windows platform is its seamless integration with the Microsoft suite. In summation, Power BI allows users to connect, prepare, model, and visualize data.

Power BI incorporates numerous features (illustrated above) that assist in the analysis and comprehension of a business. Three particularly impressive features included in Power BI’s repertoire are Natural Language Generation (“NLG”), Automated Insights, and Advanced Analytics. NLG uses artificial intelligence to automatically produce rich text descriptions detailing outputs. Automated Insights are conceived from advanced algorithms and are a great way to initiate analysis on large data sets. While the initial analysis generated from Power BI can provide direction for additional research and evaluation, other factors may be sufficiently analyzed within Power BI without the need for further investigation. Advanced Analytics can be performed with Power BI’s internal ABI platform and/or by integrating with external models. Azure Machine Learning Studio’s drag and drop interface can be combined with SQL and R to conduct predictive analytics on data sets.

Subscription Options and Functionality

The three versions of Power BI are Desktop, Pro, and Premium. Desktop, the lowest-tiered option, can be downloaded from the Microsoft Store for free. It includes the core data visualization and analysis features; data preparation, reports, dashboards, connection to over 50 data sources, and the ability to export in various formats.

Pro includes all of Desktop’s functionality and can be purchased as a standalone product for an annual subscription of $10 per user license per month or as part of the Microsoft Office 365 Enterprise E5 suite. The enhancements differentiating Pro primarily fall under collaboration and the distribution of content. For example, users can share their insights by embedding visuals within applications such as SharePoint and MS Teams. Furthermore, users can leverage peer-to-peer sharing to distribute their work to external stakeholders with Power BI Pro licenses.

Premium, the most advanced offering, comes at a hefty annual subscription that breaks down to a monthly price of $4,995 per dedicated cloud compute and storage resource. Some distinguishing characteristics that amplify data analysis include enterprise level BI, cloud & on-premise reporting, dedicated cloud computing, and big data analytics. Other features that are included in Power BI Premium are increased storage, higher refresh rates, and a larger data capacity. Premium grants enterprise-wide access and is best suited for large organizations with significant business intelligence requirements.

Implementing Power BI in Financial Services

Power BI has countless applications for alternative asset managers and other financial services companies that span the front, middle, and back office. One of Power BI’s most popular functions is financial management and reporting. QuickBooks Online customers can utilize a preconfigured Content Pack that allows them to quickly construct financial statement dashboards. Users are immediately provided with functionality that comprises customer rankings, profitability trends, and various financial ratios.

Implementing and tracking KPI’s with Power BI allows investment managers to accurately evaluate operations. Best practice is to have KPIs spanning the front, middle, and back office because an unidentified issue in any of the three areas can be detrimental. A few prevalent KPIs are Investment Management Fee Revenue as a Percentage of AUM, Trade Settlements per Back Office Employee, Subscriptions vs. Redemptions, and Trade Error Rate by Asset Class.

Business intelligence can be applied to portfolio management by connecting Power BI to the underlying data sources detailing investments. For instance, asset allocation reports and dashboards allow fund managers to interpret the distribution of funds relatively easily. Another prominent application of Power BI is treasury & liquidity management because data visualizations can be developed to provide detailed breakdowns of cash management, FX hedge balances, and more.

Conclusion

Power BI is a powerful ABI platform that augments a business’s ability to consume data through the creation of interactive reports and dashboards. Business intelligence can be constructed to support any business function with enough data. More importantly, it can be configured to the firm’s unique needs and has the ability to adapt with dynamic business requirements.

FinServ has acquired deep industry and technological expertise through the completion of over 600 engagements at more than 40 of the top 100 Hedge and Private Equity Funds. FinServ can configure Power BI to accurately monitor operations, identify the correct KPIs, properly document business processes, and seamlessly integrate new technologies with existing infrastructure.

Global market data spend recently exceeded $30 billion per year¹. In an increasingly data-driven investment world, market data spend is only expected to rise, as firms seek out new alpha-generating data sets to enhance returns. Additionally, quantitative investment strategies have never been more in vogue with investors; the literal arms race to find better, more powerful data sets is sometimes merely just a struggle to “Keep Up with the Joneses”.

Market data is a critical component of modern fund management; however, wrangling market data expenses has never been more important due to rising costs and increasing complexity. In this article, FinServ will cover:

• Why is Market Data Expense Management Important?
• What Makes Market Data Expense Management Hard?
• What Technology Solutions are Available?
• Complementary Solutions and Services
• How FinServ Can Help

Why is Market Data Expense Management Important?

Market data is a Top 5 expense at most investment managers, but it is often the #1 headache. Although other expenses like employee compensation, real estate, and general technology spend reach similar (or greater) heights, market data expense management often lacks the same direct and consistent level of stewardship. Everyone wants to decrease market data expenses, even though they tend to be the least understood (e.g. complex contracts, metered services) and it is easy to pass the buck on ownership between technology, finance, operations, and the front-office. Strong, centralized control of the market data management process can help firms save millions by eliminating unused and underutilized services; however, even when market data has an organization’s focus, there are several inherent challenges with managing market data expenses without help.

What Makes Market Data Expense Management Hard?

Market data is incredibly costly and difficult to manage due to its complexity. Market data expense managers are tasked with providing structure to market data programs facing an ever-growing list of responsibilities and related challenges. These include managing a variety of execution-focused priorities, while also driving organizational change via strategic initiatives like optimizing data usage/flow and cutting out unnecessary costs. These activities include:

Expense Allocations & Invoice Reconciliation Controls:

• Market data allocations are usually more complex than vanilla corporate expenses. A single invoice could get allocation to some combination of individuals, groups, departments, and/or strategy (e.g. fund AUM-based allocations).
• This requires a clear understanding of the market data services and solutions currently in use, including an understanding of services purchased. How you pay matters as well; any soft dollar payments should be tightly managed along with appropriate firm compliance officers.
• Due to the volume and complexity of market data vendor invoices, the invoice reconciliation process demands a strong technological solution to facilitate daily market data expense management.

Usage Management:

• Keeping track of actual market data usage is required to get a handle of how to cut unnecessary costs. This includes knowing which applications use specific data, how it’s licensed, and when renewals will occur.
• Market data usage and expense reports are required for the business to make informed decisions related to overall needs. This includes a mechanism to track usage and verify that it is in line with the original business objective.
• Mitigate audit exposure as a firm and remediate any compliance breaches. Understand how the firm’s contracted capabilities compare with actual data usage. Determine if licenses exist for all services utilized across the organization?

Strategic Platform Management:

• Review and implement industry best practices for market data expense management.
• Align the overall strategy with the strategic initiatives of the business and technology teams.
• How may the organization optimize market data consumption across the board to reduce costs?
• How many data vendors are currently used?
• Are any services duplicative/redundant?
• Are there any unused/underutilized services?
• Are there better platforms available for meeting corporate strategy?

What Technology Solutions are Available?

MDSL: Market Data Manager (MDM) and TRG: Financial Information Tracking System (FITS) are two of the leading market data expense management system providers in the financial services and asset management space. The overall landscape has been heavily influenced by private equity merger and acquisition activity. MDSL recently merged with Calero, a telecom expense vendor, and TRG acquired a third player in the market data expense marketplace called Screen: INFOmatch in 2019. Both MDSL and TRG aim to provide structure and clarity to manage firmwide market data, research, software and enterprise subscription spend on subscriptions to market data providers like Bloomberg, Reuters, and FactSet.

• Contract Management and Centralized Inventory: Allows organizations to track, organize, and calculate costs related to market data vendors, contracts, products, and users. Contracts and licensing inventory details may be captured to create a centralized inventory of market data assets for use in invoicing and allocation.
• Compliance Workflow: Compliance approval workflows may be leveraged to review soft and hard dollar eligible costs.
• Invoicing Workflow, Reconciliation, and Allocation: Invoice processing becomes streamlined when matching against structured inventory records. Robust organizational structures may be accommodated to allocate to departments, groups, and/or individual users.

Complementary Solutions and Services

• Managed Services: Both MDSL and TRG offer managed service offerings inclusive of contract maintenance, compliance reviews, and invoice reconciliations. If you are underwater with your current market data expense management process, consider leveraging managed services as part of an initial implementation.
• Usage Monitoring and Control Products: MDSL: Access Compliance Engine (ACE) and TRG ResearchMonitor provide access controls and usage monitoring for subscription services, allowing you to reduce spend on underutilized services and directly ensure compliance with data access contracts/agreements.

How FinServ Can Help

Managing market data expense is often a headache for investment managers, but there are several leading marketplace solutions that help relieve the burden placed on market data managers. FinServ Consulting’s industry expertise and unparalleled track record of service for asset management clients makes us the right partner to help you select the right solution for your organization.

To learn more about FinServ Consulting’s services, please contact us at info@finservconsulting.com or (646) 603-3799.

¹ Based on a Burton-Taylor Research Report.

As previously discussed in SOFR is the New LIBOR, one of the key issues regarding the transition of $35 trillion in USD LIBOR assets to an alternative reference rate is the lack of sufficient fallback language. Inadequate fallback language gives rise to an assortment of complications when attempting to analyze contracts using traditional technologies. Fallback language is the contractual provisions that outline the procedure for transitioning to a new reference rate.

Fallback Language Elements:

Issues with Fallback Language

Numerous issues arise when analyzing the fallback language of assets tied to USD LIBOR. Contracts often fail to designate a benchmark replacement rate and therefore leave managers without a clear resolution plan in the occurrence of a fallback trigger event. Most of the language was designed to alleviate temporary gaps in benchmark rate reporting rather than the permanent termination of LIBOR. Consequently, the appropriate benchmark replacement is unclear.

Compounding the lack of clarity is the absence of a standardized contract structure across various derivatives and cash products. Moreover, many contracts lack the existence of fallback language altogether. The involvement of multiple parties further complicates fallback language negotiations due to a misalignment of priorities. The amalgamation of these issues has hindered firms from storing asset contracts in a sophisticated document repository with search capabilities and often warrants the manual review of individual contracts.

Addressing the Situation

Changes to the structure of a fund’s holdings and operations command careful planning and execution. Amendments deriving from the termination of LIBOR mandate the construction of meticulous roadmaps and the design of new business procedures. Their creation is impossible without the knowledge of USD LIBOR assets and processes. It is vital to take a detailed inventory of all holdings, systems, and operations that are subject to change. Consolidating contracts into one or more defined document repositories augments the renegotiation process by facilitating the application of targeted remediation strategies.

Following the familiarization of contracts and their storage, the application of document intelligence solutions can greatly enhance the navigation of fallback language with tools such as natural language processing (“NLP”) and optical character recognition (“OCR”). Document intelligence has shown the ability to decrease cost by 80% and processing time by 90%; while increasing accuracy and consistency by 25% and 50%, respectively. The classification and normalization of data augments your contract review team’s ability to analyze contracts. Additionally, NLP and machine learning (“ML”) technology enable access to vital information that was formerly lost in traditional document repositories.

How Document Intelligence Works:

More on Document Intelligence Systems

Document intelligence solutions automate the ingestion of contracts, extract and structure key data, and automate contract repapering. Repositories frequently lack the advanced search capabilities required for evaluating fallback language. The implementation of a document intelligence system that automates the ingestion of structured and unstructured contracts can fill this gap and streamline your firm’s technological infrastructure.

Document Intelligence solutions transform key contract data into structured data models that allow for advanced search capabilities. Next, the solution automates various components of the contract repapering process such as generating the proposed amendments. Contract repapering functions can be paired with workflow tools to further streamline the process. The assortment of features offered by a document intelligence solution result in significant time and costs savings while boosting accuracy.

FinServ Can Help

Why tackle this arduous task alone when industry experts are eager to help? FinServ’s project management and industry expertise can provide value through the various stages of negotiating fallback language. FinServ can lead the implementation of your desired document intelligence solution, construct a comprehensive inventory of your firm’s contracts, and manage the integration of existing infrastructure with your new system.

We can produce a detailed overview of the document intelligence solution, it’s interdependence with various internal and external systems, and design the procedures associated with its use. FinServ understands that proper documentation is essential for mitigating regulatory risks, validating business procedures, and streamlining training.

Transition from the once world-renowned London Interbank Offer Rate (LIBOR) to an Alternative Reference Rate (ARR) is slated for completion by year-end 2021. The push to guide the world economy from LIBOR to the Secured Overnight Financing Rate (SOFR) was triggered by a series of scandals that highlighted LIBOR’s reliance on “Expert Judgement” rather than market transactions. LIBOR serves as the benchmark rate for more than $350 trillion financial products worldwide with $200 trillion in assets tied to USD LIBOR alone.

What is LIBOR, and How is it Used?​

LIBOR is published daily by the Intercontinental Exchange (NYSE: ICE) and denominated in five currencies across the world. It is the benchmark interest rate for major global banks extending short-term loans to one another on the international interbank market while serving as the benchmark rate for variable lending assets such as adjustable rate mortgages and other consumer loans. In addition to loans, it is used as the base rate for FRNs (floating rate notes) that use “LIBOR + X” to determine yield. Other financial instruments that frequently use LIBOR as the underlying rate include forward rate agreements, interest rate swaps, CDs, syndicated loans, and various collateralized obligations.

LIBOR’s Shortcomings

The primary shortcoming exhibited by LIBOR is its dependence on “Expert Judgement” rather than an active market. The rate submitted by each of the 16 panel banks is the cost at which the bank believes it could finance itself. LIBOR’s significantly low trading volume is illustrated by its most active tenure’s (3-month) daily transaction value of approximately $1 billion. Consequently, less than 30% of LIBOR rate submissions are derived from actual transactions.

What is SOFR, and How will it Alleviate LIBOR’s Issues?​

SOFR is the cost of borrowing overnight cash collateralized by Treasuries. It is the proposed Alternative Reference Rate for USD LIBOR and is posted each business day by the New York Fed around 8:00am. SOFR is dictated by the daily exchange of $800 billion in overnight Treasury repo transactions. This greatly reduces its susceptibility to manipulation as the rate is determined by market activity rather than the submissions from the 16 panel banks.

SOFR’s Shortcomings

Although ARRC has deemed SOFR as the USD LIBOR replacement, it is not a flawless solution. SOFR lacks LIBOR’s credit component and termed structure. LIBOR is produced for multiple time periods (3-month, 6-month, etc.) and SOFR is a single overnight rate; thus, posing an issue when borrowing funds at various time intervals. SOFR’s volatility is another predominant issue that was illustrated by a spike in September of 2019 when it jumped to 5.25% while some individual transactions reached as high as 10%. The issue was severe enough to warrant Fed intervention.

Managing the Move – FinServ Can Ensure Success

$35 trillion of the $200 trillion in assets tied to USD LIBOR are scheduled to expire after 2021. These legacy assets with varying fallback language present complexities when analyzing the impact of the transition and extracting LIBOR terms from ISDA contracts. Exposure to LIBOR assets can be identified through the utilization of technological systems such as Natural Language Processing (NLP) or a manual process; but it will likely prove ineffective to solely allocate human resources to the task. FinServ can spearhead the combined application of NLP technology and manual oversight to restructure legacy assets referencing LIBOR.

Regulators advise the appointment of a Senior Manager in conjunction with the establishment of a steering committee to oversee the changeover. The transition is a laborious process that will require the complete dedication of numerous individuals and a detailed roadmap for measuring progress. FinServ can oversee interactions with internal and external stakeholders while providing onsite white glove service tailored towards walking your company through this vital transformation.

FinServ’s comprehensive project management approach is inclusive of issue management, scope management, executive level presentations, and comprehensive weekly status reports. A mere 20% of financial institutions have a mature LIBOR transition plan for the impending 2021 year-end deadline. It is critical to create a thorough LIBOR Roadmap and begin immediately.

An extensive review of your business is vital for the identification of LIBOR dependent practices. Additionally, an in-depth analysis of your current state will likely identify opportunities for enhancement. Formal documentation of modified and/or new processes is crucial for training personnel while simultaneously serving as a resource for resolving issues faced in day-to-day operations. Allow FinServ to apply our business and technological expertise to create documentation that employees lack the time to adequately produce.

Summary

It is not necessary to embark on the journey from LIBOR to SOFR alone. Nor is it always feasible to allocate employees with various other responsibilities to this initiative. The move from LIBOR to SOFR is quickly approaching and it is best to make the necessary adjustments sooner rather than later. FinServ is an industry leader that has the expertise, experience, and resources required for a successful transition. To further continue the conversation or to discuss more of FinServ’s capabilities, please contact FinServ at info@finservconsulting.com or give us a call at (646) 603-3799.

Overview

Many investment funds outsource their back office and fund administration services to third-party administrators.  Fund administration services typically include calculation of net asset value (NAV), daily, weekly or monthly P&L reporting, fee calculations and other activities that constitute being the official books and records.  The reasons for using third-party administrators are well documented and typically include investors’ preference for an independent firm to oversee a fund’s financials.  In addition, third-party administrators provide the ability to scale and often provide a sliding pricing model that goes up when a firm does well and down when a firm does not.  Lastly, firms can take advantage of admin technology without the need for supporting this infrastructure in-house.

Shadow accounting is the process of maintaining an additional set of financial books for the purposes of comparison with the third-party administrator.

Reasons for shadowing your administrator

Full Shadow Accounting vs. ‘NAV lite’

NAV lite (or NAV light) is the process of taking in key inputs from the admin or other external sources and performing a check on the NAV calculation.  In addition, it is common for the internal fund team to perform fee calculations as both an input and output to the NAV.  Funds choose to do this to gain a level of comfort and provide senior management with confidence that the calculations are correct.  The advantages of this approach are staffing requirements are reduced, and a full-service fund accounting system is not needed.   Having confidence in the calculations is often enough to ensure the accuracy of the administrators.  Some would argue however, there is no substitute for starting from the trade and entering all the debits and credits needed to calculate a NAV and a full set of financials in order to ensure accuracy.  Shadowing only the NAV involves dependencies from the data being supplied by the admin and therefore comes with risks that mistakes could be made and the NAV can still be incorrect.

The Verdict

A recent survey indicated that over 80% of all investment managers perform some level of shadow accounting.  It is rare for an investment firm to have the ability to raise capital without additional scrutiny that has become the norm in the industry.  Investors and allocators have a large population of investment managers to choose from and have applied increased scrutiny as part of their due diligence.  Most allocators have made it clear that shadow accounting is a requirement or at least desired.  In addition, the data investors, auditors, and regulators are asking for is easier and quicker to produce when internal systems can be used.  Therefore, funds have overwhelmingly made the choice to fully shadow or partially shadow their admins.

The Realities of Shadow Accounting

The realities of this decision are the increased investment from a cost and resource perspective, in a fund’s infrastructure.  Funds are increasingly choosing order management systems and performance management applications that either has an accounting engine or can produce reports that can be used to produce a NAV.  Choosing a system or systems to perform this function can be difficult and proper resources should be dedicated towards the selection and implementation.  Similarly, choosing an outsourced shadow accounting provider is a critical decision that should be made after proper vetting.  All funds are unique and therefore making decisions based on what worked for other funds typically leads to failed implementations.  Choosing a system or vendor is a long term decision that is difficult to undo and requires attention to detail and diligence to get it done properly.

FinServ Consulting has been providing advisory, technology and business solutions to investment firms for over 15 years.

For more information on how we can help or guide your strategic direction, please contact us at info@finservconsulting.com or 646-603-3799.

When a customer implements Workday Human Capital Management it’s often an exciting event for the Human Resources team but can be an underwhelming experience for the firm.  For Workday Human Capital Management customers we’ve seen them struggle to increase user engagement. Implementing Workday is a significant investment so it can be frustrating if there isn’t a sense that it’s used firmwide. Customers that have Workday Financials or Payroll in addition to Workday HCM tend to have higher user engagement. It’s much more frequent that an employee will log into Workday to submit an expense than to update their home address. For those HCM customers that are looking for ways to increase user engagmement, FinServ has a few tricks that have worked for our clients:

1. Explain the impact. Oftentimes the best way to get employees to complete the task you’re asking of them is to explain why you need them to do it. For instance, if you explain to an employee that they need to complete all their tax forms before they can be paid, you’ll likely have a much higher rate of success among your employees.

2. Create a winner. A sure way to increase user engagement is to create an incentive for employees. For example, you can hold a raffle for those employees that enter information you’ve requested. Our clients have had success when asking employees to update their education or career history and entering employees into a raffle for completing their profile.

3. Make the ask easy. Of course if you want your employees to use the system (and like it too) you’ll want to make sure their experience is painless. We suggest leveraging Workday functionality at every opportunity. For instance, if you want employees to update part of their profile, leverage the business process Distribute Document or Task. This will send the task, like updating your Education history, directly to the worker’s inbox so they can easily execute the task without having to navigate to their worker profile.

4. Lastly, include ample instructions. There are many opportunities to include instructions and we encourage our clients to be very explicit. For instance, if you distribute a task, include a customized instructions on how to execute the task. For very detailed instructions, we include a link in our email notifications that brings an employee to a PDF with screenshots on how to complete the task. When creating the task in Workday you are also able to include instructions that will then appear in the worker’s inbox.

FinServ has helped many clients increase their user engagement and demonstrate the ROI for their Workday HCM platform. We also work with clients to plan their annual Workday initiatives, build new functionality, and maintain their system security. To learn more about FinServ Consulting’s services, please contact us at info@www.finservconsulting.com or (646) 603-3799.

Getting Started

After a long selection process, your company decided to go with Workday Financials. You have been sold on the “power of one” and are really looking forward to re-designing your financial processes and finally having a good answer for your auditors. The pre-sales teams have come in and have demonstrated solutions to your current problems. But now the realization sets in….This is going to be a lot of work!
Hopefully, your company has also spent time selecting the right integration partner and have augmented their staff with dedicated internal and external project individuals. A critical first step, is an internal one, spend time thinking about how you want the process to look or what reports you want to produce. This will allow your firm to answer important questions from Workday or the integration partner more effectively.

Workday Methodology

Workday has a formalized methodology and whether your integration partner is Workday themselves or a certified partner, you will find the process to be regimented. The first step in the process is called the Foundation Alignment Sessions (“FAS”). You will be given workbooks to populate which detail your current process. Workday, or the integration partner will ask questions to guide you on how you want this information to be stored in Workday. It is important to note, that a process review is not part of this process. Changes to future processes will be based on decisions made outside of alignment sessions. During the sessions, you may be asked questions to which you don’t know the answer. You may also answer questions having not fully understood the ramifications of the decision. That said, there is still time at this point to re-visit these decisions.

The FAS will cover everything from financial accounting, budgets, expenses, customers, suppliers, banking and any other process or “SKU” that was purchased from Workday. Every session will focus on a business process which is the approval flow associated with the transaction, as well as the key worktags that will need to be populated.
Upon completion of the FAS, the integration partner will conduct a walkthrough of the Workday environment in what is called customer confirmation sessions. This is a chance to fine tune the configuration and make additional decisions.

Testing

After these sessions, the configuration team will update the system and deliver a unit test tenant, at which time, you will be responsible for producing unit test scripts. Upon successful completion of the unit tests (and subsequent updates to the configuration), there will be user acceptance testing (which essentially strings together unit tests) and data conversion. These efforts can be time consuming and should not be underestimated.
A separate wortkstream is needed for managing interfaces (called integrations) and could be with banks or other third-party applications. Additionally, IT is typically involved in SSO and potentially user roles and security. Communication, training and hand holding can be expected.

Go-Live

Your original assessment that this will be a lot of work turned out to be true. However, what you can expect is a powerful platform capable of detailed and flexible analytics to support both your financial and management reporting requirements. Many processes that took you hours or days will be reduced to seconds or minutes. The user community will be capable of self service, which will free up your time to do more value-added activities. Most importantly, the information will be consistent, accurate and necessitate less time with auditors and regulators.FinServ Consulting has been providing technology and business solutions to financial services firms for over 15 years.

For more information on how we can help or guide your strategic direction, please contact us at info@finservconsulting.com or 646-603-3799.