The Importance of Employee Engagement Surveys

Since COVID-19, it has become crucial for healthcare organizations to monitor the well-being of their employees. Conducting employee engagement surveys is a useful way to gauge the employees’ satisfaction with the organization, and to prevent burnout related to high turnover rates witnessed post-pandemic by the health care industry.

Employee engagement surveys measure employee passion for the job, commitment to the organization, and alignment with firm values. FinServ assisted a leading healthcare services company to select and implement a new employee engagement survey platform. The client owns multiple hospitals, Ambulatory Service Centers (ASCs), and outpatient clinics across the United States. Likewise, participation in the annual engagement survey is an important part of the healthcare site accreditation process. Additionally, the survey results directly lead to tailored action plans for each site location.

Since COVID-19, it has become even more crucial for healthcare organizations to monitor the well-being of their employees. As the pandemic stretched on, the healthcare industry witnessed high burnout rates amongst its employees and the FinServ client wanted to ensure that they were supporting employees through the unprecedented difficulties placed on medical professionals.


Engagement Survey Questions – Examples

The survey questions focused on the employees’ overall satisfaction with the organization. These questions corresponded to the following categories:

  • Workplace Satisfaction: The first set of questions targeted an employee’s satisfaction with the organization and their work team e.g., “Are you satisfied with your work team?”
  • Growth Opportunities: The second set of questions focused on whether each employee’s work is meaningful to him/her and if they have ample opportunities to learn and grow. For example, one of the questions stated: “Do you find your work meaningful?” 
  • Compliance Regulations: The final set of questions surveyed each employee’s familiarity with the compliance regulatory requirements followed by the client e.g., “Do you know the name of the Chief Compliance Officer at the organization?”

These questions were intended to provide valuable feedback to the client, which would be useful in retaining its valuable talent.

Key Success Criteria – New Engagement Management System

Given its complex structure, the client required a survey system that would meet both its core business requirements and regulatory Clinical and Compliance functions.

The client determined three key success criteria for the new EMS:

  • User-Friendliness: The new system must be extremely user-friendly and easy to administer. As the client intended to conduct multiple surveys for the different units through a single platform, the new system needed to efficiently administer surveys at different points in time for various organizational units.
  • Analytic Capabilities: The system should consider the unique nature of the client’s organizational structure and provide great flexibility in collecting and interpreting the survey results. This not only would provide the client easy access to the historical data but will also customize the analysis based upon each team size, providing an ‘apple to apple’ comparison.
  • Reporting Capabilities: The system must possess data analytics capabilities, which could compile historical survey responses within the system’s repository and utilize them over time for accurate comparison. This would provide the client a unique opportunity to compare their employee responses over time and focus on any outliers. 

These questions were intended to provide valuable feedback to the client, which would be useful in retaining its valuable talent.

FinServ’s Vendor Selection Approach – New Engagement Management System

The FinServ team conducted a methodical vendor selection process using standardized processes and cumulative expert experience to ensure that everything from selecting the vendor to the survey rollout was seamless.

FinServ’s standard vendor selection process is typically divided into three main stages:

  • Step 1 – Investigate: The FinServ team documented the current and future business requirements of the client. The project team held generic demos for long list vendors to validate current vendor landscape capabilities. Based on these inputs, a short list of vendors were invited to participate in a Request for Proposal (RFP).
  • Step 2 – Assess: FinServ reviewed and scored each vendor’s RFP response using a quantitative score based on weighted question priority, supplemented by an overall qualitative assessment and cost analysis for each participant. The client selected finalist vendors for participation in a formal scripted demo process using the clients most important and/or complex workflows as evaluation criteria.
  • Step 3 – Recommend: Detailed reference checks were conducted and FinServ prepared an recommendation presentation for the client executive selection review committees including a “winning” vendor, cost analysis, and proposed service level tier to target.

Under FinServ’s guidance, the client was able to make a thorough and educated decision to find the best long-term partner for their business under a tight timeline to both select, implement, and deploy their engagement survey.

Deploying the Annual Survey Questionnaire

After negotiating the final contract, FinServ worked closely with the client to construct the engagement survey and survey deployment process itself. Survey system administration historically posed a challenge. The client wanted to streamline the process to make it easy for employees to participate, but employee information was spread across three different Human Resources Information Systems (HRIS) across its multiple facilities. FinServ spearheaded the client’s data migration onto the survey administrator.

After the data was uploaded into the system, FinServ took painstaking measures to verify the data. This included verifying the number of records, required fields and attributes, date formats, and removing the duplicate values to match the original data. This exercise ensured that the data upload into the new system was carried out smoothly and eliminated any inconsistencies providing the client with a robust data set to rely on for their new survey administrator. Additionally, FinServ’s expertise in data migration and data handling ensured a smooth enrollment of each survey user in the client’s system.

Finally, due to the client’s hierarchical organizational structure, emphasis was placed on creating the managerial hierarchy for different organizational units. The hierarchy was designed to ensure that each manager could view the aggregate response of only their team. FinServ worked closely with the survey vendor to implement stringent anonymity conditions. The client had historically struggled with post-survey analysis and ensuring the complete anonymity of the responses. This resulted in employees being hesitant to record honest responses, making it difficult for the client to implement meaningful reforms. In the new system, hard restrictions on how granular responses could be analyzed were implemented. E.g., managers would be unable to see individual responses for a team comprising of less than five members to ensure confidentiality and response safety. This allowed the client to get the analytical insight and depth they needed without compromising survey integrity and employee confidentiality.

Benchmarking Survey Results

Employee engagement benchmarks are critical to providing context for the employee responses to the survey questions. Using the benchmarks tied to the client’s survey results to a portfolio of other healthcare companies, FinServ’s client was able to add additional context to the survey data collected in order to identifying areas of weakness/strength across the organization to help structure leadership, cultural, and organization incentives.

The Outcome

The client was extremely happy with the smooth rollout of the engagement survey and the high survey participation rate. In addition, the benchmark selected by FinServ for the engagement survey proved to be a successful choice; the client was delighted with the reports created from the responses and found the benchmark a useful criterion to compare the survey responses. The client identified multiple opportunities to act on employees’ feedback and involve employees in co-creating actions to continuously improve their work experience.

In addition to designing and launching the engagement survey, FinServ additionally engaged to help the client design two other surveys in the portal. These included an engagement survey and a compliance survey targeted only at physicians. FinServ supported the creation of those surveys and the overall setup of the portal, which enhanced the efficiency of the client’s survey cycle. This ensured that the client could easily launch any of the surveys electronically, drastically reducing the time and cost associated with administering the surveys on paper. This also ensured that the client would be unlikely to rely on any other third party for designing and launching the surveys from now onwards, which added a long-term value to the client’s business operations.



Overall, employee engagement surveys can help the organizations retain their talents, especially in the wake of ongoing Great Resignation. Given how crucial engagement surveys are, it is critical that they are administered properly. By leveraging its vast expertise, FinServ can help your organization select an optimal engagement management system best suited to your unique needs.


To learn more about FinServ Consulting’s services: or (646) 603-3799.

About FinServ Consulting

FinServ Consulting is an independent experienced provider of business consulting, systems development, and integration services to alternative asset managers, global banks and their service providers. Founded in 2005, FinServ delivers customized world-class business and IT consulting services for the front, middle and back office, providing managers with optimal and first-class operating environments to support all investment styles and future asset growth. The FinServ team brings a wealth of experience from working with the largest and most complex asset management firms and global banks in the world.

What Every HR Department Must Do in Workday to Ensure a Smooth Start to the New Year

There are five main activities that need to be done in Workday at year end  / beginning of the year to ensure the smooth running of a business. These simple tasks are often overlooked – particularly by those new to Workday – but can have a negative impact if not done.

There are five critical tasks that Workday companies should undertake around the year-end / new year time frame. Individually, these are simple tasks but can significantly impact your HR operations if not completed in time.

Year-end activities come thick and fast, and it is easy in the last month of the year to forget to undertake some essential tasks. FinServ Consulting has identified five essential tasks that every HR department must complete to guarantee a smooth kick-off to the new year. Lack of action on these tasks could create unnecessary errors or preventable breaks in your operations, causing a lot of unneeded January headaches.

These five areas are:

  1. Scheduled Processes – (integration, reports, alerts) and Period Schedules (payroll, time off, time tracking) must be reviewed and set up / extended manually. Scheduled processes can be set up in advance up to five instances in a new year. Period schedules can be set up for up to two years in advance.
  2. Delegation Review – A review of delegation assignments ensures that they are correct and that expiration dates are extended. This will avoid the Workday inboxes of executives filling up with tasks that generally would be delegated.
  3. Compliance Activities – Review what compliance requirements are pending for the new year, including mandated data purging and verifying employee compliance with company policies.
  4. Corporate Document Updates – A review of employee documents like the corporate handbook, benefit plan documents, and company policies will ensure that they are updated and properly linked to in Workday.
  5. Time Off Calendar and Balances – Update the upcoming holiday calendar to ensure that employees can successfully request time off. In addition, review time-off balances that are carrying over to ensure accuracy.


#1 – Scheduled Processes and Period Schedules

Scheduled processes allow you to automate processes on a schedule (i.e. daily, weekly, monthly), such as an integration with your medical benefits provider or payroll processor. These schedules are typically set up in advance but must be maintained annually. They cannot be scheduled indefinitely and can usually be set for up to five scheduled instances in the following year.

Suppose your payroll file is not sent to your payroll provider because it is no longer automatically scheduled in Workday. In that case, the HR team risks a highly visible and potentially catastrophic mistake.

Period Schedules standardize the sequential periods you use to track absence or payroll. These period schedules also need to be entered and maintained manually and can be entered up to two years in advance.

Not setting your future period schedules can prevent employees from requesting time off or prevent you from processing the next pay run. Like the Scheduled Processes, not maintaining Period Schedules is an easily preventable error.


#2 – Delegation Review

Tasks are often delegated in Workday, usually to assistants of senior executives. Senior executives are generally crucial control points to granting approvals for time off requests from their subordinates or approving high-value expenses and invoices. Executives usually do not have the time or inclination to go into Workday consistently and approve these requests.

Delegating these tasks to assistants allow the tasks to be completed in a timely and consistent manner. These delegations do have expiration dates and need to be reviewed annually. Letting delegation settings expire can result in a senior executive’s Workday inbox being flooded rather than the tasks going to the correct delegated employee for processing. If the executive is not looking at their Workday inbox, critical invoice payments may not be approved, leading to unnecessary late payment penalties. For example, Market Data vendors’ unpaid invoices may lead to unnecessary late fees or, even worse, denial of critical data that the business requires.

As administrative permissions have time limits, it is easy to set them and forget them until something goes horribly wrong.


#3 – Compliance Activities

Data purging and employee compliance are two of the essential resets needed at year-end / beginning of the year. This means verifying that everyone has signed the required employee and corporate policy documents such as the employee handbook, Covid / return to work attestations, restricted trading policy attestations, and other necessary documents.

As these documents are disseminated throughout the year, it is easy to lose track of whether they have been reviewed and signed off on by all employees.

The time surrounding the new year is a natural time to conduct a holistic overview of the status of the firm’s overall policy attestations. For example, employees may be required to attest to understanding the code of ethics or conflicts of interest policies. Ensuring that these policies are enforced and that enforcement is tangible is key to assuaging any concerns of regulators or potential investors.

This time is also an excellent time to review how well the firm is in compliance with data retention and purging regulations. For example, the European Union’s General Data Protection Regulation (GDPR) stipulates that personal data is collected for legitimate reasons and is only kept if needed. Because of these regulations, companies will need to place greater scrutiny on terminated employees and their personal data. The HR or compliance departments must be vigilant in reviewing this data and determining if there is a legitimate reason to continue storing it in Workday.


#4 – Corporate Document Updates

Corporate documents such as employee handbooks, benefit plan documents, and policies can get out of date quickly as policies evolve, such as Diversity and Inclusion and Remote Work policies. In addition, the companies’ benefit providers often change, or the company changes the plan offerings themselves. The document file itself can change from content updates to file name changes or file location changes. Once this happens, the reference link in Workday may no longer work and inevitably lead to errors during any attestation process or during an employee onboarding.

Checking that the latest document versions are set up in the system should be part of any end of year to new year process. Multiple or outdated versions of documents can cause problems; ensuring that only one version – the latest – exists is essential.

Performance review templates are another area to double-check along with offer letters and other templates used throughout the year. These templates can change. Since they impact all employees and prospective hires, it is critical to be consistent and accurate in what is shown. If these templates link to external documents or are set to send information to vendors, it is vital to make sure that the links still work.


#5 – Time Off Calendar and Balances

A simple task that can cause many headaches is ensuring that next year’s calendar includes the correct dates for holidays. Different localities and regions may have special holidays, and observed holidays change from year to year. These are not automatically loaded into Workday; they need to be set up every year manually. This is particularly important for companies with international offices where the holiday dates may differ.

The time around year-end is also a good time to get ahead of nuances in the calendar for the upcoming year to give you more time to be prepared to address any employee concerns. For example, most financial services firms follow the stock market’s holiday schedule. At the end of 2021, the stock market is not observing New Year’s Day 2022 as a holiday since it falls on a Saturday. Usually, the holiday would be observed on the preceding Friday. But, because Friday is a key accounting period (year-end / quarter-end / month-end), the stock market will be open. Try explaining that on New Year’s Eve when this calendar quirk dawns on your employees.

Another critical activity for year-end is to check your employee’s time off balances due to carry over. Carry-over balances should be checked for accuracy; this will ensure that your time off eligibility and carry-over rules are correct and that an unexpected employee type / setup is not breaking the time-off rules.  Unused time off that can be paid out will need to be appropriately reviewed and loaded into payroll.



Overall, it is best never to assume that these essential tasks have been completed. Much of what needs to be done annually is common sense, but HR and Operations teams often overlook these additional inputs / actions in the crunch of a busy fourth quarter.

FinServ Consulting has found that many clients outsource support for these activities after they have experienced one of these painful events.

Whether you choose to seek our support or not, we hope these top tips help you avoid any adverse effects on your company’s operations. Getting to grips with these tasks early and on an annual basis will save a lot of time, energy and headaches in the coming year.

To learn more about FinServ Consulting’s services: or (646) 603-3799.

About FinServ Consulting

FinServ Consulting is an independent experienced provider of business consulting, systems development, and integration services to alternative asset managers, global banks and their service providers. Founded in 2005, FinServ delivers customized world-class business and IT consulting services for the front, middle and back office, providing managers with optimal and first-class operating environments to support all investment styles and future asset growth. The FinServ team brings a wealth of experience from working with the largest and most complex asset management firms and global banks in the world.

How FinServ Helps Funds Optimize Their Operations

Operational assessments provide an opportunity for asset managers to objectively evaluate current operational structures with an eye toward improving operations. Today’s environment — characterized by hybrid work structures and new strategies focused on investments in cryptocurrencies and other alternative assets – means that managers need to initiate these assessments to ensure that existing systems and processes are aligned with long-term operational goals.

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.



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 or (646) 603-3799. 


About FinServ Consulting

FinServ Consulting is an independent experienced provider of business consulting, systems development, and integration services to alternative asset managers, global banks and their service providers. Founded in 2005, FinServ delivers customized world-class business and IT consulting services for the front, middle and back office, providing managers with optimal and first-class operating environments to support all investment styles and future asset growth. The FinServ team brings a wealth of experience from working with the largest and most complex asset management firms and global banks in the world.

How to Create an Investor-Proof Business Continuity Plan in the Post-Pandemic World

Having a robust and automated BCP plan is critical to the post-pandemic DDQ process with Investors. Learn how FinServ has provided this critical service to their clients.

As the world slowly returns to a “new” normal for operational working practices, many funds are reviewing their existing business continuity plans (BCPs) and analyzing how to make them more robust and relevant given lessons learned from the global pandemic.

While many funds moved their technology to cloud-based solutions long before the pandemic began, others still have onsite servers and physical files that constitute a potentially serious business risk, particularly considering the changes (and disruption) to working practices over the past 18 months.

Many alternative funds, including hedge funds and private equity firms, managed to make a timely switch to remote working however many others continue to struggle to implement systems that satisfy their needs while balancing the mistrust of cloud-based environments by some executive team members. Even those that have already made changes will want to look more closely at exactly what systems they are using and if there are better, more effective, and efficient solutions that can be implemented.

Before making any modifications or implementing new business continuity plans, funds should consider several key aspects ranging from calling trees to automating vendor risk analysis. Potential unknowns could disrupt any workplace and its technological solutions. Plans should be formal, detailed, and comprehensive, and account for a variety of different scenarios.

Having a robust continuity plan is essential, particularly as existing, and new investors will look at this closely before making allocation decisions. They will want to see meticulous plans that give them the confidence they need to put (or keep) money into funds.



No business can future proof itself entirely or plan for black swan events, but it can think about what a new risk or potential disrupter of the future may be. Another pandemic cannot be ruled out, and serious climate events (wildfires, flash flooding, extreme weather, for example) and other unforeseen risks, including political risk, should be factored in.

For example, how robust are communications if there is no mobile network available? What are the alternatives if mobile phone networks are not working? For those working at home, what systems do they need, including equipment and technology, to ensure they can work remotely no matter what the problem? What happens if Wi-Fi stops working or secure networks can no longer be accessed?

Funds also need to look at their service providers and vendors and ensure their vendors’ BCP’s are at the same standard as well as consider how potential disruption to services or systems, whatever the emergency and for varying lengths of time, could be mitigated.

Throughout the pandemic, FinServ has helped clients assess current vendor agreements. A worrying number did not meet the level of detail or required response times firms should reasonably expect – or thought they had agreed on – from providers.

These are real threats to business continuity and performance. For example, quantitative trading funds need a contingency plan in case their trading platforms go down. Can present vendors guarantee little or no disruption to all or only some trades? How quickly can systems be back online or moved to alternative sites? What are the potential costs to the fund?

Enterprise document management systems such as SharePoint Online are far more effective than using the quite common and outdated construct of Network folders. However, relying heavily on document sharing programs such as SharePoint could also be a problem if there is disruption due to remote work. Are agreements in place specifying how long before systems are back online? Are there other, secondary programs that can be used? Does everyone know what to do if disaster strikes and what the alternatives are?

Even smaller scale problems could be a serious disruption to a business. If a key employee is unable to work, who is capable or next in line to handle their duties? Does the replacement employee have the training, permissions, and access needed to continue the work, and while they are being a substitute, who is going to do their work?


Potential Solutions for Alternative Investment Firms

FinServ Consulting has helped many alternative investment firms build well-thought-out and fully documented business continuity plans. Some of the areas in which continuity plans should address vendor issues are reassessing vendor agreements and identifying and prioritizing vendors in order of the most critical to the least.

FinServ Consulting can also demine the types of guarantees needed to maintain business continuity, ensure vendors provide those guarantees and review contracts on a regular basis to ensure their own business continuity plans are strong enough not to let you down.

Continuity plans are also needed for employees. FinServ can help identify the priority roles and responsibilities within the firm and create a plan of succession if anyone at any level is unable to work, whatever the reason and length of time. It can help ensure all employees will have the permissions and access needed to take on different or more responsibilities if needed.

To bring this all together, FinServ can also design and implement a communications plan that will ensure everyone is informed and briefed sufficiently on what is happening and to whom whatever the type of disruption.

A vendor management system can play an important role in helping an alternative investment firm with creating and managing a business continuity plan more effectively and efficiently.

To learn more about how FinServ Consulting can help your firm develop and implement a business continuity plan, contact us at or call us at (646) 603-3799.

About FinServ Consulting

FinServ Consulting is an independent experienced provider of business consulting, systems development, and integration services to alternative asset managers, global banks and their service providers. Founded in 2005, FinServ delivers customized world-class business and IT consulting services for the front, middle and back office, providing managers with optimal and first-class operating environments to support all investment styles and future asset growth. The FinServ team brings a wealth of experience from working with the largest and most complex asset management firms and global banks in the world.

What You Need To Consider When Choosing A New OMS

Undergoing technological change or implementing a new system is not something to be taken lightly in ordinary market environments, much less during a time of extreme or abnormal market volatility. If your fund or organization is planning to implement a new OMS or replace a legacy OMS, there are several things you should consider.

From a business and investment standpoint, there are the usual key considerations, including: the need for integrated OMS/EMS functionality, whether ease of use important, ability to customize workflows and if there is a desire for extensive client/marketplace connectivity. From an operational perspective, one must also consider other non-functional items like data migration (and how easy it is to implement), the software support model, modularity and future expandability.

​The aforementioned list only touches the surface; the overarching themes involve automation, workflows, analytics and decision-support tools. In fact, in a recent Refinitiv/Greenwich Associates paper, traders ranked an EMS as the most impactful technology in the short-term.




In general, hedge funds treat the Portfolio Manager (PM) and Trader workflows as a single unit, whereas traditional asset managers may have additional bifurcation between roles and responsibilities. At a hedge fund where the PM sends orders via email/chat/voice to a trader to execute, they may want a single, integrated OEMS. On the other hand, an asset manager often has multiple PMs who route orders to a centralized trading desk. In this case, the institution may want a solution with specific standalone OMS and EMS functionality, in order to access best-of-breed functionality.

The trend in the marketplace for a while has been OMS vendors integrating additional trading functionality by buying or building EMS solutions. This results in the ability to capture and allocate client orders while also capturing execution details to help the firms comply with regulatory requirements. Additionally, this allows them to market themselves as an all-in-one solution and would insulate the client from having to integrate yet another vendor into their technology stack.


Source: Charles River Development


Ease of Use

Being able to get your operations, back office and front office users onboarded and using the software as quickly as possible can be a heady concern for most clients. In theory, this sounds simple, but many legacy OMS were designed with a single asset class in mind. If your client is now multi-asset, multi-strategy and trading a variety of instruments in volume, it’s even more imperative that a system be easy to use and operate as one cohesive platform.

A modern interface with intuitive workflows can be a competitive advantage especially if the fund’s current OMS platform is antiquated and requires, in a worst case scenario, dual entry or swivel-chairing in order to execute and fill an order. (Swivel chairing involves a PM creating orders/allocations in an OMS and then sending them over to trader for execution in an EMS).


Ease of Customization

A vendor’s product team always has to find the right balance of customization and the notion of a standard offering for the client. However, in this day and age where customizability is king, most vendors are client-driven and willing to bend over backwards for their clients. Enfusion Systems, whose product features weekly upgrades, has marketed their product as being easily customized. In a recent implementation with an asset manager, Enfusion agreed on development of specific functionalities within their platform that would position them well for the changing OEMS marketplace. The client agreed on an OMS implementation, while also using Enfusion’s Services team for reconciliations (the client still kept some functionality in-house, like collateral management).


Client/Marketplace Connectivity

Most multi-strategy funds that trade a wide breadth of products across different asset classes and venues will always be excited at the prospect of having a vendor whose product comes pre-packaged with existing API connectivity to brokers, venues and marketplaces. Many clients have a baseline expectation of connectivity with a full suite of partners across the spectrum of asset classes. If this is not currently in the vendor’s repertoire, the expectation is that connecting to new trading venues and brokers would be trivial.


Data Migration

One of the most underestimated Issues that can be the source of delays for most implementations is data migration. What seems like a simple exercise to port accounting/trading data from the client’s old system to the new system can lay bare a client’s unreconciled data and inconsistencies between trading data and official books and records. Having clean, reconciled source data from the client that can be matched to the client’s custodian or fund administrator sounds simple. In practice, many things can go wrong and be a source of delays. Finding a vendor who has experience successfully migrating trade data, for funds that are similar to their current structure, in a timely manner is the holy grail.


Our Implementation Project with Enfusion and an Asset Manager

FinServ is currently engaged with an institutional asset manager on the implementation of Enfusion’s comprehensive front-to-back trading software product. The asset manager is looking to implement a new front-to-back office system for one of their businesses. Because their current portfolio management system is a legacy product, the product features were outdated and users found the workflows to be inefficient. By implementing a new portfolio and order management system, they would be able to control service levels and more importantly, they would be able to custom develop functionality that match their growing business needs.

After an extensive vendor selection process, the asset manager chose Enfusion Systems. Enfusion was able to make their choice easy due to their cloud-based solution, which provides integrated order and execution management as well as middle office and IBOR services. Although not the focus of this article, the asset manager was also looking to outsource part of their back office to Enfusion’s Services team. Using one vendor for both OMS and back office was one of the key drivers behind their decision. In addition, having a single data model also provided a golden copy for data for all users across all functions. Since the asset manager’s business model involved trading a diverse set of product types and made use of heavy derivatives, Enfusion’s ability to handle multiple asset classes also made sense.


Because implementing a new OMS was such a large effort, the timelines for launching and migrating an initial account and eventually the entire business spanned much longer than a year. A decision was made to have a phased approach, where specific sets of strategies and funds would be moved to the new platform in stages.

In order to alleviate some concern that the execution tools, order management workflows and trade compliance functionality would not be replicated completely (due to extensive in-house custom enhancements over the years), Enfusion worked closely with the client to address these items.

From the client’s standpoint, adding a new system would also add additional complexity – additional integration points, extra feeds into and out of their books and records system, the necessity to have Trading operate out of multiple platforms simultaneously, a bifurcation of the client’s Operations team to handle both sets of systems and lastly, having PMs manage portfolios and strategies across multiple systems during the phased implementation.

“Enfusion and FinServ worked side-by-side during this project – we ran implementations, gathered clients’ requirements and dived deep into the use cases. Both parties were truly collaborative and this enabled accountability with the client. FinServ has tremendous project management experience and it was great partnering with them.”

– Brad Flax, VP of Business Development at Enfusion


If you are interested in learning more about our current and past Enfusion implementations, please reach out to FinServ. Throughout our 15 years of existence, we have proven that our deep industry knowledge combined with our project management and overall best practice methodologies can be an asset to your organization. To further continue the conversation or to discuss more of FinServ’s capabilities, please contact FinServ at or give us a call at (646) 603-3799.

About FinServ Consulting

FinServ Consulting is an independent experienced provider of business consulting, systems development, and integration services to alternative asset managers, global banks and their service providers. Founded in 2005, FinServ delivers customized world-class business and IT consulting services for the front, middle and back office, providing managers with optimal and first-class operating environments to support all investment styles and future asset growth. The FinServ team brings a wealth of experience from working with the largest and most complex asset management firms and global banks in the world.

HCM for Asset Managers: Find the Right Solution for Your Firm

An HCM solution is an integrated system that automates HR functions combined with finance, planning, and analytics and allows for employee self-service capabilities, thereby reducing labor costs, optimizing business processes, and increasing efficiency. Companies that transition from manual processes and disparate legacy systems to modern, cohesive digital workforce management technologies can realize up to 15-25% cost savings related to HR and IT spend.

Most current HCM solutions are offered as a cloud-based, SaaS delivery model and include modules for payroll, HR, time and labor management, and recruitment. This type of solution does not require an expensive hardware investment and constantly updates software to the latest version while maintaining secure backups. These systems are monitored at all times and provide the utmost reliability. An added plus for asset managers is that the solutions can be customized to suit the size of any company and grow as the organization grows.

At FinServ Consulting, we have experience working with firms of various sizes in the alternative asset management industry to select, implement, and/or upgrade their HCM systems. While there are numerous benefits of having one comprehensive, integrated HCM, there are other options available on the market such as lite solutions that meet basic needs without all the added features that may not be necessary for some firms, as well as point solutions that cater to the industry’s unique needs, like complicated compensation structures. FinServ can help assess your company’s specific requirements to identify what to be aware of in terms of missing features, implementation issues, and cost-benefit analysis of different HCM options.


Benefits of a Consolidated HCM

Attract and Grow Talent

Recruiting top talent and keeping them engaged is no longer just HR’s responsibility—talent objectives can have a significant financial impact on growing a financial services business. Implementing a new HCM system can help enhance performance management processes to eliminate bureaucracy and encourage meaningful conversations between managers and employees focused on performance improvement. In addition, better compensation data and visibility of top talent allow managers to make more well-informed decisions regarding performance and rewards.

Some clients in the alternative asset management space that FinServ has previously worked with used manual spreadsheets to manage staff performance, as well as recruiting and other functions in some cases. However, by opting for a consolidated HCM system, these organizations were able to use more sophisticated workflows to provide employees with more meaningful feedback. Also, they could track and monitor operational outcomes and staff development across the company to ensure a payback from their HCM investment.

Make Better Informed Decisions

Asset management firms in the current environment face increasing regulatory scrutiny, such as GDPR, AIFMD, and Form PF, and constantly evolving standards. In order to meet the new generation of demands, these companies need to make well-informed investment decisions with visibility into all business lines. However, this is a difficult task when the data required to deliver these insights is housed in disparate legacy systems with varying formats and level of detail. This is where having consolidated HCM comes in—a single system for finance, HR, planning, and analytics can offer the necessary foundation to gain better insights, save time on data aggregation, and proactively solve business problems. A digital solution of this type can help improve business margins, provide competitive differentiation, attract and retain customers, and identify lucrative areas for growth.

Harness the Power of Modern Data

Today’s financial companies have an unprecedented amount of valuable data across their organization. However, many are still not able to access this data due to isolated, unorganized, and inaccurate legacy systems. The data warehouses that are typically accessed by business intelligence tools to create reports or perform financial analyses hold data that was accurate at the time it was loaded and refreshed from legacy systems, resulting in a high likelihood that it is out-of-date and unreliable. As a result, financial services firms often turn to add-on custom software solutions to try and achieve real-time data extraction, but these products often produce further challenges because they require continuous maintenance to keep up with the changing needs of the business.

Implementing a contemporary, consolidated HCM system allows firms nimble access to the real-time data that is necessary for constantly changing business needs. These solutions include technologies, such as cloud computing, open APIs, artificial intelligence, and machine learning, that make insights transparent and accessible across lines of business.

Build Organizational Agility

Being agile is key to an asset manager’s long-term success and there are several factors at play in building organizational agility:

  • Adaptable: A flexible technology foundation is essential to be able to change organizational structures and processes in response to regularly shifting business needs.
  • Skilled: Financial services firms, among others, face a widening skill gap and must find ways to upskill their workforce.
  • Empowered: In order to perform at the highest potential to meet evolving consumer expectations and drive success, employees need full access to data to make business decisions.
  • In Control: The need for measurement and control goes hand in hand with agility and speed. Asset managers must measure more relevant KPIs to learn from what works and what doesn’t when it comes to new digital revenue streams.

There are common obstacles that firms must overcome to meet the guidelines above, including inflexible legacy technologies, bureaucratic organizational culture, and a lack of relevant employee skills. By using a comprehensive HCM solution to add intelligence to business tasks, financial firms can move past these challenges and employ integrated, real-time planning in order to build organizational agility and realize their digital growth aspirations.


Choose the Right Solution

As mentioned previously, there are many HCM offerings available on the market and it is important to select the right one to meet your firm’s unique needs. There are several factors to consider, such as the needs and priorities of the business, size of the firm, and desired metrics and reporting abilities. FinServ Consulting has experience working with asset management firms to identify and implement a suitable HCM solution. We can help you make the right decision and take full advantage of the capabilities and rewards that the new solution will provide.



If you are interested in establishing or improving your firm’s HCM platform, FinServ Consulting is the right partner to help you reach your firm’s strategic objectives.  Throughout our 15 years of existence, we have proven that our deep industry knowledge combined with our project management and overall best practice methodologies can be an asset to your organization. To further continue the conversation or to discuss more of FinServ’s capabilities, please contact us at or give us a call at (646) 603-3799.

About FinServ Consulting

FinServ Consulting is an independent experienced provider of business consulting, systems development, and integration services to alternative asset managers, global banks and their service providers. Founded in 2005, FinServ delivers customized world-class business and IT consulting services for the front, middle and back office, providing managers with optimal and first-class operating environments to support all investment styles and future asset growth. The FinServ team brings a wealth of experience from working with the largest and most complex asset management firms and global banks in the world.

Discipline is Freedom: How Data Governance Generates Alpha for Asset Managers

In today’s increasingly digital, data-centric corporate environment, a strong data governance approach is of utmost importance. Data governance defines who does what in data management. It cannot be solved in one corner of the organization; it requires consistent collaboration between IT and business to manage data as a real asset. A robust data governance program defines who makes the decisions and who is accountable for each data management activity in the company. Defining these roles is necessary to improve data integrity, power key business initiatives, and ensure regulatory compliance.

Companies with unclear or non-existent responsibilities related to their data lack an effective data governance methodology and usually face the following situations:

  • Lack of clarity around who is responsible for key data objects and their quality
  • Poor data quality (e.g. missing values, outdated information)
  • Data management and stewardship activities are performed in an unstructured manner and without proper documentation and controls

These issues can have severe consequences for an asset management firm from the front to back office. For example, poor data quality and lack of responsibility for key data objects can lead to problems in reporting, such as incorrect or missing data items for PnL reporting. Asset managers are in need of enhanced analytics that improve operations. In order to build out a target operating model or other highly scalable platform, asset managers must focus on being a data-first company.

Clearly, there can be substantial functional and tactical obstacles to establishing a data governance framework. However, the benefits and overall payoff are well worth the investment. Especially within the asset management domain, there are several advantages of implementing an effective data governance strategy.



Prepare for Regulatory Scrutiny

The financial services industry has recently faced increasing pressure to comply with new financial data reporting regulations such as AIFMD, Form PF, GDPR, CCAR, and DFAST. Most firms were not adequately prepared; they had to scramble to find the necessary data, map its lineage and usage, and verify its accuracy in order to satisfy these requirements.

Firms learned that a data governance program would alleviate much of the compliance pressure and avoid endless meetings, emails, Excel spreadsheets, and Visio diagrams. The best way to end that cycle of ad hoc documentation, which produces data that nearly instantly becomes stale, is through the use of technology and analytics. Asset managers can benefit from proactively implementing a data governance plan that will be useful when the regulators come knocking.

In addition, there has been increasing regulatory emphasis on data security and protection, including cybersecurity, preventing data leaks. Data governance is the clear solution here for asset managers to prove the reliability of their data to authorities and ensure that they have protected the data against potential breaches.

Consistent Standards for Data Quality, Validity, and Transparency

The process of acquiring data, especially from external, third-party vendors, is an expensive one for asset managers. On top of that, the data may not have been properly validated and therefore presents quality issues. A centralized data governance system can streamline data procurement and validation so the firm can negotiate favorable rates with vendors, mitigate data-related risk, and reduce operational costs of scrubbing the data.

Once the data is within the organization, quality can still be an issue for different users. A data governance program facilitates commitment to firm-wide data quality standards, which increases transparency and trust among business users that the data has been thoroughly validated.

Additionally, business terms and definitions often have an entirely different meaning in one group versus another, which leads to issues in the case of firm-wide initiatives and projects that require multiple teams to collaborate. This is where data governance comes in to help centralize the function and create a set of business definitions (a “data dictionary”) and business usage rules. Having a centralized governance process is very useful when it comes to large-scale data transformations for mitigating risk through increased control and oversight of complex data projects.

Increase the Value of Data

The vast amount of data that is available today can be extremely valuable to asset managers for many purposes, from discovering valuable investment opportunities to gaining insight on potential investors. Implementing data governance contributes to increasing data’s value even further. If it is not used properly, data has little to no value. Governance ensures that any data issues can be quickly resolved, and that data is ready for use in increasing efficiency of business processes as well as decision-making and business models.

Implementing Data Governance

FinServ Consulting specializes in offering a wide variety of business services to asset management firms; we can help define a data governance framework that will realize the benefits discussed and more. FinServ can provide hands-on business analysts to support clients looking to create a specific set of reports of dashboards, those looking to stand-up a formal data governance program, and those looking to implement a more complex master data management system to handle growing complexity of hybrid on-premise and cloud system ecosystems. We are well versed in the established guidelines and proven approach for setting up data governance:

  1. Define who does what. Who owns specific data management activities within the organization? Is the function centralized or decentralized?
  2. Set mandates and decision-making rights. Set the mandate and decision-making rights for the people defining and monitoring the governance policies and standards.
  3. Define an implementation plan. Training, communication and change management activities should be included.
  4. Identify resources. Determine how many people are needed and select the right individuals to run data governance.
  5. Select technology. Select the appropriate technology solutions to create a best-in-class platform.


If you are interested in establishing or improving your firm’s data governance platform, FinServ Consulting is the right partner to help you reach your firm’s strategic data objectives. Throughout our 15 years of existence, we have proven that our deep industry knowledge combined with our project management and overall best practice methodologies can be an asset to your organization. To further continue the conversation or to discuss more of FinServ’s capabilities, please contact us at or give us a call at (646) 603-3799.

About FinServ Consulting

FinServ Consulting is an independent experienced provider of business consulting, systems development, and integration services to alternative asset managers, global banks and their service providers. Founded in 2005, FinServ delivers customized world-class business and IT consulting services for the front, middle and back office, providing managers with optimal and first-class operating environments to support all investment styles and future asset growth. The FinServ team brings a wealth of experience from working with the largest and most complex asset management firms and global banks in the world.

SOFR is the New LIBOR

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.


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 or give us a call at (646) 603-3799.

About FinServ Consulting

FinServ Consulting is an independent experienced provider of business consulting, systems development, and integration services to alternative asset managers, global banks and their service providers. Founded in 2005, FinServ delivers customized world-class business and IT consulting services for the front, middle and back office, providing managers with optimal and first-class operating environments to support all investment styles and future asset growth. The FinServ team brings a wealth of experience from working with the largest and most complex asset management firms and global banks in the world.

What You Need To Know About Uncleared Margin Rules (UMR)

Regulation around UMR came about as a response to the financial crisis of 2008-2009. One of the reforms that was recommended was the implementation of margin requirements for non-centrally cleared derivatives. The in-scope OTC derivatives include FX options, NDFs, physical FX forwards, swaptions and hedging trades.

The initial implementation of Variation Margin (VM) requirements was implemented in 2017, while Initial Margin (IM) requirements continue to be phased in until 2021. The new IM rules that are to be put into effect in 2020 and 2021 affect primarily smaller financial organizations, including buy-side participants. Note that UMR has been phased in since September 2016 in the US and March 2017 for remaining market participants.

The initial Phases affected the interdealer market and required execution/negotiation of new CSAs, custodial arrangements, eligible collateral schedules and account control agreements with counterparties/custodians.

The upcoming Phases will affect smaller insurance/banking groups and asset managers, who naturally have less experience with the new rule requirements and likely, fewer resources to help with implementation.

Unlike variation margin, which is based on the market value of trades, initial margin is a risk-based calculation. VM also happens to be a mature concept for most firms; IM, though, is new for most institutional investors because it includes custodians in addition to the trading parties.


Key Dates

Adherence to UMR has been on a phased approach thus far; in 2018, market regulators postponed the last two Phases (4 and 5) by one year. The Phase 4 compliance date was originally September 2018 and was moved to September 2020. The Phase 5 compliance date moved from September 2020 to September 2021.

The phased thresholds for UMR means that, with each Phase, more and more In-Scope Counterparties will be affected and has been the source of some consternation among market participants.

In addition to the notional thresholds, IM is required to be posted between counterparties where there is a consolidated threshold of $50mn USD or $50mn EUR. Thus, if the IM threshold is less than $50mn, no IM needs to be exchanged.



Biggest Challenges

There are four main challenges for market participants when it comes to compliance with UMR:



The IM rules consist of the following tasks that need to be completed by a market participant:

  • Calculation of regulatory IM
  • Collateral segregation and rehypothecation requirements
  • Eligibility checks of collateral
  • Settling of collateral (on T+1 basis)
  • Threshold application (ie 50mn)

Because of this daunting list (many of which are operationally intensive), many participants have sought to outsource their adherence to the new guidelines.

But market solutions have been scarce; there are few all-in-one solutions; rather, a few vendors have capabilities in different facets of UMR

  • There were originally two market solutions: Margin Xchange and ISDA create
  • As of December 2018, neither had been released to market
  • As of September 2019, Margin Xchange ended their product after regulators cut the industry workload by ~90%
  • As of January 2019, ISDA create was launched and is free to the buyside
  • As of September 2019, 50 firms were on ISDA create; more than 160 other firms are testing the platform ahead of Phases 4 and 5.


Here’s a list of what a ‘typical’ hedge fund needs to do:

  • Assess which products are in-scope and calculate notional amounts
  • See if the notional threshold is applicable or not
  • See if the IM threshold is applicable or not
  • Re-negotiate all Credit Support Annexes
  • Calculate & Pledge IM and ensure it is held with Custodian Bank
  • Ensure no rehypothecation of collateral
  • Manage margin requirements: calculation, monitoring, segregation and reconciliation

Calculating IM

Calculation of IM is one of the more cumbersome requirements of the new rules. There are certain vendors who are licensed ISDA initial margin calculation service providers and can help with calculations.

Partial list of vendors who are licensed SIMM service providers

  • AcadiaSoft Risk Services Suite
  • Bloomberg
  • Calypso
  • Cassini Systems
  • CME
  • Clarus Financial
  • Lombard Risk
  • Murex
  • OpenGamma
  • Quantile Technologies
  • TriOptima

Initial Margin (IM) has to be calculated via one of two methods : the grid method or the SIMM method.

Unfortunately, there is no clear preferred method in that both methods are operationally burdensome. Each method has its pros and cons, which will require each market participant to perform a cost benefit analysis.

Here we will list out some key points for each method.

Grid Methodology – A standardized schedule included by regulators

  • Insufficient granularity of tenor buckets and product types
  • The grid methodology has a lack of clear guidance from regulators and as a result, inconsistent interpretation. As a result, it hasn’t been widely adopted.
  • The methodology seems simple, but results are difficult to compare between counterparties

SIMM Methodology

  • Thus far, all entities that have implemented regulatory IM have used SIMM
  • Takes into account offsetting risks
  • Use of a standardized model allows simpler comparison of margin amounts and results in fewer disputes among participants
  • Requires each counterparty to generate sensitivities for every trade – time consuming and requires huge amounts of market data
  • The only regulator-approved IM model



If you are facing any of these issues in complying with the UMR rules, please reach out to FinServ. Throughout our 15 years of existence, we have proven that our deep industry knowledge combined with our project management and overall best practice methodologies can be an asset to your organization. To further continue the conversation or to discuss more of FinServ’s capabilities, please contact FinServ at or give us a call at (646) 603-3799.

About FinServ Consulting

FinServ Consulting is an independent experienced provider of business consulting, systems development, and integration services to alternative asset managers, global banks and their service providers. Founded in 2005, FinServ delivers customized world-class business and IT consulting services for the front, middle and back office, providing managers with optimal and first-class operating environments to support all investment styles and future asset growth. The FinServ team brings a wealth of experience from working with the largest and most complex asset management firms and global banks in the world.

Why Funds Who Want to Grow Must Continue With Their Strategic Projects

As an experienced surfer knows, if you wait until the wave is on top of you, then your chance to ride that wave is already gone. The same can be said about when an alternative asset manager innovates and invests in new technologies and projects during periods of low performance like we have seen recently.

As Klaus Schwab Founder and Executive Chairman of the World Economic Forum (“WEF”) noted, “Typically, first-adopters of technology are the ones with the financial means to secure it, and that technology can catapult their continued success increasing the economic gaps.”

He went on to say, “Additionally, the changes might develop so swiftly, that even those who are ahead of the curve in terms of their knowledge and preparation, might not be able to keep up with the ripple effects of the changes.”

Overview of This Paper

We will look at what companies did during the recession of 2008 to identify historical trends. We will also examine recent surveys that suggest where Investors are focused as they evaluate Hedge, Private Equity and other Alternative Asset managers in 2019 and beyond. Finally, we will highlight information from our own client data to explain how our clients followed these trends and share how those funds performed in terms of their own growth or decline.

Our Thesis

The underlying assumption to our work is that the economy and the market will recover and so will the asset managers who possess strong fundamentals. Given this premise, it would be very hard to argue that putting your strategic projects on hold is a good business decision if you want to stay relevant in an increasingly competitive landscape.

We look at surveys performed by EY and KPMG which back what most fund managers already know. Investors are focused on allocating their money to Innovative Funds who have strong cost management approaches in place, and who are leveraging the latest and greatest technologies.

Finally, we speak to the usage of technologies like AI, Big Data and RDP which are indispensable in the 4th industrial revolution and support the conclusion that funds who have not embraced these technologies will lose out to more innovative managers.

Our Recommendation

Based on this evidence, the only possible course of action is that funds must continue to push forward with their strategic and cost management projects undaunted by current fund performances. This is critical to not just to survive, but thrive and grow in the fast-paced and constantly evolving technical golden age we now live in.

Klaus Schwab who coined the term the 4th Industrial Revolution explained that, “Typically, first-adopters of technology are the ones with the financial means to secure it, and that technology can catapult their continued success increasing the economic gaps. Additionally, the changes might develop so swiftly, that even those who are ahead of the curve in terms of their knowledge and preparation, might not be able to keep up with the ripple effects of the changes.”

We believe in this statement Mr. Schwab accurately warns businesses that a pause in innovation can be very costly to their competitive position in the marketplace.

Why a Reactive Response to Poor Fund Performance Can Amplify its Impact

While it is totally understandable that a prudent CFO, CTO or COO will place all projects on hold during periods of uncertainty and poor fund performances, the loss of momentum is far too costly to allow this to happen. This pause will only multiply the impact on your funds’ future performance by handicapping your investment team from performing their jobs at an optimal level.

There appear to be two basic camps on this question. One side argues that companies should double their innovation efforts in recessionary times. In March 2008, American Express CEO Ken Chenault was quoted in Fortune saying, “A difficult economic environment argues for the need to innovate more, not to pull back.” [1]

What we have seen firsthand at the top performing funds is the exact opposite mentality. The top funds never stop working on the most important strategic projects to their business. In fact, what we have witnessed in most cases is when the markets are in question they double down on their investments, because they want to be able to take advantage of the funds who are too scared to make moves and enhance their market dominance.

They know from experience that when others are cautious and holding back, they can seize on opportunities more easily to extend their dominance.

Historical Support for Investing in Disruptive Innovations During Economic Contraction

Supporting the concepts of the 4th industrial revolution, FinServ believes the pace at which new technologies are being offered to funds in our industry is at a pace that we have never seen before. We believe adopting solutions like AI and RDP without delay is essential to succeed during these down periods in performance.

As we researched historical data to support our thesis, we came across many examples and anecdotes that support the idea that innovation during hard times is the best course of action. Here is one example provided in 2001.


The EY study further backs up the case for innovation supporting the idea that tactical short-term fixes are always important, but it should never be prioritized or replace the long-term, strategic investments that fund managers must continue to focus on in a highly competitive marketplace for investors. We’ll explore a few examples of these innovations as it relates to alternative asset managers later.

Strategic, long-term actions are more successful in protecting margins

It feels like an intuitive finding, but the data is clear. Those managers who indicated that they were taking strategic, long-term actions are more likely to report that their margins increased in the past two years.

Only 19% of those managers who indicated they were taking tactical, short-term actions increased margins as compared to 62% who indicated margins decreased. This compares to managers who took strategic actions of whom 32% reported margin increases and only 36% who had margin compression.

Margins are influenced based on both top-line revenue growth as well as cost management, all while making necessary investments to support the overall growth of the business. With resources less abundant for most managers, business leaders need to critically analyze their operations and take actions to best prepare the organization for both the current and future landscape. Acknowledging that the industry is being disrupted and taking advantage of newfound opportunities will best position innovative and forward-looking managers to deal with challenges and competition.

A study performed by McKinsey in the high-tech industry that backs up this point. In their analysis below they reinforce the point made by Klaus Schwab, that if you hesitate you will be left behind, but if you innovate you will surge ahead. The evidence suggests that if you hold back you can very quickly lose your position in the marketplace and go from a leader to a laggard.

“We found, for example, that 69 of the 146 high-tech companies entering the 2000–02 contraction as leaders—47 percent—emerged from it as laggards (Exhibit 3).

Conversely, 13 percent improved their positions during that same period. For example, the last downturn saw several leaders in various subsectors slip, from storage device makers and enterprise software manufacturers to virtualization and consulting-services firms. In contrast, companies such as Foxconn and HCL ascended.

Even companies that remained in the same categories moved to the extremes: Cisco Systems and 3Com, for instance, continued to be a leader and a laggard, respectively, but Cisco’s performance improved while 3Com’s fell further (see sidebar, “Cisco: Exploiting a recession’s dynamics”). With so much change in the sector’s leadership, it’s not surprising that we found that the market-to-book values of leaders and laggards changed significantly—by 40 to 80 percent from prerecession values. The current crisis could exacerbate the sector’s volatility.” [1]

Cisco: Exploiting a recession’s dynamics

While many competitors of Cisco Systems retrenched during the 2000–02 high-tech slide, Cisco invested in the downturn through prudent M&A moves, simultaneously scaling up and streamlining. The company made 16 acquisitions for a total value of almost $15 billion, rounding out its portfolio in areas such as systems design (a large stake in Sigma Systems). It also shed noncore assets, such as a consulting unit in Europe.

Cisco then took decisive steps to increase revenues and cut operating costs. To gain market share, the company reduced prices and shored up customer relationships by allowing deferred payments on purchases. At the same time, it aggressively cut operating expenses by more than $2 billion—in part through redesigning products to use less costly parts and slashing its supplier base by 50 percent to extract bigger discounts from remaining vendors. These actions allowed Cisco to extend its leadership against competitors such as 3Com, which reportedly reduced its headcount by 50 percent (versus Cisco’s 20 percent), froze acquisitions, and divested a valuable asset—Palm—to raise cash. By contrast, Cisco’s cash discipline allowed it to buy back stock even as it stepped up acquisitions. [2]

Another Strong Argument to Invest in Market Downturns

During these market downturns, vendors will offer clients extra incentives to move deals forward, including cost concessions. This is something funds can really leverage, sometimes even locking in long-term preferred rates. Another thing we have seen is when projects are slower at these firms, you are much more likely to get their best talent on your project.

At the end of the day, it is all about supply and demand. If you are brave enough to spend money during shakier times, you will no doubt be able to complete your projects, purchase software and other services at a more advantageous cost than when the rest of the market is buying with you.

FinServ’s Client Experience During Periods of Market Turmoil

As a consulting firm who lived through the 2008 financial crisis, we experienced first-hand how our client base reacted to those catastrophic events. We observed how many of our clients put all projects on hold and pulled back on all work immediately. We witnessed far fewer continue with their most strategic projects undaunted by the potential collapse of the markets.

Of course, the current situation is far from the dynamics of the financial crisis, but we are seeing a general pause on existing projects and slowdown in new projects at many investment firms since the middle of 2018.

Without exception, our clients who chose to continue with their projects during the crisis greatly expanded their businesses and exponentially grew their AUM over the following years. We believe this was because they never stopped their projects and kept the momentum in the innovations. This left them in a much better position to take advantage as the markets rebounded.

This was not only investment in projects or software, but also in new hires and training as well. With many funds cutting back, the number of desirable and experienced candidates in positions like fund accounting had a rare instance of supply far surpassing demand, resulting in many key, valuable hires made during that time.

In an industry where the most knowledgeable resources are so hard to find and hire, this was a rare time when finding qualified candidates was far less challenging.

The Current Alternative Asset Management Environment

Over the past several years, it has become increasingly difficult for funds to compete for new investors and achieve superior returns. As this competition continues to increase, funds are searching for the differentiators that will compel investors to choose their funds.

Based on our own experience, the rigorous due diligence process that most investors put fund managers through today presents challenges in two key areas which is backed up by several studies: technical innovation and cost management.

Technical Innovation – Prospective investors have been clear when performing their due diligence to look for funds who are innovators and utilizing the latest and greatest technologies to achieve superior returns and to effectively manage risk.

The days of investors just providing money without scrutinizing the investment process is gone. The survey by EY substantiates the understanding that although investors may not explain why they require this, it is absolutely critical that the funds who want to continue raising capital must be leveraging technologies like AI, RDP, big data and other innovations.

As a professional with over 25 years in consulting, I have worked through many different economic cycles. Often during the downturns, I have seen clients shift their focus toward compliance-related or non-discretionary projects, and away from more strategic or innovative efforts. In fact, this is the opposite of what funds should do based on investor requirements, and below is great evidence for why.

Continuing to prioritize innovation efforts in recessionary periods requires strong senior leadership. The overwhelming tendency is to slash resources, shut down long-term investments and focus on incremental improvements. Taking the wrong actions can sharply inhibit a company’s ability to reach its long-term strategic objectives. Approaching the problem in the right way can allow companies to do more with less and continue to move forward.”1

As FinServ has worked closely with our clients they have shared many stories of the most common and consistent questions asked during the due diligence process. A few years ago, there was a tremendous focus on risk management and controls in key operational processes and a push to ensure external third parties like third party administrator was validating the funds’ financials. Over the past year or so, there has been a significant shift towards understanding a funds technology stack and what new technologies they are utilizing in their investment process and in their operations to effectively support cost management.

The EY study further supported our experience as well.

“Investors believe advanced technology and data in the front office are important … but few have been able to quantify the benefits.

As the industry becomes more familiar with the use cases of artificial intelligence and alternative data, investors are increasingly coming to expect that asset managers will leverage it. Many view these tools as attractive complements to the manager’s existing investment process which can lead to alpha generation … although few investors can actually prove it.

Investors reported that 30% of their 2018 allocations are to managers using next-generation investment tools or data with an expectation that these allocations will grow to over 40% in the next two years. Investors are continuing to trend in the direction of expecting AI or alternative data to be used, and where it is not, managers may need to justify the rationale.

Those managers who are not embracing these techniques need to ask if they and their investors are comfortable with the status quo or if there are potential benefits.” [1]

3 At the tipping point: Disruption and the pace of change in the alternative asset management industry, 2018 Global Alternative Fund Survey

  1. Cost Management – At the same time, investors continue to add pressures to funds to be much more effective at managing their own operating costs. Investors want assurance from the funds that their operations are efficient. Again, investors are being more intrusive in this area, insisting that funds demonstrate a focus in technologies like AI, Robotic Process Automation (“RPA”) to meet this expectation.

The McKinsey study backed up this same focus on investment in the business operations:

“The companies in our study managed their sales, general, and administrative (SG&A) expenses in a much different way than anything else we investigated. Controlling operating expenses is critical for all companies, but leading ones that maintained their positions in the 2000–02 recession actually increased their SG&A costs by 6 percent more, in absolute dollar terms, than leaders that lost their positions (Exhibit 4). Some leaders that maintained their leadership also raised overall headcounts by 2 percent; fallen leaders cut them by 8 percent. The growth in SG&A expenses and employees took place even as sales for most leaders declined by 5 percent. A leading software firm, for instance, increased its advertising expenditures from $1.23 billion in 2000 to $1.36 billion in 2001 as the market softened. And SAP ramped up sales and marketing spending by 19 percent in 2001, although it cut administrative expenses by 8 percent. In contrast, a software competitor that slipped somewhat cut approximately 2,000 sales and marketing employees.”  [1]

Who is Implementing These New Technologies

As a consulting firm that services the Hedge and Private Equity Fund markets, we have seen that the two alternative asset management approaches have different levels of systems requirements, as well as experience levels of investing in technologies.

Hedge funds tend to have far more complex needs, demonstrating a propensity to invest in and adopt new technologies well ahead of most private equity firms. However, we have seen over the past several years that many of our private equity clients are beginning to push into the newer technologies like AI and big data at an increasing rate.

The Private Equity Story

A KPMG paper which focused mostly on digitization technologies correctly points out that while Private Equity firms have been slow to adopting new technologies, they do have just as much, if not more to gain from investing in them.

This is because Private Equity firms can not only apply the solutions to their own investment process, but also to their portfolio companies, thus offering a huge return in terms of efficiency by leveraging the same technologies. Applying these technologies to their portfolio company reporting requirements also aids in the transparency for their investors. Investors preferred private equity firms who utilized advanced technologies to report performance on their investments as they saw this as evidence of a strong set of fund operations and effective controls. Additionally, investors looked very favorably on fund managers who brought the latest technologies to their investment portfolio to enhance their investments value and efficiency as well.

KPMG’s analysis corroborates this finding with the following charts.

As suggested by KPMG, innovation should not be limited to the front office and the investing process in general, but instead should be spread out across the front, middle, and the back office as the chart below depicts.

This backs up the point we made earlier that potential investors are also very interested in cost containment and want to see evidence that the funds are using technology to make their operations as cost effective and efficient as possible.

Private equity firms are applying technologies to the onboarding of new portfolio companies, which makes the processing of the portfolio company’s financials more efficient and antiquates a manually intensive process that was often subject to data entry errors.

The Hedge Fund Story

A survey by EY reveals that the most innovative hedge funds have already been delving into artificial intelligence and big data for some time now.

“Artificial intelligence and machine learning are more often being used by managers across asset classes and investment strategies to make actual investment decisions. Automation of various facets of the investment process is being embraced, and managers who are able to complement their operations with these tools are gaining significant competitive advantages.” 2

The impact of artificial intelligence on front-office models is significant

In the past year, we saw 300% growth in the use of artificial intelligence (AI) in the front office among hedge fund managers and 100% growth in the proportion that expect to use AI in the near future. Quantitative managers have been on the forefront of this technology for years, but managers of all strategies have been building capabilities and taking advantage of next generation trading systems and tools.

Hedge funds have embraced these capabilities more quickly as their investment strategy of analyzing large volumes of securities and economic data lends itself more to leveraging software and machine learning as part of the trade analysis and execution process. Further, hedge fund managers are more likely to have been further along on the technology continuum. Over their life cycle, most were able to forgo basic tools such as spreadsheets Excel and have been using off-the-shelf and proprietary technology.

Use of big data continues to proliferate

The majority of hedge funds either use or are evaluating “next-gen” data for use cases in their investing — a material increase from two years ago. During 2018, only 30% of hedge fund managers did not expect to use next-gen data in their investment process, a decline from almost 50% who made that statement just two years ago. The explosion in the volume of data that is available and the number of market participants utilizing it have begun to change how many hedge funds think of this information. For many firms in the industry, what next-gen data was a few years ago is now just data.

As a consulting firm with very deep expertise in ERP systems and business expertise in fund accounting and other back office areas, we have been helping our clients from our inception to implement the latest applications and technologies to automate manual, recurring and error prone processes.

The speed at which new technologies have been introduced and adopted by the hedge fund industry in just the past two to three years has been astounding. This is in no small part due to key players like Workday who have begun to dominate the ERP / Financials marketplace with a SAAS-based solution that many hedge funds are implementing.

Now that Workday and other vendors are linking their applications to AI offerings, the cost and effort required for even small fund managers to leverage these technologies in areas of their business other than the front office is even more compelling. This is further backed up by the EY survey:

Hedge fund managers lead in using robotics and AI in the middle and back office.

There has been significant growth in the proportion of hedge fund managers that leverage robotics to perform routine, repetitive tasks in the middle and back office. In 2017, just 10% of hedge fund managers reported that they had invest in robotics or AI. This year a third of hedge managers have implemented robotics and 1 in 10 is utilizing AI.

The benefits are significant. Technology is able to confirm trades, reconcile positions, automate regulatory reporting filings, etc. Once implemented, the tools can work continuously and limit the amount of manual, low-value work performed by people at the manager, freeing these individuals up to perform more value-add activities. The tools and technology are no longer the “wave of the future” so much as the current reality and one of the most impactful means in which managers can scale their operations to support growth and product diversification.

A Warning to Laggard Private Equity Managers

The EY study found some alarming observations in the likelihood of PE funds embracing these new technologies overall. Given the historical use of systems by PE funds, this is not surprising. However, given the increased competition for investors it is shocking that most PE funds seem determined to keep their heads stuck in the sand when it comes to AI.

74% of private equity managers do not expect to use AI. But only 40% of hedge fund managers still hold that expectation.


It seems clear that despite many experiencing weaker performance over the past year, there is only one option for any fund who wants to continue to not only survive, but thrive in the ever more competitive alternative asset management marketplace.

The evidence we have provided in this analysis compels managers to avoid any hesitation on moving forward with key strategic projects. Doing so will inevitably position them at a distinct disadvantage compared to other funds who will be only too happy to take their investors.

Investors are far more savvy and demanding than ever in our industry’s history, and that trend shows no signs of abatement. In fact, we expect that the demands for funds to be more transparent and efficient through technological innovations will only grow exponentially as the 4th industrial revolution takes hold.

Size is no longer a guarantee of leadership in the future, as our historical analysis has shown. It is quite easy to go from a leader to a laggard in increasingly shorter periods of time as the speed of innovation outpaces companies’ ability to adapt.

The words of Klaus Schwab should be a constant reminder to innovate at all costs:

“It used to be that the big used to eat the small, now it is the fast eat the slow and I’m seeing it everyday.”

[1] Innovating During A Recession, By Scott D. Anthony and Leslie Feinzaig, July 8, 2008

[2] Article McKinsey Quarterly March 2009 High tech: Finding opportunity in the downturn, By Andrew Cheung, Eric Kutcher, and Dilip Wagle

[3] At the tipping point: Disruption and the pace of change in the alternative asset management industry, 2018 Global Alternative Fund Survey

[4] The Digital Transformation Imperative – Why Private Equity Firms Must Digitally Transform to Compete, By Gavin Geminder, and Jeff Kollin

About FinServ Consulting

FinServ Consulting is an independent experienced provider of business consulting, systems development, and integration services to alternative asset managers, global banks and their service providers. Founded in 2005, FinServ delivers customized world-class business and IT consulting services for the front, middle and back office, providing managers with optimal and first-class operating environments to support all investment styles and future asset growth. The FinServ team brings a wealth of experience from working with the largest and most complex asset management firms and global banks in the world.

FinServ can help you plan for and optimally implement a long term strategy and roadmap to embrace the new technologies of the 4th Industrial Revolution.