What Has Your Performance Application Done for You Lately?

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24 September 2015

In our personal lives, technology often seems one step ahead of us – solving problems we didn’t even know we had, or simplifying processes that we thought were good enough. For example, with the click of a button we can hail an Uber in the middle of the night after a long coast-to-coast plane ride, deposit a check in our bank accounts by simply taking a picture (on our phones!), or keep in touch with our closest family and farthest flung friends via video (on our phones!). 

Yet in our professional lives, particularly in the financial services industry, I see more and more teams being expected to constantly do more with less – to become almost superhuman in order to keep up with evolving processes and expectations. This shouldn’t be the case.  In your work world, as in your personal life, you should expect your applications to keep up with your evolving requirements – to know what you need before you know. Your business applications should be helping you to do your job more efficiently. Do they?

In the coming month, beginning with today’s post, I’ll be leading an exploration into all the ways your investment performance application should be empowering the way you calculate, measure and analyze performance.  And, if you followed my colleague Lisa Conner’s August web series, you’ll understand that “it all starts with the data.” Following are a couple of questions you should ask yourself about your current performance application and its ability to stay ahead of your requirements.

1. Is your performance application helping you identify and fix your data problems?

Perfect data yields perfect results.  Performance applications rely on the cleanest data possible, and are notorious for consuming vast amounts of data (fixed income attribution, I’m looking at you).  From comprehensive security master data covering your portfolios and benchmarks, to accurate holdings, transactions, analytics and more – the perfect storm of data should converge in the performance application to tell your portfolio manager and your clients what contributed to alpha for that day / week / month.  But is your performance application smart enough to help you avoid the imperfect storm? Does it identify bad data?  Does it suggest a fix?  Does it help you when the client service team needed that report for the client yesterday?  Because it should.

Your performance application should be checking the data as it is loaded, and flagging records that are technically deficient.  Your performance application should spot formatting issues and incomplete records.  It should enforce standards for technical data validations to ensure bad data does not get loaded in the first place.  But even that’s not enough.

Your performance application should also be conducting business validations on the data that was loaded.  It should know how to reconcile between yesterday’s records and today’s.  It should tell you that a specific security on a specific day led to a reconciliation break.  It should fill in the gaps to allow for the sophisticated analysis demanded by your clients – calculating exposure values, creating synthetic cash offsets, creating reflexive cash flows, etc.  Your performance application knows what perfect data should look like, and it should help you get there.  If it doesn’t, you need to re-think your performance system.

2. Does your performance application scale automatically? 

Does your team grow as your firm adds new clients or new mandates?  Don’t answer that - it’s a rhetorical question: no performance teams ever grow as quickly as the list of new clients.  And yet with each new client win, there are always just acouple more things you had to agree to in order to win the client in the first place.  Before you know it, what was once a routine process has become the Gantt chart from hell.  Chances are you would like to improve your performance process, decrease the amount of time it takes to provide results to your clients and reduce complexity.  Well, your performance application should help you to do that.

Your performance application should automate the end to end process.  It should blend best practice processes with those few things custom to each firm.  It should provide a window into the health of a portfolio, tell you when it will be ready, and identify the exact problem when there is one.  It should bring this to your attention, rather than forcing you to go digging for the issue.  And, most importantly, it should only release the results to the client when you’re ready for them to be released.  After all, it’s your neck on the line if the results are wrong. 

So with the above in mind, you must ask yourself, “what has my performance application done for me lately?” If you are able to identify and fix data problems before the data is even loaded into the system, great! If you’re able to scale on the fly to accommodate new clients, new mandates, new reporting requirements, well then you’re well ahead of many of your peers. But if you always find yourself thinking, “I wish I could have more confidence in my performance system and the results I deliver,” well then perhaps it’s time we speak!