In my earlier blog I spoke of client onboarding, how it has changed over the last few years and how standardization of service offerings is partially responsible for this progress. In this blog I will highlight what service agents and investment managers can do to navigate the existing challenges and make onboarding easier.
Aligning around the standard onboarding process can save a lot of time for investment managers and service agents. And the alignment has to be agile as there is explosive growth in such areas as the Exchange Trade Funds market, expansions into alternative investment funds, and innovative strategies such as Liability-Drive Investments, and they have each had a disruptive effect on service models. Similarly, the expansion of outsourcing by asset owners, such as sovereign wealth and insurance firms, push the envelope even further and service agents have to be flexible in addressing these.
When you consider onboarding, both investment managers and asset service agents share an interest to ensure predictability of the program time line that is:
- Properly controlled, yet
- Reflects the resiliency to address the inevitable surprises that will arise during the effort.
Achieving this allows investment managers to focus on oversight as they adopt the newly optimized operating models and allows asset servicers to start generating the revenue needed to run their business.
Working with our clients, we have found that predictability is most closely correlated with a comprehensive due diligence program as it allows all parties to properly scope the effort. When performed well, due diligence can alleviate nearly 70% of the risk of overrun.
Another area of onboarding programs that is gaining recognition as an enabler of data accuracy is testing. For the investment manager to achieve a high degree of confidence of the data accuracy, onboarding programs that employ a test factory approach have benefitted from a holistic series of repeatable scripts and routines. While, we all recognize that testing is not the time to identify requirements, inevitably new information does come to light during the testing phase. The completeness of the test factory ensures that all data is as-required in the end and alleviates the post-conversion clean-up issues.
Lastly, services agent’s involvement in global onboarding service vendors, provides a pool of on-demand business and technical resources that can be quickly engaged to effectively respond to new program demands, which is a measure of program resiliency. Further, the breadth of an onboarding service vendor expertise in the investment arena combined with onboarding experience and a strong portfolio of tools and playbooks enables the service agents to continually derive innovative solutions to the changing dynamics of this industry.
Please feel free to write in your views on client onboarding.