This is the second part of our series on outsourcing and managed services. If you’re interested in the evolution of outsourcing and understanding what managed services are, you can read part one of this series here.
In the drive to outperform traditional equity markets, many asset and hedge fund managers are diversifying their product offerings across a broader mix of asset classes. In doing so, firms have found that accounting for and reporting on multi-asset portfolios adds several layer of operational complexity. Firms are rightly asking if they want to take on that added complexity internally, or perhaps divest some tasks to a managed services provider whose core competencies are IT and operations.
Evaluating service providers
As with all things, not all managed service offerings are alike. It is important to exercise your due diligence to better understand the capabilities of the service provider and if the offering includes a range of technology solutions and operational services that can be tailored to your needs.
During the evaluation process, these five questions can act as a guide to facilitate the conversation:
- Do they provide a comprehensive platform through a single source?
Consider whether your provider can deliver the full ecosystem of technology solutions to support your core investment management functions. - Do they own and support the technology?
Ensure that your provider guarantees uptime and provides 24/7 monitoring to confirm that data uploads and downloads are successful, integrations are working as intended, workflows are in order, and the system is responding as it should. - Do they combine technology and operational expertise?
Verify that your provider has the systems, processes and people with the expertise to execute efficiently, improve accuracy, and reduce compliance risks. Best practices should be adhered to by the experts that is borne of the experience working with dozens of firms. - Can they support diversified asset classes?
Confirm that the provider is able to support diversified portfolios on a single platform. Many firms are running multiple accounting systems to keep up with this demand, which is both inefficient and fraught with operational risk. - Do they meet high security standards?
Certify that your managed services provider has implemented strong security measures and controls that meet the highest industry standards, as evidenced by rigorous third-party audits and attestations.
The right provider gives you greater flexibility to customize your selection of operational services according to your needs. As your strategies and product offerings evolve, you should feel confident to adjust your service mix. Essentially, you should be able to scale up and down as you grow and your operational services needs change. For those that are evaluating their operating models, the ability to answer these five questions will give you peace of mind as you embark on the outsourcing journey.
To take a deeper dive on managed services and understanding the key five questions to ask your provider, we’ve compiled a guide and checklist to determine what the best managed service offering looks like for your firm.
Download Five Key Questions: What to Look for in a Managed Services Provider, or to learn more about SS&C Advent, request a demo.
