Alternative Investments

 

Background

According to standard industry metrics, the Alternative Investments (AI) business has experienced tremendous growth within the past 5 years. The number of high-net-worth clients with some alternatives in their portfolios has jumped from less than 15% five years ago to more than 75% today. Potentially every client is now a candidate for alternative investing as a standard part of their investment plan. While the client education process can take more time, offering alternative strategies can be a competitive edge for financial services firms.

As a reflection of this increase, total positions are up 80% and valuations are up 60%. Companies are seeing the “subscription to redemption” ratio reach levels as high as 3:1, with “receives to distribution” ratio at 2:1.

Challenge

The back office and support workloads are growing precipitously with this trend. It is critical to the continued expansion and profitability of the AI business that operational productivity gains are achieved in order to provide economies of scale, economies of scope, and lower error rates, while maintaining current staffing levels. The internal groups that currently support all of the necessary operational aspects including: trading, settlement, custody, corporate actions, account maintenance, pricing and valuation faced inefficiencies and deficiencies reflecting the legacy features and smaller workloads initially envisioned in now outdated process designs.

Solution

Through our Business and Technology Assessment process, Princeton Information identified a business and technology roadmap that defined multiple initiatives designed to overhaul the AI operations. Princeton Information evaluated the business procedures and technology architectures to identify areas of improvement addressing user-experience and productivity. We conducted innovation and strategic visioning workshops to drive solution design and program execution, including:

  • Workflow processing of trades, transfers, redemptions, and distributions
  • Integration with Securities, Treasury and Transfer of Assets
  • Streamline Order Entry with creation of audit trail, and ability for brokers to monitor transaction status
  • Enhanced risk functionality with greater transparency
  • Automated transfers, re-registrations, and account maintenance
  • Ability to view sponsor and transfer agent information, and product details in all transaction processing phases
  • Optimize reconciliation process with sponsors/hedge funds
  • Integrate credit risk and asset review process
  • Improve pricing coverage and valuation practices

Vitals

Financial Services, Alternative Investments, Custodial Services, .NET Framework, C#, ASP.NET, Oracle 10