Why are investment operations still plagued by inefficiency?

Believe it or not, even in today’s digital age, many buy-side investment managers are still reconciling transactions, positions and cash manually in spreadsheets or using generic platforms that lack key features. This adds up to a whole lot of inefficiency, redundancy, risk and errors throughout post-trade operations.

Every asset manager knows how the impact of a failed trade can wreak havoc across the reconciliation, settlement and trading teams. As the volume of trades and complexity of investment strategies increase, the need for operations teams to collaborate, reduce manual processes, and provide more buy-side specific automation is more urgent than ever.

Redundant work

Buy-side operations teams spend an excessive amount of time investigating exceptions. Why? Because they are often viewed in silos across cash, transactions and positions.
Many times, multiple departments throughout the middle and back offices participate in the effort, leading to inefficiencies and high error rates, not to mention increased transaction costs and operational risk. Much of the same work is  repeated by different teams. What a waste.

Imagine being able to integrate cash balances, transaction activities and/or positions onto one screen, giving your operations teams the ability to see the root cause of a break regardless of where it occurred.

The research vortex

Post-trade ops teams spend the majority of their time on reconciliation and researching breaks – not really a great use of resources. What if you could reduce the effort spent on investigating why breaks occur?

Integrating common forms of break research data is one way to create a more efficient investigation process. As a result, portfolio accountants and other back-office staff can improve their ability to troubleshoot breaks related to failed trades, collateral, corporate actions, securities lending, and many others.

Islands of reconciliation

Reconciliation should not be done in silos. But in reality, operations staff find themselves duplicating much of the work that had already been performed by their colleagues. To make matters worse, the same investigation work is performed across different teams and is often hidden from management, so the inefficiency goes undetected.

The concept is really a product of legacy thinking – but these are not legacy times. A reconciliation and exception management process must be efficient and comprehensive enough to take into account all the reconciliation processes found across the middle- and back-office functions while also fostering collaboration across these areas. It also ensures management and operations staff can access a single point of reference to gain the transparency they need throughout the investigation workflow.

N-way confusion

You may think you’re doing n-way reconciliation, but it’s quite possible that you’re not – and therefore slowing down the process and causing errors. So, what does n-way mean, anyway?

True n-way reconciliation compares multiple unique data sets within the same view, allowing you to compare large volumes of data quickly and seamlessly. Multiple two-way reconciliations are simply multiple source comparisons that are viewed separately, hence the cause of delays and errors.

Assessing your workflows

Volatility is a mainstay in the industry, and as data volumes increase and investment strategies and asset classes become more complex, an inefficient reconciliation process can bring operations and risk controls to their knees while constraining AUM growth.

Now is the time for investment managers to assess their reconciliation workflows and systems, and look for better ways to reduce risk, enhance speed and accuracy, and enable better collaboration and efficiency. But there's no need to go it alone.

We’ve helped firms across the entire investment management universe digitize, right-size and optimize their operations so they’re better equipped to attain long-term efficiency and growth. Contact us today to start your journey towards to more efficient, resilient and scalable investment operations.

Gresham will be at InvestOps USA in Tampa, March 28-30, 2022. Book an on-site meeting to learn more about how to get a better handle on your data, reconciliation and fee billing operations


Decrease time-to-market and scale to growth while reducing risk. Putting you in control of your data, operations and growth.

Related Articles

See All