For the enterprising RIA firm that's diversifying its asset management strategies—and is looking for outside expertise in its selected areas of specialization—it's more essential than ever to choose the right asset management providers.
Sure, it's a given that you want an asset manager who delivers superior historical performance, whether you're relying on them for their expertise in fixed income, alternative investments, real estate, micro-caps or any other of the innumerable investment options. But you also want to select a manager who offers something else—namely, operational advantages that not only enhance your client service, but boost your firm's bottom line as well.
In terms of data flow, what types of turnaround times are you getting from your asset managers? How would you rate the quality of the data? The consistency?
In today's fast-paced operational environment, your clients expect to receive information quickly, reliably and accurately. That's why many RIAs are finding it difficult to carry on "business as usual" with asset managers who continue to use outdated data management systems. Because the fact is, even if the asset manager's performance is good, there can be delays in the flow of data to you, and ultimately from you to your client—an impediment for which the client holds you (and not the asset manager) accountable.
Furthermore, in addition to increasing your client service challenges, the data bottleneck can hurt your firm's profitability. That occurs when your staff is forced to operate in a reduced timeframe on its end to compensate for slow turnaround times from your asset managers. This can result in increased operational costs for you—from hiring and training additional staff to increasing the work hours allocated to complete the reconciliation and reporting processes in a timely fashion.
To put it another way, you may find yourself using inefficient "solutions" that simply don't scale.
To find a real solution—one that truly works—you need to select an asset manager whose investment strategies bear fruit,and who has data management systems in place to deliver data to you in a timely, complete and consistent fashion.
