Transforming Reporting in Asset Management: Digital reporting

Introduction

The Asset Management (AM) industry is at a pivotal juncture where the complexity of fund structures and the increasing expectations from investors and regulators necessitate a modernization of fund reporting processes and technology. This article explores the challenges faced by AM firms in fund reporting and the innovative solutions available to address these issues.

The Challenge

Fund reporting in the AM industry is inherently complex and time-consuming. The intricate nature of fund structures, involving multiple tiers, co-investment arrangements, and special purpose vehicles, has led to a heavy reliance on manual processes, spreadsheets, and outdated portfolio performance management systems. This approach has introduced inefficiencies and errors and results in inaccuracies and delays. As AM firms expand globally, they also encounter varying accounting standards, tax regulations, compliance requirements, and local reporting obligations, further complicating the reporting landscape.

As the industry is experiencing a broader shift toward digital transformation, investment levels in Fund Reporting capabilities have often not kept pace with the growing reporting expectations, whether that is related to topics such as ESG reporting or emerging asset classes.

CFOs are increasingly being asked to harness the power of cutting-edge technology to optimize their operations and unlock data-driven insights, however firms face a multitude of obstacles, spanning from the integration of outdated systems to the establishment of robust data governance frameworks and mitigation of cybersecurity vulnerabilities.

The Solution

To tackle these issues, asset managers, along with their fund administrators must consistently evolve their practices to streamline their processes, integrate their data and underpin this with modern cloud and AI powered technology.  

Effective modernisation in fund reporting typically begins with a framework within which to create reporting solutions and is grounded in data integration between fund accounting, valuation and ERP systems and reporting tools to truly combine fund performance data.

Key features of these solutions include:

• Technology Stack: Design a fit-for-purpose technology stack leveraging best-in-class automation and workflow tools, cloud-based repositories, Gen AI capabilities and visualization tools/dashboards.

• Integrated and Standardized Data: Connect and standardize data from various disparate systems, allowing for fast querying and consolidation.

• Customized Report Production: Use advanced reporting and data visualization capabilities to create investor reporting based on specific preferences.

• Automated Workflows: Replace manual processes to produce investor reporting with automated workflows reducing time required for report production.

• Ease of Collaboration: Allow multiple teams to simultaneously contribute to the report production in a controlled environment.

• Sustainability Considerations: Identify sustainability-based attributes and align to applicable sustainability frameworks.

• Asset Management Capabilities: Calculate and report on metrics valued by report users to provide greater transparency into underlying holdings and funds.

• Established Data Quality Controls and Audit Trail: Integrate data quality controls to reduce errors and provide audit trail visibility and transparency.

Key Outcomes

In my experience, to bring reporting to the next level there must be a digitised process where the output from the different core systems gets seamlessly combined with other content, automatically populated into reporting, and approved and published in a way that allows collaboration and transparency across your teams.

Fortunately, there are digital technologies available that enable much greater data alignment, automation of report preparation and workflow integration. These digital reporting tools are allowing firms to implement modern fund reporting solutions which are driving significant improvements:

• Improved trust in reported data – Data has been connected directly from source systems (e.g., fund accounting and performance systems) to the final reports. Data transformations are centralized within a single tool or environment with a change and runtime log of all data pulls and calculations and full data traceability, as opposed to a complex web of Excel workbooks, each with multiple macros and data transformations.

• Reduced reporting production time and costs – Time required to produce reports will be significantly reduced delivering direct efficiencies and substantial annual savings. Development of a ‘click of the button’ roll-forward capability which will allow next period reports to be generated seamlessly will further enhance efficiencies.

• Extendable reporting platform – Solutions can be easily extended and configured for additional investor reporting and use cases. Uses cases can be developed into areas such as management reporting, investor decks, quarterly as well as annual financials, prospectus and fund fact books.

• Collaboration, review and Audit ready solutions – Report reviews and approvals are built into the solution with automated notification procedures. Evidence of these controls can be readily accessed to provide an audit trail for internal or regulatory reviews.

Conclusion

Modern fund reporting solutions provide AM firms with robust tools to streamline their reporting processes, reduce manual intervention, shorten processing times, and strengthen controls. By leveraging advanced technology and automation, AM firms can enhance engagement and confidence, streamline record-to-report processes, and accelerate their finance transformation journey.