Setting up a new investment advisory practice, going solo after operating as part of a larger firm, or expanding your practice to include asset management services demands realistic expectations about what is involved in providing your clients the kind of service you can build your reputation on.
Cornerstone Revolutions was created from a vision of providing all advisors-whether new to the business, newly independent or already established-the tools they need to operate effectively and professionally.
Selecting software appropriate for the way you do business is essential to providing the level of service your clients will come to value and expect. Understanding what steps are needed to support the tasks your software performs is an absolute necessity before even running your first report and will ease the transition from getting started to fully operational.
Before buying asset management software for your office, invest the time in answering the following questions for yourself or in discussions with members of your staff who will be using it:
Product Type
Is your preference for Web-based or desktop (See Technology)?
- Security issues-where is your client data?
- Data control-who controls your client data?
- Access to data if Web-based firm closes
- Data portability
Is the technology platform compatible with your needs?
- Is it new technology (See Technology) or dated?
- Does it matter to you?
- Can the data be extracted for use elsewhere?
Company Philosophy
What is the company's product and service philosophy? (See Services)
- Does the vendor's basic philosophy (See Company Philosophy) align with yours?
- Does it matter to you?
- Do their goals, both short and long term, fit with yours?
- Is the firm customer centric? (See Support)
Who is their target market (See A Vision for Independence) and where do you fit with them?
- Large, mid or small sized firms or a combination?
Product and Data Limitations
Is the product available to you?
- Are there availability or pricing limitations dependent upon where you custody assets?
- Is this a conflict of interest for you?
Are there limitations to the accessibility of your data?
Do you have full control over your data? (See Returning Control to the Advisor)
- Are there restrictions for retrieval of your data?
- Does the vendor place restraints on you in relation to how you retrieve your data? (See Custodial Interfaces)
- Does the vendor have access or control over your data in any way?
Pricing Considerations
What is the cost of base license, additional workstations, and additional features such as annual maintenance?
- What can you afford and what makes sense?
- How many simultaneous users do you want to have on the system and how many do you really need?
- What add-on's, if any, do you want and which ones do you really need?
Functionality
Types of Assets
Does the application accommodate the types of assets under your management? For example:- Fixed and non-managed assets (See Alternative Investments) such as real estate, collectibles, etc.
- Does the system offer any automated pricing features (See Alternative Investments) for non-managed assets?
- Mortgage backed securities and capability to accept principal pay-down transactions
Custodial Interfaces
- Are interfaces available (See Custodian Interfaces) for the custodians that I need?
- Which custodians are critical and which ones, if any, could you do without?
- Is there an extra charge for interfaces?
- What is the initial cost?
- Are there ongoing costs?
- Are there any other options for getting data into the system (See Historical Performance Tool - QuickEntry) other than electronic custodial data feeds?
- Preformatted product template (See Pre-formatted Feature) imports?
- .csv file imports?
- .xls file imports?
- Manual entry (See Historical Performance Tool - QuickEntry)
- How easy or difficult is it to make manual entries?
Reports
Which reports do I really need for my practice?
Are reports available with comparative indexes?
Does the system allow for blended indexes?
Does the system have batch printing capabilities? (See Batch Reporting)
- Does batch printing have various output options? (See Batch Reporting)
Can additional reports be purchased or can they be written on a custom basis?
What is the cost for standard reports and/or customized reports?
Can reports be created in a variety of formats?
Asset Allocation Models
Do you need asset allocation modeling?
Does the system offer rebalancing reports?
Do you need to create customized allocation models with performance measurement comparisons?
How do you model your portfolios and does the system accommodate this style?
- Modeling (See Asset Allocation Models) at the security type, asset class, industry, sector or individual security level?
Grouping
- Does the system have account grouping (See Groups) capabilities?
- Does the system easily display group members and those entities not included within the group?
- How easily is an entity added into a group?
- Does the system accommodate groups of groups?
- Project bills
- Minimum fee billing?
- Arrears or advance features?
- Tiered billing
- Number of tiers allowed?
- Asset exclusion?
- Performance based billing?
- Is there a limitation to the number of billing scenarios/formulas that can be created?
- Does the system have any CRM capabilities?
- What do you really need vs. what you would like to have?
- Does the system have baseline capabilities for multiple contacts (See Contact List) with phone numbers and addresses?
- Does the system provide any color graphics? (See Reports)
- Line, bar or pie charts? (View Sample Report)
- Is there an additional charge for graphing capability? (See Reports)
- One time charge and/or ongoing?
- Can report output be easily exported for use in other applications?
- Who will be the primary administrator of the system?
- Does this person have skills or experience in the areas of portfolio management or investment accounting?
- Is staff turnover and subsequent training for new employees an issue?
- Is the application easy to learn? (See User Interface)
- Is it visually intuitive?
- Is training (See Support - Training) available? What training options are available and what is the cost?
- Tutorials (See Support - Tutorials)
- Web or on-site training (See Support - Training)
- Webinars
Customer Service
- What is the firm's reputation for client service?
- How quickly are your calls answered?
- How long were you placed on hold? Were you disconnected while waiting?
- Can you reach out to support (See Support) through a variety of methods such as phone and email?
- Does the vendor offer conversion services? (See Data Conversion Services)
- Does the vendor offer any services for initial system setup? (See How do I Proceed with JumpStart)
- Does the vendor offer back office service support?
- What services are offered?
- What is the cost
Once a software purchase decision is made, what are the next steps? Considerations on how to set up your data, what is involved, how much to outsource or take on yourself are mandatory in order to make your system fully functional for you and your practice.
The outline below is intended to increase your awareness of important considerations in the set-up of your asset management system, regardless of what software you choose to use in your practice.
Initial Setup Considerations
Is a data conversion needed?
- Does the vendor offer data conversion services?
- How much history needs to be retained?
- How much is wanted?
- How much is needed?
What is the cost of conversion and does the value equal the cost?
What information is typically converted?
- Clients and accounts
- Transactions
- Securities
- Prices
- Cost basis if present in the existing system
- Tax lots if present in the existing system
What types of information could be excluded from a data conversion?
- Billing calculations and association with clients
- Account groups
- Categorization of assets by asset class, industry and/or sector
- Allocation Models and association with clients
- Equity and fixed income details such as dividend dates and rates, bond ratings, put and call dates, etc.
- Contact custodian(s) and arrange for electronic data files to be created in a system compatible format
- System compatible data records must begin on the calendar date following the last date downloaded into the existing system that was copied and provided to vendor for data conversion
- Does the vendor offer a "quick start" (See How do I Proceed with JumpStart) program to populate the database with accounts, securities, pricing and initial positions for a fixed date in time?
- Remember that "quick starts", when available, are based on custodial data records and typically excludes cost basis information, account groups, billing formulas, security categorizations and details, models, manual entries of any kind, etc.
- Will a full, manual data conversion be attempted or simply setup of initial positions?
- Who will be tasked with this project?
- How much time will be dedicated to the project?
- Is it worth the time and effort to do this in-house or is money better spent with a professional service provider?
Tasks Following Initial Setup
Once the conversion or initial setup without conversion is complete, what tasks are required before the system is fully functional?
- Mapping of new electronic data to the new system
- Manual entry of missing cost basis and original purchase date
- Set up groups of accounts for reporting and billing
- Set up billing formulas
- Associate billing formulas to clients, accounts and billing groups
- Set up allocation models and associate with clients, accounts and/or groups
- Set up indexes and historic returns
- Manual addition of equity and/or fixed income details such as dividend date, dividend date, bond ratings, put and call dates, etc., if desired
- Set up category designations such as asset classes, industries and sectors and association to individual securities
- Manual entry of information for client accounts outside your custodial download
- Set up account information
- Client name, contact info, address, account number, matching method, etc.
- Manual entry of transactions
- Manual reconciliation of account
- Set up batch printing for report packages
- Ongoing maintenance of new inbound electronic data
Regarding ongoing maintenance, what must be done?
- Retrieval of electronic data records from custodial website
- Import, review, post and reconcile electronic data records into new system
- Manual data entry of transactions and prices for accounts outside custodial download capabilities
- Retrieval and input of index returns
- New account maintenance
- Add to appropriate "client"
- Add to appropriate groups for reporting and billing
- Associate appropriate billing formula to new entity
- Associate allocation models as appropriate
- Manually input cost basis on new assets received
- Association of category designations (asset class/industry/sector) to new securities in system
- Fill in security details such as dividend rates and dates, bond ratings and put/call dates if desired
- Select desired reports for period end and set up report parameters
- Set up new billing formulas as needed
- Update billing parameters for period end as needed
- Maintenance of new securities added to system during
- Association of asset class/industry/sector designations
- Manual update of security details such as dividend rate/date, bond ratings, put/call dates if desired
- System check for missing prices within the reporting period
- Creation of report disclaimers (See Reports) and association to appropriate reports
- Service bureaus provide back office service to advisors
- Basic services typically include data downloads, data scrubbing and reconciliation.
- Other services such as corporate action processing, group maintenance, assignment of asset classing/industries/sectors to individual securities, set up of billing formulas and other specialty items are typically excluded from basic services.
- What user options are available for specialty services and what is the cost?
