Go Beyond Ordinary Reconciliations

admin | January 15, 2020| 12:12 pm

Reconciliation systems for asset management firms typically have too narrow a focus. They are developed to handle only the most common reconciliations – namely, security positions, cash (balances and transactions,) and trade activity. These data sets are retrieved from data files with predictable formats and structures, making them relatively easy to integrate with reconciliation platforms or other downstream systems. Although this general functionality is necessary, it leaves the investment operations staff to figure out their own methods of reconciling other data, such as dividends and interest, typically using Excel. Implementing a more robust reconciliation tool with powerful data management functionality can bring efficiency, accuracy, and add significant controls to any investment operations team.

The accurate reconciliation of data sets is essential for asset management firms. Without a robust set of reconciliations and controls around data, asset managers place themselves at significant monetary and reputational risk. Reconciliation exceptions as a result of accounting errors, data corruption, or worse must be identified and swiftly corrected. Having a system in place to automatically check for irregularities is therefore necessary and preferable to time consuming manual balancing due to the volume of data and risk of human error. But what if your system could do more than just handle typical reconciliations?

As an asset manager, you can hire an administrator to perform the recordkeeping of your funds. You assume the administrator is performing all the proper controls and checks to ensure an accurate NAV is being reported to your investors. But how do you know? As the saying goes, you can delegate authority, but not responsibility. Asset managers must prove to their investors how they oversee their administrator. The oversight process typically involves a series of reconciliations between the administrator’s records and either the asset manager’s internal system or the source data. These reconciliations would not be standard and most likely involve obtaining data files which include activity for accounts such as dividends, interest, swap financing accruals, and portfolio P&L. Typical reconciliation systems will not have the data management capabilities or the flexibility to quickly configure these types of reconciliations.

Smonik Recon is a powerful solution that allows users to reconcile any data sets with efficiency and total control. This allows asset managers to reconcile many less-common, more complex scenarios, such as dividends, interest, and swap financing accruals. It can also be used as a control mechanism to independently verify values such as tiered management fees. In Smonik Recon, relevant files are retrieved automatically, while the setup functions, formatting, and transformation of data are configured entirely by the users to suit their needs. This gives the user total control over their data, no matter how complicated, voluminous, and varied it may be.

See Smonik Recon’s extraordinary power for yourself. Contact us to schedule a demo today.