Investment managers who fail to properly maintain their clients' private equity and hedge fund data will experience problems:
A disorderly and chaotic data management process reflects poorly on firms, much to the chagrin of the clients, who may consider moving their wealth and assets to rival investment management companies.
Organization isn't hard per se, but it requires attention. Investment operations managers need a plan in place for maintaining clients' private equity and hedge fund data.
There is often a need to refer to statements and locating that file among thousands of documents.It is added work to rename files, but when they are needed, it may be the time the investor is sitting in the office questioning a number.
Typically, client folders are the normal method, but if there are only a few managers, then by manager. In any regard, a combination of client, manager, date and report type should be included in the name. This all sounds obvious, but if not organized and adhered to, it can quickly snowball into a long, eye-burning task.
Track all investments in an asset registry. This should connect to the accounting system so values and valuation dates can be included. The registry should include the client, manager, asset ID as well as data delivery method, frequency and delay.
The delivery methods could be email, web portal or physical mail. The frequency could be monthly, quarterly or annually. The delay is the number of days after the statement date is actually delivered or available.
Knowing the delay is key, as it will build a calendar of when to look or expect a statement to enter. This will allow a regular update routine and avoid a fire drill during each quarterly report production.
In this process, the “maker” is the one who enters the data into a system, and the “checker” is the one who validates the entry. The checker, whenever possible, should also be armed with quality assurance tools where the checker can see firm-wide assets over periods of time.
In this manner, the checker can identify inconsistencies with the data. The checker should also have a considerable amount of domain knowledge as these assets will need interpretation at times to get correct into the system.
Examples like side-pockets, catch-up investors or quarter-end redemptions paid in multiple installments will need a checker to ensure presentations are reflecting the situation.
Create an email specifically for statements. The maker will be able to tend to the Inbox, and once complete with an email update, will move messages to a Processed sub folder. The checker will be able to tend to the Processed box and then move to an Archive folder.
By having a consistent naming convention, an asset registry, a maker-checker tag team and documents going into a designated email account, investment managers are doing their part to mitigate operational and reporting risk.
Organizing clients' data is not rocket science, but it takes commitment and consistency.
It may seem like it doesn't matter at the time how files are named or where they're stored, but when dealing with large volumes of documents or needing access to the data in crunch time, investment managers will wish they had everything organized from the start.