Investment Managers, Has Your Middle-Office Operational Performance Improved?

At the end of the quarter, year, 2 years, etc., you should ask yourself, “are we better off now than we were then?”

Volatile markets and increased regulatory demands could stretch a firm’s resources thin, and when budgets tighten, all departments will have to do more with less, operations being no exception.

Points to Reflect On Regarding Middle-Office Operational Performance


  • Are you satisfied with your portfolio accounting and management system?
    • How much is it costing you?
  • Are you getting the most of out of your software?
    • How difficult is it for you or your team to use?
  • Are you considering a new system, but are concerned about:
    • costs?
    • data migration?
    • training?

Reconciliation and Performance Reporting

  • Has reporting accuracy improved or worsened?
  • Have you created or updated your reporting process documentation?
  • Do you have a training program?
    • If so, how effective has it been?
  • How are your quality controls?
    • Do you have a QC checklist?
  • Are you using RPA tools?
    • What impact has it had on the quality of the reports?

Read More: What Should Operations Managers Do About Reconciliation Reporting Errors?

Operational Leadership

  • Have you equipped your middle- and back-office teams with the resources they need to perform at a high level?
    • Do you make yourself available for them?
  • Do people enjoying work with you and for you?
    • Does your team feel comfortable approaching you when they need help?
  • In what ways have you sought to improve your leadership and management skills?

Read More: 5 Books Investment Operations Managers Must Read


  • In terms of time and costs, how has your middle-office hiring process been?
    • Do you hire a headhunter? What are their fees?
      • Are you satisfied with the quality and quantity of talent they’ve found for you?
  • After hiring an employee, how long does it usually take to get them up to speed?
  • Has employee turnover been an issue?

Read More:  Employee Turnover: Is the Person Who Knew How to Do Everything Gone?

If you’ve given honest answers to the questions above, there’s a good chance you’re not satisfied with how some things are going.

Perhaps you’re not happy with the portfolio accounting and management system because of the poor ROI and complexity in using it.

Or maybe the reconciliation and performance reporting accuracy hasn’t been very good.

And maybe you haven’t had the time to give your middle-office team the full support needed.

And even if things are going well, everything could be thrown off course when key operations team members leave your organization.

Middle-Office Operations Outsourcing Could Help Investment Firms Improve Performance

Middle-office operational performance is influenced by everything from the technology in use to the capabilities of those doing the reporting, and from how well you perform as a leader to the quality of people you hire.

Unfortunately, it’s hard to get everything right. You may not have the time, resources, or skills to implement the necessary changes.

But that’s where a middle-office outsourcing company may help.

Technology and Reporting Expertise

Depending on the firm you select, the provider should have a team of experienced portfolio accounting experts to run your software, implement reconciliation automation features, and ultimately deliver more accurate reporting.

What’s more, the reports could be ready before the markets open.

And if you’re planning to use a new portfolio accounting software, they can help with migrating the data onto the new system.

Cost Savings

Just as your organization specializes in investing, middle-office outsourcing providers specialize in running operations for their hedge fund, wealth and asset management clients.

That sole focus on operations has allowed the outsourcing providers the time and ability to develop cost-efficient solutions for improving operations, and the provider can pass on the savings to you, the investment manager.

It’s not uncommon for investment firms to reduce their operating costs by 25% or more, and in some cases up to 50%, with outsourcing.

A Scalable Middle-Office Operations

When middle-office reporting volume picks up or slows down, the provider can easily add and subtract labor without a negative impact on reporting timeliness and accuracy.

New clients and accounts to manage are good for business, but with a sudden increase in workload, you might have been worried about how to reconcile all of the accounts, especially if there is a high volume of separately managed ones.

And on the flip side, when work slows down, you may have had to let people go, knowing full well you might need them back again a year or two later when the workload returns.

Outsourcing makes it possible to take on new business without worrying about the middle-office reporting obstacles, and when things slow down, you can request less labor and not have to pay for idle employees.

Continue Seeking Operational Improvement

When being honest with yourself, your middle-office operational performance could probably be better.

But a limitation of time, resources, and skill sets might prevent your organization from properly addressing matters related to technology, reporting, leadership, and hiring.

Middle-office outsourcing companies could help firms get consistent, accurate reconciliation and performance reporting without worrying about turnover and associated costs.

Also, outsourcing gives investment managers the operational expertise, cost savings, and scalability that couldn’t be had in-house and within the limitations of your budget.

Consider which areas you need to improve, and see if outsourcing makes sense.