Apr 18, 2024

Precision under pressure: Accuracy in the face of success

In investment management, financial reporting season presents enormous challenges for Finance teams who have to reconcile global financial data

Luke Tones
Precision under pressure: Accuracy in the face of success

Every investment manager looks at least partially towards net flows to drive top line growth, with an increasing number diversifying product sets to try and meet untapped investor demand. As financial reporting season closes, Aiviq takes a look at the challenges this time of year often presents to CFOs, Financial Controllers, FP&A analysts and wider reporting teams trying to make sense of the numbers and hone in on the drivers of success?

BlackRock case study: A closer look at recent success

At this time of year, the asset management industry press is filled with reports on quarterly performance. One of the period’s standout performers was BlackRock, who reported an impressive $19 billion in long-term net inflows from the EMEA region, according to Ignites, no doubt underpinned by their wide range of products distributed across the region by a very wide array of distributors and fuelled by interest in innovative new products such as their iShares Bitcoin Trust.

What trends are at play here?

Whilst continued market consolidation and value chain disruption is partially responsible for market movements, shifting customer preferences towards digital assets and (active and passive) ETFs are also being targeted by firms like BlackRock to drive AUM growth. These trends signify a shift towards more diversified and innovative financial products, driven by evolving investor demands globally. As new vehicles gain traction, their integration into mainstream portfolios continues to drive strategic changes across the industry, influencing front to back operations - from product mix through to investment methodology and client reporting.

All this means it’s never been harder for teams to accurately or efficiently track AUM, flow and revenue data across channels, vehicles and markets.

Challenges in global financial reporting

Global financial reporting presents intricate challenges such as dealing with cross-holdings, intermediated, cross-border distribution and even organisation challenges such as siloed internal definitions of reporting terms such as ‘net new money’, ‘net revenue’, ‘client’ or ‘sales territory’. These complexities are compounded by a business requirements to report the same money against a variety of business objectives or reporting dimensions, rolling up flows into solutions, strategies and asset classes based on their definitions at specific points in time for specific stakeholders.

This mirrors what the Aiviq team see across the industry, with regular struggles to reconcile multi-billion dollar trades or AUM discrepancies at year-end commonplace as firms aim to close their books and report to the market. The pressure this reality puts on teams cannot be understated, eroding management trust in their own financial data for decision making and introducing major distractions from critical transformation initiatives.

The role of the Aiviq platform in addressing reporting challenges

Aiviq works with some of the world’s leading investment managers to respond to these challenges– aggregating, attributing, reconciliating and governing firm-wide financials and supplying intra-day updates to Finance reporting teams as they meet mission critical deadlines with confidence and transparency during reporting season.

Conclusion: Reporting for all seasons

Asset Managers have the opportunity to reflect on their processes and ask themselves what they could do if they had the right data at the right time. Leaving to one side the reduced burden falling on reporting teams when it comes to measuring performance, Aiviq believes there is huge scope for investment managers to streamline these processes. We are starting to see firms getting this right benefit from the additional time needed to dig deeper into fundamentals driving growth, model the data to identify underserved markets and become more proactive with financial forecasting and scenario modelling.

If you’re interested in finding out more about how Aiviq supports the world’s leading asset managers with financial reporting or the 160+ other enterprise use cases supported by the platform, get in touch with our team today at aiviq.com/getstarted

For a deep-dive into customer case studies and detailed insights on fund and client profitability, also have a look at our latest Profitability Whitepaper

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