Effective data management has become critical to success in fund distribution, as financial institutions rely on their data more than ever to exist and to perform.
There is no question that Asset Managers need to get this right to be successful. Without an effective data management and reporting solution, firms are prone to introduce inefficiencies and expose themselves to risks of non-compliance or inconsistent use of data. And this is just the tip of the iceberg.
Data management is one half of the equation
What does an effective data management solution look like? One of the biggest challenges faced by firms is in sourcing data and normalising it to fit the required format. An effective solution takes that pain away by providing flexibility and the ability to upload data from any source in any format.
This has already been the philosophy of Kneip since its inception in 1993, and it has been further enhanced following the recent acquisition of technology company Dataglide, a specialist in data transformation and cloud-based automation. Not only can client data be provided without the need for a specific template, but new data sources can be onboarded within minutes, with fund data controlled, normalized and integrated to make it usable for different purposes.
When it comes to supporting distribution, fund data is been used for two main purposes: to ensure regulatory compliance by providing the right data and documents to regulators and investors, and of course to support the marketing of funds. Both are connected by a common denominator: they need to be powered by consistent data across calculations and outputs, in other words, by the same underlying data.
A final point to consider is when data is made available to third parties for publication. This is when most data management and reporting solution reach their limit because data leaves the firm’s internal data ecosystem (and control). From that point onwards any data governance and technology that was ensuring consistency across outputs is no longer applicable, as third parties consume information and make these available to the market in a way that is not in direct control of Asset Managers.
Why does it matter? Because even the best data management and reporting solution is worth nothing, if the data on its way to the actual end investor and consumer is either lost, changed, not updated, or only published partially.
Published data oversight, the other half of the equation
Kneip’s research on over 15,000 ISINs across different platforms shows that nearly 4 out of 10 data points published by financial institutions suffer from inconsistencies. This means that datapoints are not the same, depending on what source an investor, financial advisor or distributor consults to get fund information, which carries obvious operational and compliance risks. This is particularly concerning in the age of rule-based investment decisions and distribution when the majority of products in retail distribution are being selected by computers, and inconsistent data points can cause funds to be discarded.
One reason for this inconsistency is the lack of oversight performed by Asset Managers on the destinations where fund data is made available. Another reason can be that platforms will take fund data from alternative sources if an Asset Manager has no active data feed established.
While such oversight may introduce additional cost, compared to a simple dissemination and may be seen as a “nice to have”, the question is rather, what is the impact of bad quality data on your fund distribution and your risk of non-compliance?
Another way to look at it is via the lens of cost efficiency: why spend large budgets on a state-of-the-art data management and reporting solutions or external services, when you receive no evidence that your data is published accurately and consistently across outputs on the market?
Kneip solves this problem with its post publication control, which helps to create transparency about missing or wrong published data points by platforms. Additionally, the complementary service ensures that any inconsistency detected is been followed up with the third party so to get corrected. Due to this combination of technology and service Kneip clients benefit from a data consistency across platforms of close to 100%.
Effective data management + publication oversight = key to successful fund distribution and compliance
Kneip does not only solve for the production of all the various outputs such as investor disclosures (e.g. UCITS KIID, PRIIPs KID, SFDR documents or factsheets), industry standards (e.g. EPTs/CEPTs, EMTs or the new European ESG Template - EET), and underlying calculations (eg. Risk, Performance, Transaction Cost and Ongoing Charges). With Kneip as your strategic partner you can leverage the benefits of a true one stop shop for data management, fund registration, calculations, regulatory reporting and dissemination services, combined with an active oversight about the information made available to and published by third parties on your funds. Ultimately this means lower risk of inaccurate data and more exposure to potential investors.
Kneip are Platinum Sponsors of IM|Power Incorporating FundForum. Find out more about the 2022 event and agenda here >>
