Hortz: Can you detail for us the kind of services and technology stack you provide to strengthen RIA and asset manager middle office functioning and efficiency? What are the benefits they offer?
Wahmann: We feel we have a unique product offering with the ability to align with the specific business criteria RIAs and asset managers are currently looking for. The Ultimus middle office platform is modular, which is key to our strategy and offers flexible solutions designed to meet the exact requirements for each client, providing efficiencies and standardization across each client’s entire range of investment products, including registered and private funds, ETFs, pooled vehicles, and separately managed accounts. We can offer these services in a modular format so that our clients do not need to be captive to one all-encompassing solution and thus investing in services which are outside of their scope and needs.
Our technology strategy is co-sourced where we leverage best-in-class vendor technology specific to our servicing needs, then augment it with our uSUITE® client front-end technology which allows client flexibility for data management and delivery. We then overlay our tech platform with our award-winning service team which is well versed and experienced in the needs of RIA and asset manager investment operations. Our recent release of the uANALYZE™ direct client portal is a prime example of this strategy, which provides users with front end access to their accounting, performance, and analytical data with the functionality to configure their data to meet the specific need of their business.
Some of the benefits our clients realize by leveraging our model include: a full end to end, straight through trade settlement service employing industry best practices such as SWIFT and FIX messaging and direct access to core market utilities for matching and settlement instruction maintenance. An additional core benefit of our platform is the ability to be agnostic to source intake data. Our clients have the flexibility to utilize their choice of custodians, order management systems, market data, and counterparties. In addition, our data consumption and normalization capabilities allow us to provide our clients with a single, consistent view of their entire book of business. For foundational technology platforms, Ultimus partners with market leading firms such as FIS for IBOR, Xceptor for data integration and reconciliation, and Optoro to support our performance and analytics products.
Lastly, our development roadmap is designed and managed to deliver specifically to the needs of our clients. We recognize a primary value of our service needs to be focused on execution and delivery of our roadmap as we evolve and meet the standards our clients require and expect.
Hortz: Why and at what point of growth of a financial firm should they consider outsourcing their middle office?
Wahmann: There are several different drivers which should be incorporated into an asset manager’s decision on when and how to outsource. Historically, one of the primary drivers has been cost, and while cost alone drove many decisions to outsource—as seen from the large lift-outs which occurred over the course of the last 10 to 15 years—that has now shifted to other dynamics driving these decisions.
An approach to outsourcing should now be weighed in alignment with a firm's long-term strategy and accompanying growth. Dynamics such as changes in asset complexity and resulting volumes, new investment product offerings, and the need for geographic expansion and coverage should be considered. In addition, firms should review their organization’s overall IT platform taking into consideration business needs, contractual renewals, and the evolution of innovative technology and how it may fit into a manager’s broader platform, inclusive of front office, trading, and back-office needs. Managers should also integrate into their decision a consensus on a full outsource versus a software solution which they would operate themselves, or a hybrid approach between the two.
Firms considering outsourcing should prioritize their specific needs so they can be appropriately weighed into the decision process. It is always a challenge after the fact to reset against changed priorities which has led to some of the downfalls in the past of many large, outsourced lift-outs. A clearly defined model and business requirements are critical to the success of when to outsource the selection process and execution once the selection is made.
Hortz: How practically do you go about transitioning your middle office to an outsourced solution? What are the steps you take?
Wahmann: The key to a successful transition, whether it be a full outsource to a service provider or implementation of a technology platform, is all about proper planning and execution. Key tenets in planning for the transition should include reviewing priorities, dependencies, setting a realistic timeline and expectations, looking at a phased approach and timeline aligned to these priorities and objectives, ensuring proper project leadership is applied by both organizations inclusive of oversight and transparency, and ensuring your provider has adequate and consistent resources available to execute in alignment with the proposed timeline.
For the transition itself, key milestones should include:
First, a full due diligence of the operating model. Lessons learned from past engagements show that adequate due diligence is rarely performed within the sales process, so it is key for both parties to perform the deep dive into the day in the life processes within the current environment.