Software

Creating and managing a key dataset across the firm

Assets Under Management (AUM)

Assets Under Management (AUM) is a fundamental metric indicating the market value of all assets managed by an investment management firm.

Flows can be characterised as the investor-directed movement of assets in and out of investment products.

Every aspect of an asset manager’s operations involves an AUM – whether it’s a share class, a fund, a desk or an industry exposure to institutional clients.

AUM & Flow is therefore a key process and dataset across the entire firm – either used directly or as a key input.

The Board, shareholders, investment team, Compliance and Audit are all stakeholders – in addition to Finance & Distribution.

In a sense, how to calculate AUM & Flow is a fundamental building block for the entire firm.

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How do firms calculate AUM & Flow today?

Within a large asset manager, the production of AUM & Flow at the end of a month is a cross-departmental headache that takes many days.

There is client matching, flow splitting, monitoring the arrival of data from third parties, new fund launches, fund terminations and many other aspects to consider.

Regional Sales and Finance teams are all generating their own numbers.

Finance and Distribution have often been areas that have suffered underinvestment in technology terms.

Systems purchased or developed in these areas (such as SAP or Salesforce) are generally not integrated into the rest of the front, middle and back office environment.

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Why is it a challenge to get it right?

With multiple teams and processes, the result is double-counting and different stats in the measurement of AUM & Flow – there is no ‘golden source’.

To make matters worse, the systems generally used are time consuming to build and expensive to support, generating a significant keyman risk.

Questions that we would pose include:

  • How long does it take you to calculate your Group numbers at the end of the month?

  • How many Finance teams globally are involved in the process?

  • Is it a STP or is there a multitude of spreadsheets involved?

Does the data tie back to your CRM system?

All fund management firms we have worked with over the years have been deficient in this area of AUM & Flow data.

The problem is endemic, but it is rarely articulated by the industry.

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