Technology
Many Investor Firms Still Calculate Fees, Rebates By Hand - Bonaire Survey
Many buy-side executives calculate retrocession payments and related fund rebates by hand rather than use technology, and a majority of those recently surveyed have little or no confidence in reconciling billing details, according to Bonaire Software Solutions.
The firm polled 51 managers in February on the topic of mutual fund rebate calculations – a crucial issue in this competitive field and likely to intensify amid reforms of the industry such as the UK’s Retail Distribution Review.
The survey showed that managers rely on manual processes to process distributor rebate and retrocession payments, even though there is supposed to be industry focus on the importance of transparency and automation.
According to the survey, nearly 35 per cent of firms are processing over 500 distributor payments each period. However, over 70 per cent of respondents have neutral to no confidence at all in reconciling distributor payouts with distributor invoices.
“The results from our survey were eye opening,” Christopher John, chief executive of Bonaire, said.
“Despite increased regulatory pressures to bring transparency and automation to the industry, most fund and fund administration firms are still manually calculating the hundreds of distributor payments they need to be making. This is a highly error-prone and risk-filled process and could create major problems for mutual fund firms. With accuracy and cost control being key objectives of most fund firms, this is a problem that could easily be addressed with software solutions that would automate this process,” he said.
Some 44 per cent of firms still use spreadsheets to manually calculate distributor payments and over 45 per cent of firms are unable to generate management intelligence reporting across all their distributor relationships. Also, 36 per cent of firms are tracking these relationships but via manual processes.
Bonaire, based in Boston, MA, has offices also in UK. It is focused on providing revenue management and accounting software and services solutions to the asset management industry.