Debunking Common Concerns About Outsourced Performance Programs

Firms are increasingly challenged to increase the effectiveness of their performance programs, manage with fewer internal resources, ensure high-quality results, reduce turnaround times, and lower costs. These pressures leave firms in danger of creating risky exposure gaps in their performance program.

Outsourced managed services are becoming an increasingly popular choice for firms aiming to relieve themselves of operational challenges.

However, while moving investment performance programs to a managed services solution with a third-party service provider has many benefits, some firms may be hesitant to take this step for a variety of reasons. We look at these concerns and outline why these apprehensions can be alleviated by working with the right provider.

Loss of control

The worry: Outsourcing the performance program will result in a loss of control over the process and quality of results.

Third-party response: A reputable third-party service provider will work closely with clients to develop a customized solution that meets their specific needs and requirements, ensuring the investment firm retains control over key decisions and processes. Additionally, regular communication and reporting will keep clients informed and involved throughout the engagement.

Cost concerns

The worry: Outsourcing a performance program could be more expensive than maintaining in-house.

Third-party response: While outsourcing may involve an upfront cost, partnering with a third-party service provider can lead to long-term cost savings by reducing the need for additional staff, ongoing training, and technology investments. Additionally, a third-party service provider can provide scalable solutions that accommodate the firm’s growth and changing needs, ensuring they only pay for the services they require.

Quality and reliability

The worry: An outsourced performance program will not deliver the same level of quality and reliability as an in-house solution.

Third-party response: A well-established third-party service provider will have a team of performance experts with extensive industry experience and knowledge, ensuring the outsourced performance program is of the highest quality. Regular monitoring, quality assurance checks, and adherence to industry best practices helps provide investment firms the comfort they need regarding the reliability and accuracy of the performance program.

Regulatory compliance

The worry: Outsourcing the performance program could expose a firm to increased regulatory risks and potential penalties.

Third-party response: A reputable third-party service provider will have a deep understanding of the regulatory landscape and stay up to date with the latest changes and requirements. This expertise allows the third-party service provider to ensure the outsourced performance program remains compliant with all relevant regulations, reducing the likelihood of regulatory issues or penalties.

Conclusion

Performance measurement and reporting are critical components of a successful investment program. Performance marketing continues to evolve globally and is undergoing a renewed sense of scrutiny from regulators and investors alike.

With the investment landscape becoming increasingly challenging, necessitating greater efficiency, compliance, and robustness from investment managers’ performance programs is ever important. It’s vital for asset and investment owners to ensure their investment performance programs are solid, efficient, and compliant.

In this complicated and competitive investment environment, partnering with a reputable third-party performance expert with both technical and regulatory expertise can help investment managers navigate this ever evolving landscape and provide unparalleled industry knowledge and best practices in risk management and compliance.

Managed Performance Services Plays a Critical Role

Learn more about the strategic role Managed Performance Services plays to help firms maintain their investment performance program. 

Download our white paper to: 

• Explore the case for managed services – a form of outsourcing – to address contemporary industry trends and concerns that are making the investment landscape increasingly complex and competitive. 
• Examine best practices investment managers should be aware of when utilizing a managed service provider to help ensure a successful relationship. 
• Debunk common concerns, discover best practices, and uncover solutions to help firms overcome perceived challenges.  
• Look into real-scenario case studies, such as this one, to see how firms benefited from performance managed services. 

Watch our on demand webcast to learn the value of engaging a third-party service provider to oversee and manage your investment performance program. We examine how this approach has become a highly effective strategy for addressing industry challenges and driving success in a competitive environment.

How we help

Utilizing ACA's Managed Performance Services solutions allows firms to leverage unparalleled expertise, scalable solutions, and significant cost savings. In addition, collaborating with us can enhance service offerings, strengthen risk mitigation, simplify the intricate investment process, and seize opportunities for growth and innovation. 

Firms can outsource all or certain aspects of their performance measurement and reporting functions with the assurance they are working with a team that not only understands the technical aspects of calculating complex performance, but also knows industry best practices and regulatory expectations. Our suite of services includes: 

• Portfolio and fund performance calculations 
• Composite management and performance calculations 
• Global Investment Performance Standards (GIPS^®) compliance oversight and verification management 
• Risk and other performance-related statistics calculations 
• Gross and Net Money Weighted Return calculations (fund and deal level IRRs) 
• Private fund management fee and performance-based fee review and reconciliation 

If you would like to get in touch with our team today, we're ready to help. Start a conversation with us here. 

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