REDEFINING INVESTMENT

RECONCILIATION FOR ASSET MANAGERS

THE CLEARWATER WAY

Reconciliation |clearwateranalytics.com 1

hen it comes to managing clients’ portfolios, you depend on accurate and

timely investment data. It drives every trading decision you make—and

you need it daily.

However, the process for acquiring and processing this data—and making sure that it

is correct—can be unnecessarily difficult. Many firms discover that as they grow, the

investment accounting and trading systems they rely on have become outdated and

inefficient, and are unable to scale to meet greater data and organizational demands.

Because there’s more data to manage, and less time to verify its accuracy, it’s

essential that your portfolio accounting system is producing trustworthy and

accurate data, and that it can scale as you win new mandates or expand to

new markets.

Reconciliation is a critical step in confirming that accounting values are correct

before they end up in your trading and accounting systems. However, while some

reconciliation is better than none, not all reconciliation processes and solutions are

created equal. In fact, many reconciliation processes and systems can’t deliver the

accurate and timely investment data you really need. They’re infrequent, incomplete,

and prone to error.

Clearwater’s web-based investment accounting and reporting solution takes

reconciliation to a whole new level. With Clearwater, reconciliation is daily, detailed,

and accurate. This frees internal staff to focus on more important tasks, and frees the

firm to explore new opportunities.

Learn more about the key reasons why legacy reconciliation solutions and processes

don’t meet your data management needs, and the key reasons why Clearwater’s

reconciliation does.

“With Clearwater, we can focus on strategy, and not

on reconciling numbers. Clearwater lets us focus on

making sure the client is in the driver’s seat and making sure

that we give the client what the client needs.”

William Dalziel

PartnerLondon & Capital

W

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1. Hard to Get Data

Getting the data you need for portfolio management

and reporting gets more difficult as your firm grows.

While some of the position, security master, and transaction data

you need is automatically aggregated and fed into your accounting,

reconciliation, and trading systems, you’re still tracking down

data from multiple custodians and systems and manually entering

it into software or spreadsheets. Manual activity shouldn’t be a

part of everyday data acquisition processes that produce critical

portfolio information. It’s infrequent, incomplete, error-prone, and

ties up your operations team when they could be focused on more

important, strategic work.

2. Hard to Compare

and Validate Data

Every day, you work with transaction data from three

sources: your trading system, custodians, and your investment

accounting system. The problem is, it arrives in different formats

and the values often don’t match. The process for comparing each

of these sources and merging them with security master data

every day is challenging and time-consuming. While there is some

consistency and crossover, and while some systems automate

the aggregation and validation of data from all three sources, the

process is rarely seamless and straightforward. As a result, your

operations team is forced to spend valuable time and energy

aligning mismatched data.

3. Shallow and Infrequent

Data Processing

As organizations grow, so does the amount of time

their operations teams spend collecting and reconciling portfolio

data. Faced with this reality, many firms feel compelled to reconcile

only the cash, position, and transaction data that is absolutely

necessary for core trading purposes. Some firms even choose to just

reconcile cash balances. The reconciliation of other vital accounting

data—including income, amortization, yield, market value,

factors, corporate actions, late payments, and more—is often only

performed weekly or monthly. By delaying the reconciliation of this

important data, asset managers have an incomplete picture of their

clients’ portfolios, which can lead to potential trading risk.

4. Cumbersome Exception

Resolution Management

As part of their regular reconciliation processes,

many asset managers manually track and resolve exceptions and

data discrepancies in separate spreadsheets or databases, and are

forced to investigate these exceptions on their own. As firms grow,

so too does the volume of exceptions their operations teams are

typically forced to examine. There’s more extraneous data to sift

through, leading to more “noise” than ever before. Tracking and

resolving reconciliation exceptions can be a time-consuming

challenge for already overloaded teams. It’s up to internal staff to

consult third-party sources or work with custody banks to identify

and resolve any incorrect values in the system.

5. Not Scalable

Outdated reconciliation systems inhibit asset

managers’ ability to take on new business or

explore new investment strategies on their clients’ behalf. Firms

need modern systems that can streamline data management

to effortlessly accommodate new mandates and investment

approaches without taxing internal staff or processes. Asset

managers operate on a daily cycle, and for a well-oiled firm, having

up-to-date, accurate cash, position, and transaction data at the start

of every trading day is essential. However, for many firms, the effort

to prepare this data can be overwhelming, and can ultimately stand

in the way of long-term growth. While operations staff can take on

more data management tasks, develop temporary workarounds,

bolt on additional software solutions, or even hire additional staff,

these are ultimately short-term fixes that don’t solve your core

scalability challenges, and can actually make things worse in the

long run.

Outdated systems inhibit your ability to take on new business or explore new investment

strategies on your clients’ behalf.5 Key Reasons Why They Fall Short

Legacy Reconciliation Processes

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1. Automated and Managed

Data Acquisition

Clearwater has streamlined the entire data

management process. It is efficient, accurate, and wholly managed

by a team committed to your firm’s success. Wherever your clients’

assets are custodied, the powerful Clearwater solution automatically

extracts holdings data from hundreds of separate financial

institutions daily. The position, security master, and transaction

data you need is automatically aggregated and fed into Clearwater’s

reconciliation, accounting, and reporting solution. With Clearwater,

you’ll spend zero time tracking down hard-to-find data from

disparate locations. Errors caused by mis-keying information are

eliminated and your operations team is freed up to work on other

important tasks.

2. Automated and Managed

Data Validation

Clearwater’s solution identifies the most accurate

investment data by comparing and validating information

generated from your trading, custody, and investment accounting

systems. This streamlined process automatically reconciles

investment data, even if it arrives in different forms and formats.

Not only does Clearwater’s solution provide accurate cash, position,

and transaction-level details, it enriches this with leading third-

party sources to build a complete profile of the data you need.

The security master is fully formed, analyzed extensively, and

contains all the data necessary for Clearwater’s core reconciliation,

accounting, and reporting processes—all without your operations

team ever needing to manually intervene.

3. Thorough, Daily

Data Processing

Many reconciliation and processing systems

simply match daily trades and transactions to a custody source.

Clearwater takes reconciliation to a whole new level. Not only is the

Asset managers need modern systems that can streamline data management processes to accommodate new mandates

and investment strategies without taxing internal staff.5 Key Reasons Why It Is Superior

Clearwater’s Reconciliation Process

reconciliation thorough, it’s daily. Once we’ve connected with your

trading system and safekeeping institutions, we process transactions

plus the vital data that you need for trading and core accounting

purposes, such as income, amortization, yield, position, market

value, factors, corporate actions, late payments, and more, every

single day. You gain immediate access to the information you need

for daily trading, and a clearer vision of your clients’ portfolios.

4. Streamlined, Painless

Exception Resolution

Clearwater’s software-as-a-service (SaaS) technology

streamlines the exception resolution process. Clearwater

automatically reconciles cash, positions, and transactions in all your

portfolios. Any exceptions that the solution cannot reconcile are

flagged and individually investigated by experts dedicated to your

account, with no burden on your employees. Clearwater identifies

the true issues, not the numerous false positives that can hinder

your access to accurate and timely investment data. Clearwater

removes the noise, and lets you focus on what really matters.

Exceptions are resolved quickly and accurately, and you gain time to

devote to more important tasks.

5. True Scalability

By streamlining the entire data management

process, Clearwater enables your firm to easily

scale. From an operational perspective, this allows you to

take on additional portfolios without adding new processes

or staff. From a relationship management perspective, this

lets you support your clients in a much more meaningful

way. And from a strategic perspective, this frees up your

firm to consider new investment types and areas of growth.

Clearwater’s scalable reconciliation, accounting, and reporting

solution allows you to focus on what you do best, giving

your organization a key advantage in a highly complex and

competitive environment. Clearwater enables true scalability

for today’s—and tomorrow’s—data management challenges.

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Problem Implication

1. Hard to

Get Data

Because your data management system is based—

at least in part—on manual processes, getting

the data you need for portfolio management and

reporting gets harder as your firm grows.

Tracking down data from multiple sources and

manually entering it into accounting, reconciliation,

and trading systems increases the potential for error.

2. Hard to

Compare and

Validate Data

The process of comparing data from your trading

system, custodian, and investment accounting

system—and merging this with security master data

every day—is inefficient and time-consuming.

Your operations team is forced to spend valuable time

and energy aligning mismatched data.

3. Shallow and

Infrequent

Data Processing

As your organization grows, so does the amount of

time your operations team spends collecting and

reconciling portfolio data. You only have time to

reconcile essential data each day.

The reconciliation of data necessary for core

accounting and trading is shallow and infrequent,

leaving you with an incomplete picture of

your portfolios.

4. Cumbersome

Exception

Tracking

As your firm grows, so too does the volume of

exceptions your operations team is forced to

investigate. There’s more extraneous data to sift

through, leading to more noise than ever before.

It’s up to your already overloaded operations team

to consult third-party sources or work with custody

banks to identify and resolve any incorrect values in

your system.

5. Not Scalable Over time, your ability to scale has decreased as

your organization has grown.

Legacy solutions inhibit your ability to take on

new business or explore new mandates and

investment strategies.

Solution Benefit

1. Automated and

Managed Data

Acquisition

Clearwater has streamlined the entire data management

process. It is efficient, accurate, and wholly managed by

a support team committed to your success.

You spend zero time tracking down

hard-to-find data from disparate locations. Your

operations team is freed up to work on other

important tasks.

2. Automated

and Managed

Data Validation

Clearwater’s solution identifies the most accurate

investment data by comparing and validating

information generated from your trading, custody, and

investment accounting systems.

Trading and accounting data is fully formed, analyzed

extensively, and contains all the data necessary for

in-depth reconciliation, accounting, and reporting.

3. Thorough,

Daily Data

Processing

Clearwater takes reconciliation to a whole new level.

Not only does it reconcile transactions and holdings, it

reconciles vital trading and core accounting data every

single day.

Gain immediate access to the information you

need for daily trading and a clearer vision of your

clients’ portfolios.

4. Streamlined,

Painless

Exception

Resolution

Clearwater’s SaaS solution streamlines the exception

resolution process. Exceptions that the system cannot

reconcile are flagged and individually investigated by

experts dedicated to your account.

Free your operations team to work on more

important tasks.

5. True Scalability Clearwater streamlines the entire data management

process, allowing your business to scale.

Take on additional portfolios without adding new

processes or staff, support your clients in a much

more meaningful way, and consider new investment

types and areas of growth.

The Reconciliation Process

Clearwater removes the noise, and lets you focus on

what really matters.

Legacy Reconciliation Processes

A Side-by-Side Comparison

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Automated Reconciliation Delivers Accurate and Timely Portfolio Data

Clearwater Analytics recognizes the problems inherent in traditional

reconciliation processes and has developed a better way. Clearwater’s

web-based investment accounting and reporting solution leverages the

power of technology and automation, deep industry knowledge, and

access to the very best data sources to create a reconciliation process

that provides asset managers with accurate and timely portfolio

accounting and trading data at their fingertips, when they need it.

When it comes to reconciliation, there’s

the legacy way, and then there’s

THE CLEARWATER WAY

©2015 Clearwater Analytics All rights reserved. This material is for informational purposes only. Clearwater makes no warranties, express or implied, in this summary. All technologies described herein are either registered trademarks or trademarks of their respective owners in the United States and/or other countries.03.2015

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