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NICSA MidWest Regional Meeting
Vincent Manning
Agenda
� Introductions� Industry Primer� Managed Asset Market Place� Servicing Separately Managed Accounts� Outsourcing as an Option� Q&A
NICSA MidWest Regional Meeting
PanelistsVincent ManningVenture Financial Systems Group, LTD.
Roger GregoryDST International
Jim PrescottThe Burridge Group, LLC
Walter MakaruchaThe Bank of New York, BNY SmartSource
NICSA MidWest Regional Meeting
Why Are We Here?
� Separately managed accounts (SMA) held $399 billion in assets at the end of 2002(Source: The Money Management Institute).
� SMA assets are expected to increase to $1 trillion by 2006 and $2 trillion by 2011(Source: Financial Research Corp – “FRC”).
� More investors will turn to managed accounts over the next five years, cutting the ratio of mutual funds to managed accounts in halfFRC).
NICSA MidWest Regional Meeting
Managed Accounts
� Separately Managed Accounts – Investment accounts featuring customized offerings based on providing tax optimization and security restrictions on an individual basis (a.k.a. Wealth Management, High Net Worth Accounts, Wrap Accounts).
� Multi-Style Managed Accounts – A fund of funds type of approach offering the same customization as in SMAs while spreading investments across multiple products (e.g., 50% Growth Fund, 40% International Fund, and 10% Fixed Income Fund).
NICSA MidWest Regional Meeting
Benefits of Managed Accounts Vs. Mutual Funds
No, typically with a no-load mutual fund investors must determine their goals themselves.
YesDetermining Investor's goals
YesYes, managers are evaluated and constantly screened by trained financial analysts.
Evaluation of Professional Money Managers
No, most no-load mutual funds only offer an 800 phone number.
Yes, face to face discussions with an investment professional.
Investor Contact
No, usually semi-annually, but varies with fund company.
Yes, viewable both electronically and in hard copy on a quarterly basis.
Performance reporting
No, investors must calculate their own performance.
Yes, viewable both electronically and in hard copy.
Quarterly reports customized to reflect actual activity and holdings.
Service
YesYes, Personal Financial Advisors, CPAs, and Lawyers.
Can be used in conjunction with any financial advisor
withdrawals/redemptionsNo, typically funds have restrictions. YesUnlimited
No, clients are not permitted to view the current securities that comprise the fund.
YesTransparency of holdingsYesYesOnline access to view account
No, with a mutual fund the investor owns a share of the fund which is comprised of a diversified portfolio.
YesDirect ownership of securities
No, in order to refund clients leaving the fund, money managers must sell securities to raise the capital necessary for redemptions.
YesControl of asset in-flow and out-flow from account
NoYesStock screening according to individual criteria regarding social, ethical, and economic values/preferences.
NoYesAble to be tailored to investor's unique needs.
General Features(Break Points)
NoYes, discounts of up to 25% or more as the account grows.
Volume discountsCost Related Features
NoYesAbility to harvest losses to offset gains
Yes, the average US mutual fund has 20% imbedded, unrealized capital gains (Morningstar Principia, 1996).
No, with a separate account the investors cost basis is initiated at the time each security is purchased.
Imbedded and unrealized capital gains
NoYesCapable of customizing account to focus on after tax returns
Tax Related Features
YesYesAccess to professional active money management
ExpertiseMutual FundSeparate AccountFeatures
(Source: Separate Account
Solutions)
Why Are We Here?
� Current technical and operational landscape is void of industry standards.� Analogous to mutual fund industry in the early 1980s.� Until recently, industry power has been concentrated in
the hands of a few sponsors and systems providers.
NICSA MidWest Regional Meeting
Industry Challenges
� Lack of standardization among sponsor systems presents significant operational hurdles.
� Major sponsors, excluding Merrill Lynch, maintain proprietary portfolio accounting and trading systems.
� Operational complexity increases dramatically as the number of sponsor connections increases.
� MSP market is very immature with offerings of operational solutions extremely limited.
� Most vendors are in beta phase with products and offerings.
NICSA MidWest Regional Meeting
Industry Challenges
� Leading investment management outsource providers rushing to enter market space with high-cost solutions and little experience. It remains unclear who will emerge as long-term leaders.
� The life-cycle of current Technology Platforms/Solutions may be short-lived.
� Assets are custodied by the sponsor, at the custodian of their choice, and not the manager. Managers are forced to deal with multiple custodians for each product offered across multiple sponsors.
NICSA MidWest Regional Meeting
The Players
� Wirehouses/Sponsors� Top 5 control over 70% of the assets (FRC)
� Investment Managers� Top 10 control 35% of AUM (FRC).
� Technology Platform� CheckFree APL, IDS, Advent, DST, FIN
� Customization Tools� LifeHarbor, SoftPak, Upstream, Parametric,
Placemark, Tamarac, Smartleaf, BTA, Hyland, Vestmark
� Outsource Providers� BONY, Mellon, State Street
NICSA MidWest Regional Meeting
The Problem: Technical and Operationally Inefficient Marketplace
Portfolio Manager
Model A
Model B
Model D
Program #1
Program #2
Program #3
Program #4
Program #5
Program #6
Program #7
Program #8
Logon
Logon
Logon
Logon
OperationsTeam
Model C
INTERFACE
Source: Cerulli Associates
NICSA MidWest Regional Meeting
The Problem: Technical and Operationally Inefficient Marketplace
� Lack of standardization among sponsor systems presents significant operational hurdles and technical challenges.� Majority of major sponsors maintain proprietary
portfolio accounting and trading systems.� No standard technology protocols or workflow
processes across sponsor systems making it difficult to standardize operations across multiple sponsors.
� Operational complexity increases dramatically as the number of sponsor connections increases.
NICSA MidWest Regional Meeting
With Scalability Comes Complexity…� If you look at the current operational infrastructure through
the eyes of the money manager. The largest managers participate in upwards of 50 sponsor programs. That means they have to:� Reconcile their portfolio management system with 50 different
custodians.� Deal with 50 different new account procedures.� Implement 50 different termination policies.� Execute 50 different billing systems. (Can any manager say
definitively that they know they're being paid correctly by all sponsors?)
� Place trades for the same stock at 50 different broker dealers. (Who goes first?)
� Maintain 50 trade-error accounts.� Receive cost data on securities transferred in 50 different ways.� The list could go on and on. It’s easy to see the immediate
operational challenges.Source: Lockwood Financial Services
NICSA MidWest Regional Meeting
Key Operational Functions
� Account Openings and Closing
� Portfolio Management
� Trading
� Reconciliation
� Performance Reporting
� Marketing Support and Service
NICSA MidWest Regional Meeting
Key Operational Functions� Current Environment
� Each sponsor relationship requires some level of manual intervention.� Customized portfolio management systems required to properly manage products
and accounts.� Institutional front-office personnel can be leveraged for some time while a base of
accounts are established.� Managers responsible for internal reporting and marketing materials.� Aggregation of appropriate data represents greatest challenge.
� Future Considerations� Industry is workings towards standardized, automated solutions.� Future requirements for account customization and tax considerations are expected
to increase in the future.� Market moving towards daily valuations requiring automated interfaces with
sponsors and tight, systematic reconciliation procedures for asset managers.� AIMR compliance should be considered an absolute requirement.
� Third Party Vendors (TPVs) offer single connectivity to multiple sponsors allowing for single system for account maintenance.
� Outsourcing of some operational functions is an option.
NICSA MidWest Regional Meeting
Potential Operational Models
� Maintain middle- and back-office internally
� Outsource back-office while maintaining middle-office internally
� Outsource middle- and back-office functionality
� Participate in third-party direct distribution networks
NICSA MidWest Regional Meeting
Servicing Options – Advantages of Internal and Outsourcing Options
Internal Servicing– Get to know your client
– Ability to employ talent
– Timely problem resolution
– Can develop metrics to prepare for growth
– Ability to design customized workflow
Outsourcing– Potential cost savings
– Eliminate training costs and concerns
– Financial risks due to operational errors are outsourced to third party
NICSA MidWest Regional Meeting
Servicing Options – Disadvantages of Internal and Outsourcing Options
Internal Servicing– Could be costly:
people, technology, infrastructure
Outsourcing– Potential to lose control of
effective client servicing
– Can lose ability to implement value added technology as needed
– Place all operational matters in the hands of a third party provider –reputation at stake
NICSA MidWest Regional Meeting
Potential Solution: Industry Utility
� In a November 2002 white paper, The Money Management Institute (MMI) called for the creation of an industry utility to transmit critical communications between industry participants.
Industry StandardsPortfolio Manager
Model A
Model B
Model D
OperationsTeam
Model C
Program #1
Program #2
Program #3
Program #4
Program #1
Program #2
Program #3
Program #4
Program #5
Program #6
Program #7
Program #8
Program #5
Program #6
Program #7
Program #8
Logon
Logon
Logon
Logon
INTERFACE
NICSA MidWest Regional Meeting
The Reality: We Are Not There Yet
� The Money Management Institute is working to bring standards to the industry.
� DTCC is working to bring standards to new account openings process.
� New market participants offer expanded solutions along with pressure to standardize communications.
NICSA MidWest Regional Meeting
The Future…� Service and technology offerings are
continually evolving.� The emergence of industry and technology
standards provide the opportunity for gains in operational efficiencies.
� Seeing a move towards bundling of services (e.g., SEI/Hyland/APL, Upstream/Lava Trading, Thomson/Vestmark).
� Standards will allow managers to apply best of breed solutions.
NICSA MidWest Regional Meeting
Managed Asset Market PlaceThe Players, The Core Functions, The Tools
Roger GregoryProduct ManagerDST International
Boston, MA
NICSA MidWest Regional Meeting
Managed Assets: The Players
� Wirehouse� Sponsor� Product Provider� Hybrid� Supermarket� TAMP
NICSA MidWest Regional Meeting
Managed Assets: The Players
� Wirehouse� Sponsor� Product Provider� Hybrid� Supermarket� TAMP
Old-line large brokerage firms.
NICSA MidWest Regional Meeting
Managed Assets: The Players
� Wirehouse� Sponsor� Product Provider� Hybrid� Supermarket� TAMP
Wirehouses, firms distributing SMA’s
NICSA MidWest Regional Meeting
Managed Assets: The Players
� Wirehouse� Sponsor� Product Provider� Hybrid� Supermarket� TAMP
Asset managers, proprietary or outsourced
NICSA MidWest Regional Meeting
Managed Assets: The Players
� Wirehouse� Sponsor� Product Provider� Hybrid� Supermarket� TAMP
Overlay managers, brand aggregators/consolidators
NICSA MidWest Regional Meeting
Managed Assets: The Players
� Wirehouse� Sponsor� Product Provider� Hybrid� Supermarket� TAMP
Originally mutual fund distribution, now expanding product offerings.
NICSA MidWest Regional Meeting
Managed Assets: The Players
� Wirehouse� Sponsor� Product Provider� Hybrid� Supermarket� TAMP
Turnkey asset management program
NICSA MidWest Regional Meeting
Managed Assets: Core Functions
� Distribution Channel� Financial Planning� Product Offerings� Trade Execution� Custody� Product Provider
NICSA MidWest Regional Meeting
Managed Assets: Core Functions
� Distribution Channel� Financial Planning� Product Offerings� Trade Execution� Custody� Product Provider
• Banking• Insurance• Wirehouse• Regional Brokers• Mutual Fund Complex
NICSA MidWest Regional Meeting
Managed Assets: Core Functions
� Distribution Channel� Financial Planning� Product Offerings� Trade Execution� Custody� Product Provider
• Risk Profiling• Asset Allocation• Product Selection• On-going Monitoring
NICSA MidWest Regional Meeting
Managed Assets: Core Functions
� Distribution Channel� Financial Planning� Product Offerings� Trade Execution� Custody� Product Provider
• Mutual Funds/MF SMA• Annuities• SMAs• Self Directed Brokerage
NICSA MidWest Regional Meeting
Managed Assets: Core Functions
� Distribution Channel� Financial Planning� Product Offerings� Trade Execution� Custody� Product Provider
• Mutual Fund• Equity• Fixed Income
NICSA MidWest Regional Meeting
Managed Assets: Core Functions� Distribution Channel� Financial Planning� Product Offerings� Trade Execution� Custody� Product Provider
• Fully Disclosed/Omnibus• Self Clearing • Trust
NICSA MidWest Regional Meeting
Managed Assets: Core Functions
� Distribution Channel� Financial Planning� Product Offerings� Trade Execution� Custody� Product Provider
• Mutual Funds• Pensions/Institutional• Fund Wraps• SMAs• Hedge Funds
NICSA MidWest Regional Meeting
Managed Assets: The Tools� Advisor Tool Kit� Interfaces� Decision Support� Order Management� Compliance� Trading Links� Back Office Processing� Recon / Synchronization� Performance Measurement� Reporting
NICSA MidWest Regional Meeting
Managed Assets: The Tools
� Advisor Tool Kit� Interfaces� Decision Support� Order Management� Compliance� Trading Links� Back Office Processing� Recon / Synchronization� Performance
Measurement� Reporting
• Client questionnaire• Risk assessment• Monetary milestones• Asset allocation• Product selection• Proposal generation• Imaging / workflow• System interfaces• Reporting
NICSA MidWest Regional Meeting
Managed Assets: The Tools
� Advisor Tool Kit� Interfaces� Decision Support� Order Management� Compliance� Trading Links� Back Office Processing� Recon / Synchronization� Performance
Measurement� Reporting
• Account activity• New account• Account funding• Legal changes• Style changes• Manager changes• Terminations
• Reconciliation• Posted trades• Off-market• Positions and cash
NICSA MidWest Regional Meeting
Managed Assets: The Tools
� Advisor Tool Kit� Interfaces� Decision Support� Order Management� Compliance� Trading Links� Back Office Processing� Recon / Synchronization� Performance
Measurement� Reporting
• Targets/models• Dispersion • Rebalancing• Tax efficiency• Gain / loss harvesting• Client restrictions• Raising / investing
cash• Portfolio monitoring
NICSA MidWest Regional Meeting
Managed Assets: The Tools
� Advisor Tool Kit� Interfaces� Decision Support� Order Management� Compliance� Trading Links� Back Office Processing� Recon / Synchronization� Performance
Measurement� Reporting
• Centralized review• Aggregation by
sponsor• Sponsor rotation• Non-sponsor
execution• GTC / carryover
NICSA MidWest Regional Meeting
Managed Assets: The Tools
� Advisor Tool Kit� Interfaces� Decision Support� Order Management� Compliance� Trading Links� Back Office Processing� Recon / Synchronization� Performance
Measurement� Reporting
• Restrictions• Cash limits• Wash sales• Securities changing
holding periods• Firm wide thresholds
NICSA MidWest Regional Meeting
Managed Assets: The Tools
� Advisor Tool Kit� Interfaces� Decision Support� Order Management� Compliance� Trading Links� Back Office Processing� Recon / Synchronization� Performance
Measurement� Reporting
• Order routing• Execution reports• Allocations• Confirmations• DTC affirmations• Settlement advice
NICSA MidWest Regional Meeting
Managed Assets: The Tools
� Advisor Tool Kit� Interfaces� Decision Support� Order Management� Compliance� Trading Links� Back Office Processing� Recon / Synchronization� Performance
Measurement� Reporting
• Does manager report to client?
• Should manager augment sponsor back office weaknesses?• Income accruals• Amortization / OID
• Value of enterprise wide consolidated positions
NICSA MidWest Regional Meeting
Managed Assets: The Tools
� Advisor Tool Kit� Interfaces� Decision Support� Order Management� Compliance� Trading Links� Back Office Processing� Recon / Synchronization� Performance
Measurement� Reporting
• Shadow accounting: who’s books are correct?
• Who does lot accounting?
• Sync overlays data
• Recon finds differences
• Who publishes client reports?
NICSA MidWest Regional Meeting
Managed Assets: The Tools� Advisor Tool Kit� Interfaces� Decision Support� Order Management� Compliance� Trading Links� Back Office Processing� Recon / Synchronization� Performance
Measurement� Reporting
• Client • Sponsor composites• Manager • Manager composites• Advisor • Benchmarks / blends • Attribution
NICSA MidWest Regional Meeting
Managed Assets: The Tools
� Advisor Tool Kit� Interfaces� Decision Support� Order Management� Compliance� Trading Links� Back Office Processing� Recon / Synchronization� Performance
Measurement� Reporting
• Client• Management • Sales • Advisor
NICSA MidWest Regional Meeting
Servicing Separately Managed AccountsJim Prescott
Burridge Group LLC
NICSA MidWest Regional Meeting
Burridge Group LLCAMG Affiliate since 1996
� Burridge Growth Partners – 1996� Sound Capital Partners – 1998
$1.6 billion AUM as of 9/30/03� Portfolio Services Group (PSG) – 1998
NICSA MidWest Regional Meeting
Burridge / PSG
� 34 Employees in LLC� 14 in sales and marketing including 5
wholesalers and 6 internal sales support� 12 in research between two firms� 1 compliance officer� 7 in operations and trading
�1 manager�2 in trading and settlements�4 administrators
NICSA MidWest Regional Meeting
Portfolio Services Group
� Provides SMA marketing and administration services to AMG affiliates
� Burridge Growth Partners – Chicago, IL� Essex Investment Management – Boston, MA� Frontier Capital Management – Boston, MA� Renaissance – Cincinnati, OH� Systematic Financial – Teaneck, NJ� Sound Capital Partners – Seattle, WA
NICSA MidWest Regional Meeting
Portfolio Services Group SMA Programs
A.G. EdwardsBank of AmericaConcordDB Alex BrownLegg MasonLinsco Private
LedgerLockwoodMerrill Lynch
Morgan StanleyPrudentialSmith BarneyUBSWachoviaWells Fargo
Over 7,000 accounts
NICSA MidWest Regional Meeting
Portfolio Services Group Multiple Style Portfolios
� Wachovia DMA�6 blends
� Wells Fargo�3 blends
� Prudential MACS�2 bends
� 6 AMG managers sub-advising to PSG including�Burridge, Essex, Systematic, Renaissance,
Davis Hamilton, Rorer
NICSA MidWest Regional Meeting
Operational Challenges Facing PSG� Reduced fees and higher expectations� Staying focused and setting rules� Mirroring and not mirroring� Reconciliation� Restrictions� Frozen accounts, terminations, “special
situations”� Tax aware management� Cash flow management� Cross training
NICSA MidWest Regional Meeting
Additional Challenges
� Communicating with other managers � Identifying outliers� Moving from paper to imaging� Each sponsor working differently but moving
toward standards� Paper, files, websites, dial-ups . . . .
� How do we get it all done? We needed help.
NICSA MidWest Regional Meeting
Outsourcing at PSG
� Spectrum Global Funds Administration� Outsourced CFO since April of 2002� Created CRM “Asset Gathering Tool”
� Rorer Asset Management� AMG Affiliate “Big Brother”� Advantage Outsourcing Services� Providing administrative support starting October,
2003� OnBase
NICSA MidWest Regional Meeting
Success Through Partnership
NICSA Midwest Regional Meeting
October 8, 2003
2… Around the Globe… Around the Globe
Executing theInvestment
Decision
InvestmentDecision
Analyzing thePortfolio The Bank of
New York’sGlobal
Solutions
� Asset Allocation� Analytics� Compliance
� Trade Execution� Equities� Fixed Income� Foreign Exchange
� Transfer Agency� Credit Services� Funds Transfer
� Trade Order Management� Electronic Instruction Capture
� Safekeeping� Short Term Cash� Securities Lending� Securities Clearance
� Global Accounting� Strategic Outsourcing� Offshore Services� Collateral Management
� Investment Risk Management� Performance
Measurement/Analytics� Compliance� VaR
� Currency Risk Management
� Web-based Reporting� VaR Reporting
Servicing thePortfolio
Issuers
Servicing the Investment Lifecycle…
3
• World Advisor Program� Sponsor Focused� Small Platform� Back-office Offering
• World Advisor Program� Sponsor Focused� Small Platform� Back-office Offering
BNY Clearing
2000
BNY’s Evolution in the Managed Account Business
2002
� Focused on Gathering Assets and Increasing Distribution
� Front-office Offering� Proprietary Front-end Tools
� Entire Management Team Retained
� Focused on Gathering Assets and Increasing Distribution
� Front-office Offering� Proprietary Front-end Tools
� Entire Management Team Retained
� Focused on SMA Back-office Processing
� Highly CustomizedTechnology Platform
� Multi-custodian� Entire ManagementTeam Retained
� Focused on SMA Back-office Processing
� Highly CustomizedTechnology Platform
� Multi-custodian� Entire ManagementTeam Retained
$8 Billion AUA40,000 Accounts
$8 Billion AUA40,000 Accounts
LockwoodAcquisition
EMATAcquisition
2003
• Investment ManagerFocused
• Lift Out/BSP• Multi-sponsor, Multi-custodian
• Investment ManagerFocused
• Lift Out/BSP• Multi-sponsor, Multi-custodian
$10.2 Billion AUA31,000 Accounts
56 Sponsors
$10.2 Billion AUA31,000 Accounts
56 Sponsors
• Sponsor Focused• Peak 1 & Peak 2 Offerings
• Peak 1 Separate Accts.
• Sponsor Focused• Peak 1 & Peak 2 Offerings
• Peak 1 Separate Accts.
Pershing
$3 Billion AUA7,500 Accounts
$3 Billion AUA7,500 Accounts
ManagedAccount Group
4
Investment Manager & Sponsor Outsourcing Solutions
SMANon-
sponsorInstitution Mutual
FundsDefinedBenefit
SMA asSponsor
& IM
BNY Supporting a Multi-product Investment Manager
BNY Supporting an SMA Sponsor
� Operations – Sponsor Level� Broker/Dealer Services
� Account Set-up & Maintenance
� Reconciliation
� Relationship Management
� Performance Reporting
� Billing
� Operations – Manager Level� Trade Support & Enrichment Services
� Account Set-up & Maintenance
� Accounting, Reconciliation & PerformanceReporting
SMA Sponsor
InvestorIFA IM
Broker
Custody
IMIM
IM
IMSMA Sponsor
SMA Sponsor
SMA Sponsor
5
What to Outsource?
Reconciliation
Model Maintenance
Performance & Analytics
Sponsor Support
Record-keeping
Sales
Asset Allocation
Tax HarvestingClient Servicing.
Settlement
SMAMarketing
Investment Mgmt.
Rotation Mgmt.
Trade Dealing & Execution
Account Maint. & Administration
InvestmentInvestmentManagerManager
BNY SmartSourceBNY SmartSource
6
PortfolioManagement
System
AccountSet-up
& Maintenance
DailyReconciliation
Services
Fee Calculation& Processing
Services
PerformanceReportingServices
Commoditized Functions are Candidates for Outsourcing
� Receive & verify new account information from sponsor & send welcome package� Open account & notify manager account is ready to trade� Process contributions, withdrawals, rebalancing requests� Facilitate tax gain/loss sell requests within account restrictions� Maintain account records, manager/style changes & terminations
� Perform final reconciliation of new account before releasing to manager� Perform daily reconciliation between portfolio accounting & custodians� Maintain security master database� Process voluntary corporate action on portfolio accounting
� Perform fee calculations (including multiple components)� Reconcile investment manager fees from various sponsor programs� Collect (or direct custodian to debit) fees from client accounts & disburse as
appropriate� Provide MIS reporting on fee transactions & billing history
� Produce quarterly performance reports for client accounts� Provide composite reporting for managers� Provide Investor Workstation for clients to review account
holdings & performance
� Portfolio accounting & record keeping� Portfolio modeling & block trade creation� Trade allocation� Account re-balancing
7
Outsourcing Advantages Outweigh the Concerns
Manager’s Concerns� Loss of control� Accountability� Confidentiality of:
� Data� Models� Intellectual property� Clients
� Loss of customization
Key Advantages� Cost control� Focus on core� Scaleability� Risk transference� Infrastructure upkeep
8
Finding the Right Outsourcing Partner
Selection Criteria Listed in Order of Importance:
Source: Celent Communications Investment Manager Survey – March 2002
Criteria (1=Highest)
3.34
3.33
3.11
2.44
2.20
0 1 2 3 4
Cost
People/Culture
Stability ofOutsourcer
Specific Expertisein Investment Area
Technology Platform
9
Client Support/Service Model
Investment Manager
PortfolioManager
Marketing& Sales
Finance& Acct.
Investment ManagerOperations Coordinator
BNY SmartSourceClient Service
Team
BNY PMA Team
� Business Manager
� SMA Operations Manager
� Account Maintenance Manager
� Reconciliation Manager
� Settlements Manager
� Records Manager
Operations
BNY SmartSource
10
BNY Competitive Advantages as an Outsourcing Partner
� Focused Outsourcing Strategy & Experience� Proven Track Record with Large Outsourcing Projects� History of Innovation� Tenured Pioneers
� Leading Technology� State-of-the-Art Tools� Modular Yet Fully Integrated – Highly Customized
� Investment Manager Focus� Relationship Driven� Key Business Line� Dedicated Resources with Investment Management Expertise
� Flexibility� Consultative View� Understanding of Sponsor & Investment Manager Needs� Flexible Service Models & Transition Strategies
� Product Breadth� Commitment to Securities Processing� Service Capabilities Across the Investment Lifecycle� Ability to Work with Investment Managers Across All Product Types
(i.e., Managed Accounts, Fund Vehicles, HNW & Institutional)
11
Some Final Thoughts…
� Managed accounts is a complex business - more styles/programs, MSP & multi-currency
� Most managers need to reach $2.1B in AUM to achieve profitability
� The average spend on technology alone is between $1 - $3M
� Scale and operational efficiency are the primary keys to success
� Drive to Standards!
� Outsourcing must be a partnership rather than a traditional vendor relationship
NICSA MidWest Regional Meeting
Contact InformationVincent ManningVenture Financial Systems Group, [email protected]
Roger GregoryDST [email protected]
Jim PrescottThe Burridge Group [email protected]
Walter MakaruchaThe Bank of New York, BNY SmartSource212-815-6161 [email protected]
NICSA MidWest Regional Meeting
BiographiesVINCENT MANNINGVenture Financial Systems Group, LTD.Managing ConsultantVincent Manning is a Managing Consultant at Venture responsible for providing leadership in the development and implementation of innovative solutions to solve complex technical and business issues. Vincent actively works with senior management teams to assess current business and systems environments and proposes organizational and process reengineering solutions. He is responsible for directing and managing project teams to ensure timely and effective execution of management efforts. Mr. Manning’s engagements have covered both front- and back-office initiatives ranging from conceptual design through final implementation.Over the past five years Vincent has led initiatives in every area of the trading cycle covering issues ranging from data modeling, business processing, enhancing trading systems, providing web-based reporting platforms, and the integration of front- and back-office systems to provide real-time positions, prices, and transactions.Mr. Manning is currently a member of the National Investment Company Service Association (NICSA) Technology Committee. Prior to joining Venture, Mr. Manning was with Fidelity Investments as a Senior Business Analyst. Prior to Fidelity, Mr. Manning was with William M. Mercer, Incorporated for five years as a Consultant. Mr. Manning holds an MBA with a Strategic Management concentration from Boston College and a BA degree in Economics from Brown University.
NICSA MidWest Regional Meeting
BiographiesROGER GREGORYDST InternationalProduct Manager
Mr. Gregory has over 25 years of experience in portfolio management and accounting systems software development and is currently a product manager forDST’s Managed Asset Platform.In this role, Roger is part of team responsible for both the functional and technical direction of DST’s managed account solutions and their current evolution.Roger was previously responsible for the original design and development of DST's HiNet accounting solution, which is a rules-based client-server multi-currency portfolio accounting system, currently in use by many leading US financial institutions. Mr. Gregory holds an M.S. in Computer Science and a B.A. in Political Science from Boston University.
NICSA MidWest Regional Meeting
Biographies
Jim PrescottBurridge Group LLCVice President, Operations
Mr. Prescott has been active in the Chicago investment operations business for over twenty years.
He oversees the operations and trading area at Burridge and has played an important role in growing the firm a one product traditional manager to an aggressive SMA manager with multiple product lines.
Prior to joining Burridge in 1995, Jim spent 14 years with Fiduciary Management Associates in Chicago as their Vice President of Operations.
Jim holds a B.S. in Business Administration from DePaul University.
NICSA MidWest Regional Meeting
BiographiesWALTER J. MAKARUCHA The Bank of New York, BNY SmartSourceVice President – SMA Business Manager and BNY SmartSource Product Manager
Walter Makarucha is a Vice President and Separately Managed Accounts (SMA) Business Manager within BNY SmartSource, The Bank of New York’s investment manager outsourcing division. He also is responsible for Product Management within BNY SmartSource and also serves as the group’s SEC Compliance Policy Manager.
As SMA Business Manager, Mr. Makarucha is responsible for all SMA related middle- and back-office outsourcing services provided to Investment Managers. Mr. Makarucha leads a management team with an average of 10 years experience in providing operational support to managers. The team specializes in dealing in multiple sponsor/custodial/brokerage relationships in a multitude of programs and investment styles.
In his Product Management capacity, Mr. Makarucha is responsible for the creation, development, and deployment of new products and services to be offered to existing and new clients of the Bank. In addition to Product Management, Mr. Makarucha is a recognized subject matter expert in the area of straight through processing (STP) and has spoken at many industry conferences. In addition, he has authored a number of articles on this topic.
Mr. Makarucha joined the Bank of New York in May 2002. Prior to joining the Bank of New York, Mr. Makarucha was employed by Deutsche Bank Asset Management and Private Banking Americas as Director of Information Technology and Securities Operations. He also was president of an IT subsidiary for Credit Suisse, a major European investment bank. Under Mr. Makarucha’s direction, this firm grew rapidly and was ultimately acquired by EDS. Mr. Makarucha was also Chief Operating Office responsible for technology and operations for Credit Suisse Asset Management Americas, and Swiss Bank Corporation Portfolio Management International. Mr. Makarucha is a seasoned professional with over 20 years in the financial services industry.
NICSA MidWest Regional Meeting