To convert or not to convert portfolio reporting technology

One of the more important business decisions underpinning a successful advisory practice is the selection of a portfolio reporting platform. If the decision isn’t properly researched, a platform that doesn’t meet expectations could prove to be detrimental to your entire operation. While due diligence during the platform selection process can be tedious and cumbersome, an aspect that is often overlooked during the process is the transition of historical client data.

In deciding the path to best complement your core business operations, ask yourself the following questions:

‘Do I really want to convert?’

Before going too far down the rabbit hole, decide whether you really need a conversion. A “fresh start” user has its reporting begin once its data are linked to the new technology platform. Obviously, it’s the easiest, and typically the cheapest setup.

But it is important to consider whether not having historical data available will be an issue for you — or more so for your clients when they’re viewing past positions, activities and performances. Depending on how much historical data you have available, a fresh start may be the only option on the table.

‘What can I bring to the table?’

If you decide to go the conversion route, you’ll need to confirm all the accessible data to provide to the new platform. When leaving an existing platform, be mindful of the contract termination date and how long you will have access to download data or request data to be produced for you by the provider.

Although it may not be possible without making too much noise — for example, when leaving a broker-dealer — a conversation may be warranted to confirm who owns the data in the current system and the willingness of a broker-dealer to work with you to obtain the client data to take with you on the way out.

‘What options do I have?’

Conversions can typically be divided into three types: custodian file, third party or performance only. The options available to you will depend on what you have available.

For example, a custodian-file conversion is only available if you either have the historical files locally or your custodian allows you to request these directly through them.

For a third-party conversion, the experience a new provider has in converting your current platform data over will be essential.

If custodial files aren’t available and you don’t have access to convert directly from a third-party system, a performance-only conversion may be your sole option. These processes typically require users to complete templates to provide historical interval data back to load values for basic performance calculations, which are then linked to live performance reporting.

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‘What can I expect?’

Regardless of the type of conversion you pick, there are pros and cons:

Custodian File

• Pro: Data loaded, reconciled and presented as if accounts had been on the platform all along.

• Con: Data may not be available from custodians or may come at a high cost; the process could be time-consuming.

Third Party

• Pro: Data loaded, reconciled and presented as if accounts had been on the platform all along.

• Con: Issues during reconciliation of inaccurate data, inability to get historical data on certain securities.

Performance Only

• Pro: Quick and cost-effective, user controls the intervals provided.

• Con: No transactional data, manually compiled data.

‘What am I forgetting to ask?’

Conversions can be very time-consuming, but it is important to be diligent and ask the right questions, such as:

• In using composite performance reporting, how is enrollment history on each account obtained and loaded?

• Does the platform’s billing system provide support to load fee schedule and payout data?

• How does this new system handle gaps in data?

• Will the new platform allow me to mix and match the conversion options depending on the type, account or where the accounts are custodied?

At the end of the day, it’s about how to best align your business needs and the needs of your clients with the options you have available.

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Anthony Valente is senior vice president at Portfolio Pathway.