Middle and Back Office Efficiency Key to Advisor Satisfaction and Growth

By Dennis Godin, SVP, Relationship Management, Vestmark


Cerulli’s recently published “State of US Wealth Management Technology 2021” report stated that “Portfolio accounting will often act as the control center for the ongoing wealth management relationships. Its core functions are boring but necessary – reconciling trades and client positions with the custodian. However, a wealth manager’s selection of portfolio accounting software has significant implications for the firm’s long-term strategy and client engagement.”

This report goes on to show that more than half (56%) of firms surveyed are either only somewhat (45%) or not (11%) satisfied with their “reconciliation with custody platform”.

Clearly the foundation matters. Operational functions such as reconciliation may be “boring” in Cerulli’s words, but until an account is reconciled, it cannot be traded. So, it’s a fundamentally important daily process, and scaling this activity has a direct impact on an organization’s bottom line, its ability to deliver on advisor and client satisfaction, and its ability to grow.

Vestmark recently commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study of the VestmarkONE® platform, surveying four of our wealth management clients. The study found that workflow automation enabled by the VestmarkONE platform created a significant benefit for middle and back-office teams. For example, the visibility and overall centralized nature of data made reconciliation and reporting workflows significantly faster for back-office teams. The study found that – based on a composite of the 4 clients – back-office teams spent 75% less time on reconciliation and reporting tasks.

This means not only fewer FTEs needed to manage the reconciliation workflow – which is a significant cost savings – but it also means that recon is completed faster and accounts are available for trading at the start of the trading day.

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The Manager of Advisory Operations at one of the clients participating in the Forrester study told Forrester “Having to reconcile over a million accounts every single day – it simply wasn’t very doable on our old model. We’ve decreased the work down to 20% of what it was before.”

The COO of another of the clients participating in the Forrester study said “Our mid- and back- office side is saving 70% of their day on trade and reconciliation management.”

Vestmark holds 2 patents related to the automated recon process in our VestmarkONE platform. This automated workflow matches both transactions and positions to the custodian – down to the tax lot level, every single trading day – and based on the matching of transactions is able to fix position recon breaks. This is all done in a completely automated way and therefore results in significantly fewer reconciliation exceptions for the back-office team to research and address.

Outside of the study, another Vestmark client (one who was not interviewed for the study) was able to reallocate a significant portion of their reconciliation team, and is able to reconcile more than 90 million tax-lots across their book of business in just over 2 hours.

Let us show you how this can apply to your back office operations – contact us today.

By Dennis Godin, SVP, Relationship Management, Vestmark