Change Your Thinking and Decrease Your Reconciliation Process – The Value in Providing Position Only Account Data (Part 1)

Fiduciary and asset allocation responsibilities have increased the need to report on non-managed accounts. Reconciliation is taking up more time with the need for reporting and monitoring these non-managed accounts.

Advisors have a responsibility to know all of their client’s assets, what they are, and where they are held.

They do not, however, have a responsibility to calculate and report on the performance. Performance is being calculated by the manager. Even if you are GIPS compliant, if you are not responsible for the performance of the account you do not have the responsibility of calculating the performance. So for accounts such as 529s and annuities, where the performance is somewhat predetermined, then it does not make sense to calculate the performance. If performance is not being calculated the need for transactions and the reconciling of those transactions goes away.

You can decrease your overhead by decreasing the reconciliation process.

Providing accounts with position only data along with accounts with transactions will allow you to provide your clients with a complete picture of their finances, comprehensive asset allocation advice, while decreasing your back office overhead.

I have spent the majority of my last 20 years thinking of ways to make life easier and processes more efficient for the back office operations of RIA, Asset Managers, and the Back Office Service providers that serve them. This quest began when I was the Operations Manager, Chief Operating Officer and Chief Compliance Officer in two boutique high net worth Investment Advisory firms and has continued in my role as a Client Engagement Manager at ByAllAccounts, a data aggregation provider.

My most recent thinking has been around position only account data in response to our Clients asking how they can decrease the amount of time they spend reconciling transaction data for accounts that they do not need performance on, but do need to be included in the overall Portfolio Appraisal and Allocation. The regulatory pressures from the SEC, DOL and Congress, regarding being your clients Fiduciary, is making this a pressing issue. There was a time when the only assets an advisor had to report on were the assets they directly managed, now it is imperative that an Advisor knows their clients full financial picture in order to give fair, impartial, and appropriate advice.

You May Also Be Interested In…

Reconciliation: Best Practices (Complimentary Whitepaper)

How Automation & Scalability Can Keep You Compliant (Blog post by James Carney, CEO, ByAllAccounts)

Streamlining Operational Efficiency (Interactive eBook)

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