7 Fund Reporting Challenges and How to Fix Them
Modernizing financial reporting for mutual funds and investments is an ongoing journey, with a variety of potential roadblocks.
Outsourcing may leave you with limited control of your documents, while traditional tools could impact your team's efficiency when they update, review, edit, and confirm information.
The pain you feel as an investment reporting professional can translate into risk. That could mean regulatory risk from reporting inaccurate information or reputational risk due to publishing something that does not look and feel like your company's brand.
The good news is that technology has introduced automation into a traditionally manual process, vastly reducing risk of human error. Investment reporting no longer has to be riddled with tedious edits made by hand or bogged down by back-and-forth between contributors.
I recently led a webinar on how to relieve seven common headaches in the fund reporting financial close cycle. Here is a synopsis:
Challenge 1: Collaboration
Emailing drafts of a prospectus, financial statements, fund books, and fact sheets back and forth for review can quickly lead to confusion about which version is the most recent.
Solution: Employ the single active document model
Have everyone—financial reporting, legal, compliance, and marketing managers—work in one active document. Take it one step further by working in a cloud platform that enables real-time collaboration, so you can guarantee everyone on the fund reporting team is always using the most recent version.
Challenge 2: Data accuracy
Last-minute valuation adjustments may change critical numbers, opening up the risk that the same value does not appear in all relevant instances.
Solution: Link data
Link data from a single source to many destinations, so that updating the number at the source automatically updates it across all linked occurrences.
Challenge 3: Cumbersome review
It can be difficult to see what has changed from draft to draft. Stakeholders may lack visibility into what changed, when it changed, and why, which can delay the approval process.
Solution: Use blacklines
A blackline allows you to compare the contents of one draft to another, highlighting any changes. The Workiva platform enables users to create their own blacklines and mark milestones in a matter of seconds and send it out for review.
Challenge 4: Stylized reporting
Adjusting spacing, fonts, and formatting takes time away from more valuable work.
Solution: Embed style guides
Implementing standard fonts, font sizes, colors, and brand guidelines and styles into templates gives you a default for entering and updating information.
Challenge 5: Data validation
It takes time to double-check data for consistency. For instance, does the cash value on the balance sheet match the value in the cash flow statement?
Solution: Run variance reports
Create custom reports to systematically compare values and highlight scenarios requiring troubleshooting. You can do this with Workiva Spreadsheets.
Challenge 6: Inconsistency
Let's say I have to update a footnote that appears in each prospectus for 50 different mutual funds. How can I efficiently update each footnote without opening 50 prospectuses?
Solution: Connect your data
Manage text and financial data in a common content or source library, and link those elements to multiple destinations in prospectuses, financial statements, fund books, internal and external reports, and marketing materials. Workiva makes connected data and reports easy with Wdesk.
Challenge 7: Late revisions on tight deadlines
If you need to outsource a document to be EDGARized for the Securities and Exchange Commission (SEC), late changes can be a stressful, costly nightmare. EDGARization can take up to 48 hours, and a rush request for something as simple as adding a space or capitalizing a letter could cause you to miss a deadline.
Solution: Go for a fixed-cost model
Ask your vendor to quote you a fixed cost per mutual fund or investment, so you can make as many revisions, blacklines, and EDGAR and PDF proofs as you want. That kind of flexibility will give you peace of mind if you have to make an important correction, knowing you won't have to pay for it later.
At Workiva, we have made it our business to help address all seven of these challenges. Reach out to us to explore any of these ideas in depth.
About the Author
Arthy Kumar, Director of Product Marketing at Workiva, oversees the investments industry. She works exclusively with financial services companies and focuses on mutual funds, annuities, asset management, life insurance, and other investment reporting and compliance. Prior to joining Workiva in 2012, Arthy spent 14 years at Vanguard and MetLife holding positions in financial planning, investment portfolio analysis, relationship management, and people management. She is a certified financial planner (CFP) and a chartered financial consultant (ChFC).