How to Fight Falling Fees with Connected Investment Reporting

How to Fight Falling Fees with Connected Investment Reporting
October 16, 2019

Pressure is growing for mutual fund providers to produce regulatory reports more efficiently as revenue falls from fund fees.

That's because investors are paying roughly half as much to own funds as they did two decades ago, with fund fees hitting a record low in 2018, according to Morningstar's 2019 report.

At the same time, funds remain highly regulated. Under requirements to file a prospectus, annual and quarterly shareholder reports, Form N-PORT, and Form N-CEN, for starters, a fund must regularly disclose information about:

  • Operations
  • Financial condition
  • Net asset values
  • Flows
  • Returns
  • Risk metrics

Updating that information in a timely manner across disclosures, marketing materials, and internal sales pitch decks or war books can be a complicated compliance exercise involving multiple team members. Sometimes external parties are involved if an investment provider uses the sub-adviser model, for example.

For N-PORT alone, the U.S. Securities and Exchange Commission estimates that fund companies could incur tens of thousands of dollars a year, per fund. Roughly 11,000 funds are required to file N-PORT.

With the right systems in place, compliance and marketing departments do not have to spend hours updating multiple pieces manually. And they don't have to start from scratch or drain their compliance budgets to satisfy evolving regulations. Instead, it's time for firms to rethink the whole reporting process altogether.

Transforming investment reporting

A more efficient process starts with a centralized platform for collecting data that can then be connected to multiple reports for efficiency and consistency. And, rather than sacrificing control of your documents during a pencils down period while your documents go to a financial printer, consider keeping much of the work finalizing SEC documents in-house with technology that automates time-consuming tasks.

Cloud technologies, especially purpose-built solutions for business reporting or SEC filing software, are making it possible for resource-constrained investment providers to:

  • Automate the tedious process of updating data across multiple instances and reports
  • Collaborate in real time, limiting bottlenecks in the editing and review process
  • Control their own documents from start to finish, so it's easier to make late changes or fix a typo

More time-saving tips are included in this white paper, Regulatory and Compliance Best Practices for Investment Reporting.

My main takeaway is this: While it may be tempting to look for an investment reporting solution that offers immediate cost savings in light of shrinking fund fees, you would be best served with a fully connected solution that scales to several long-term business needs, from adding funds to creating marketing materials to maintaining internal controls, policies, and procedures.

Arthy Kumar

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).