Investment Managers Say Fee Leakage Remains Unwieldy

A majority of mutual fund and asset management firms remain concerned with efficiency and accuracy in their fee billing processes, according to a survey of 51 market participants by Boston-based capital markets software provider Bonaire, published today at Sifma’s 2012 Tech Expo.

In particular, manual paper processing by management via spreadsheet continues to lead to difficulty for investment management firms recovering their fees quickly and correctly, with half of respondents citing fee leakage and inaccuracy as enduring obstacles. Leakage, which is a consistent issue particularly for managed accounts, occurs when multiple institutions sell investment services to clients, but fail to properly divvy up the amount owed to each after the transaction—leading either to inefficiencies built into an extended billing cycle, or fees being lost entirely.

Within those issues appear to be inconsistencies around firms' use of data: Almost 50 percent of users surveyed say data management is their biggest challenge for invoicing services distributors, while 37 percent say consolidating data across various systems is providing a challenge for their revenue reporting.

"What's clear [in light of the survey results] is that the investment management industry needs to continue adopting the processes and technology required to truly address the fee leakage challenge and ensure revenue and expense management is accurate, particularly in light of current and proposed regulations," says Christopher John, CEO of Bonaire.