Friday 30 August 2019 10:20 am

Poor broker performance reviews leaving fund managers in the dark

Fund managers may not know how much money they are spending with brokers thanks to a failure to properly review the relationships, a new study has found.

Despite the majority having procedures to review broker relationships in place, only 11 per cent of fund managers actually assess how all their brokers are performing, according to a report by analytics fintech OpenGamma.

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The vast majority of the 22 investment management firms surveyed (86 per cent) had a broker review process in place, but there was no industry consensus around how often the reviews should be carried out.


Almost a third (31.8 per cent) of firms said they held reviews at “mixed/multiple” during the year, while just over a fifth (22.8 per cent) held them “semi-annually”.

The majority of the are reliant on manual processes to review broker relationships, with only 21 per cent using live data in the review process.

The biggest challenge when conducting reviews was gathering data and calculating revenue, the report found. Over half – 53 per cent – of firms said they found carrying out broker reviews “very time consuming”.

“Having a process for assessing how brokers are performing is without question very valuable, but only when carried out,” said Opengamma chief operating officer Maxime Jeanniard du Dot.

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“While regulations will be a big driver in reviewing broker performance, fund managers also have a strict fiduciary responsibility to investors,” he continued.

“On top of this, as the geopolitical landscape begins to take shape over the coming months, it is clear that fund managers will need to gain a new level of insight to understand the best brokers to do business with.”


Main image credit: Getty

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