The Keily Funds View

Don’t waste a good crisis

July 6, 2010 at 10:00 am | Posted in Accounting, Fund Accounting, Funds Industry | Leave a comment
Tags: Asset Management, Financial Services, Financial Services Industry, Fund, Fund Accounting, Fund Administration, Funds, Hedge Fund NAV, Hedge Funds, Mutual Fund NAV, Mutual Funds, Resource Constraints

“Don’t waste a good crisis”- its an expression used a lot at the moment and it occurs to me its directly applicable to the funds industry.

After some of  the doom and gloom of the last few years there is surely an opportunity here to think about the way we do things. Back in the day when I was a valuations team leader, I was never ever in a position to just add headcount anytime I wanted, so I needed to be very clever in the way I managed resources. It seems to me that the funds industry (along with everyone else) is in exactly that position now. While over the last few years, we always had a significant number of open vacancies and thus did not have all the resources we needed, that was a far cry from the current situation. There is still a tremendous workload, indeed an increased workload in lots of ways due to the level of issues to be dealt with, but there isn’t the “luxury” of adding staff, using temporary staff, hiring lots of consultants etc etc.

I’m using a fund accounting team as an example, but really this applies to all sorts of teams. Whenever I managed a team that did not meet deadlines on a regular basis, despite silly hours being worked, this is what I did :

1. I found out what the actual deadline was.  You might be surprised by some of the results. If a client mentioned three years ago that he’d quite like to get the NAV by 1pm, and has never once complained if he received it at say 2.30pm, is that really a deadline ?

2. I found out why the deadline was there. Is it a “nice to have”, is it a regulatory requirement, or an internal deadline of some sort?

3. I found out what the actual deliverable was. This might sound like a silly question but really, does the client want the fully completed NAV, is he looking for an indicative price ?

4. I found out would happen if we did not deliver by the deadline. Whats happening at the moment (or possibly being threatened) is a good clue to this. Is the client going mad and escalating complaints up the organisation? Will the fund be de listed from a stock exchange ?

5. I asked everyone on the team why they thought the deadline was being missed. This is where you find out the good stuff. People may well be waiting on others for information, and not wish to complain about it. Work may be unfairly distributed across the team. An important system might be unreliable.

6. I asked everyone on the team what steps they performed and why. Really critical. Sit with them and get them to show you what they do, look at what order things are done in, look at the critical path the process is following and what are the inputs and outputs.

7. I thought about all I had learned and what I wanted to achieve. Usually this was to deliver an accurate NAV, by the deadline and have everyone out by 5.30pm. (This is important for (a) morale, (b) Accuracy. Tired people make mistakes and (c)Wriggle room. You might need those extra few hours in the evening for the day the IT department delete the days work by mistake. Do not laugh. This actually happened to me once.)

8. I made a plan. Famously, this once involved a hour by hour schedule for a daily valuations team to encourage them to do one NAV at a time and submit for review, and then update everything for the next day once todays NAVs were finished. It solved the problem of all the NAVs coming for review at 4pm, and everyone being stuck there for hours.

9. I gave everyone the plan. I explained the plan. I sold the value of the plan to everyone. I believed in the plan.

10. I monitored the plan. When it succeeded, as of course it did, I cheered loudly and make sure everyone knew my team had turned the situation around. (Because of course, you didn’t do it on your own. Your team did it.)

So, its an example. Its not rocket science and it  won’t fix the financial crisis, but it is food for thought. Sometimes the solutions to our problems are within our grasp. We need to be thoughtful and creative to find them.