Gaining Perspective on IBOR Solutions

As a concept IBOR – Investment Book of Record – has been around for some time, but has recently gained wider acceptance in the investment management industry. Investment managers seeking IBOR solutions have indicated some concerns that should be addressed, including:

• risk mitigation
• cost containment and predictability
• superior, accessible service

I would caution managers actively pursuing a solution to consider a few key points, including:

• Scale cannot be achieved with bodies. Middle office process efficiency must be addressed by a marriage of subject matter expertise and technology solutions that facilitate the management of firm and client risk.
• No one vendor is an expert in every aspect of the business.
• Compliance and vendor management are critical components of investment operations outsourcing.
• IBOR must be viewed as an integrated piece of an overarching investment process.
• Vendors who specialize in IBOR need to own the technology for sure, but also to be experienced in its use, that is, to be investment management professionals themselves.
• The astute service provider understands that an integrated IBOR system is not a compilation of discreet systems, plugged together.
• Data integrity is critically important.

When seeking to implement an IBOR solution, it’s imperative for the investment manager to consider the benefits that outsourcing solutions can provide. These benefits include the ability for a firm to concentrate on core competencies while aligning costs with success – which I identify as “right-sourcing.” Gaining perspective on how IBOR should work within an investment management firm’s total business will help lead to a right-sourced solution where technology and service intersect. Right-sourcing enables flexible IBOR solutions and is the emergent answer to investment managers’ business efficiency challenge.