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Fund Administrator Automates More Customer Functions to Balance Growth

The demands on investment management companies to deliver timely information have never been more stringent than they are today. Regulators from various countries are imposing greater controls and more frequent compliance checks. Asset managers demand more flexible reporting to better meet the needs of their customers.

Investors and regulators alike demand complete transparency in the information they receive, along with more frequent reports. And the proliferation of more complex managed investments such as asset management planning schemes (AMPS) in the U.K. for school districts, only adds to the challenge for fund administrators to deliver accurate, timely reports.

ALPS Fund Services knows about these demands all too well. The Denver-based company provides administration, compliance, fund accounting, tax administration, transfer agency and other services on an outsourced basis. And ALPS has apparently done well meeting market demands, as the company has seen revenue growth of at least 40% for each of the last four years, said Jeremy May, managing director of operations and client services at ALPS. In the first six months of 2007 alone, ALPS saw a 25% increase in the number of shareholder accounts it manages, and revenue increased nearly 100% last year from the year before, although acquisitions did play a role in that jump.

At one time, keeping up with such growth demands would mean simply hiring more people. While ALPS has certainly done that, it is making effective use of technology to keep its headcount requirements to a minimum, while also enabling it to provide the superior service the company is known for.

ALPS has implemented a comprehensive technology strategy that automates many of the routine responsibilities of a fund administrator. Using a variety of homegrown and off-the-shelf tools, notably some tools from the investment management software firm Confluence, ALPS has dramatically reduced the time required to create routine reports. Monthly performance reports that once took four hours to produce now take a mere five minutes, while after-tax performance calculations that used to require 30 hours can be tackled in a single hour using the Confluence platform (see chart).

Need for Automation

Driven in part by a need to become more scalable as the company continued to add clients, ALPS began working with Confluence in December 2005. The idea was to enhance the process of collecting, creating, confirming and delivering investment product data.

"Our IT team, under the direction of Chief Technology Officer Bob Szydlowski, has done a tremendous job of implementing various pieces of technology and tying them together to create a cohesive whole," May said. "We have automated many processes that were once manual and labor-intensive."

For example, ALPS uses Unity Holdings (formerly known as Confluence Clear Portfolio Holdings) to extract holdings data from its fund accounting system and combine it with other data feeds to produce a report that can be customized to meet the needs of individual clients.

Another Confluence Unity solution, Unity Performance (the former FundStation), provides a central warehouse for daily fund data, automates before- and after-tax performance calculations, and automates the collection and distribution of the data. Both solutions dramatically reduce the time required to perform what were once largely manual tasks. At the same time, they enhance the controls over the production and distribution of data, helping ALPS and its clients meet regulatory requirements.

ALPS is also delivering technology to its clients that help them better service investors. The company's TA Web online account access product enables shareholders to easily view account data, place trades and make changes to personal information. The idea is to allow investors to quickly shift from reading marketing materials on a fund's website to actually opening an account. The product not only appeals to the growing population of customers who favor an all-electronic relationship, it helps keep costs down for ALPS and its clients by enabling shareholder self-service, May said.

Indeed, implementing more automation is helping ALPS keep up with its impressive growth while enabling the company to keep hiring in check. That, in turn, helps ensure the company can continually hire only employees who share the firm's commitment to always "do things right." In many ways, its automation efforts have been more than an enabler for ALPS, they've been a differentiator.

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