Data management key to riding the wave of super fund mergers

A key feature of the Australian market is a number of small and medium-sized superannuation funds. There’s increasing regulatory and market pressure on funds to generate returns, which in turn becomes more difficult as they don’t have the scale and resources of much larger funds, but do have the same regulatory and governance overheads. That presents risks for the entities involved, particularly with regards to data management.

Merging super funds together is a complex business, but it’s gaining in momentum. KPMG recently said that a “wave of fund mergers is imminent” and they predicted the number of funds in the market could halve in under a decade.

This is partly to do with the increased regulatory oversight generated by the Royal Commission Report. Scrutiny on super funds is more intense, and mergers generate more resources to make sure that risk management and assurance are up to date.

Data integration is a significant challenge when it comes to merging super funds that must be worked through. Part of this is how the systems of each fund operate, and how they’ll merge their data. In many cases, complex spreadsheets are still at the core of data management often with different spreadsheet structures for 3rd party systems (eg specialists systems for Performance & Attribution).

Meeting this challenge involves getting the data for each fund onto a common platform, so that the integration is seamless. For instance, if both funds were already using the AlphaCert platform it would mean that:

  • Data collation would already be automated
  • Elimination of manual processes reduces errors – no more cutting and pasting information from PDF documents and emails into spreadsheets
  • The process is much faster and more efficient – 90% of the work has already been done to create a common data format
  • There’s inherently a much higher degree of confidence in the data
  • Investment managers already have greater control over the data.

When it comes to data reporting, a merger between two super funds that are using the same data integration platform means that changing the data source is all that’s required – you’re not having to rebuild entire spreadsheets, downstream reports or integration to 3rd party specialist systems.

At AlphaCert, this is at the core of what we do – putting investment managers in control of their investment management data. When the decision is made to merge two funds, the data integration process is much more streamlined, fast and efficient if the data from both funds is on the same platform. Not only will it save a significant amount of time, but the quality of the data is much higher and more accurate.

To find out more about how information is managed for investment funds, and the importance of having the right platforms in place, download our eBook, Investing in the future.

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