An insight into the shifting landscape of outsourced fund administration, oversight liability and complying with the regulators, the reliance on spreadsheets and manual processing, and the search for better solutions.

1. NAV Oversight&
Backup NAV Challenges?
Youarenot alone…
M I L E S T O N E G R O U P . C O M

2. Outsourcingchallenges
with NAVs
There is a renewed interest within both established and recent
outsourcing initiatives in addressing the challenges around
NAV Oversight and Backup NAV:
• Complex operational challenges in supporting these
outsourcing relationships
• Overseeing these relationships in a changing regulatory and
operational landscape
Soundfamiliar?
Youarenotalone

3. Changing
outsourcing
motivations

4. 1
2
However these motivations have
now shifted a degree or twoShifting
outsourcing
motivations–
new drivers
A corporate sense of core and non-core activities
Desire to avoid major refurbishment projects of
internal operating models and related technology

5. Heightened
challenges

6. How are somewho
outsourcefeeling?
A LOSS OF
CONTROL
over the quality transparency of
daily NAV production and
related data
FEAR OF PERIODIC
INTERRUPTIONS
to the timely and accurate delivery
of NAVs
DESIRE TO
INDUSTRIALIZE
and support a robust, professional
and automated oversight function

7. What are the
regulators
saying?
The regulators have ‘raised the bar’ on acceptable
market practice in relation to oversight. They have set
the expectation that fund boards should have a
business continuity plan in place to insure against
future service provider outages or failures.
Regulators around the globe are clear - outsourcing
fund accounting does not absolve the fund managers
of their fiduciary duty to distribute timely and accurate
NAVs.

8. What are the
regulatorsdoing?
Fund managers have had NAV error, in some cases,
for months before being detected. Remediation costs
to the fund have been magnified by multi-million
dollars in fines by the relevant regulator.
APPLYING PENALTIES WHERE BREACHES OCCUR

9. Difficulties in
complying
Continued reliance on home grown
solutions, often leveraging existing
middle office systems that were not
intended for this purpose.
Unwieldy spreadsheet-based
manual solutions.
Some fund administrators provide
reporting and contingency services, but
these generally fail to meet the criteria
of independence and resilience during a
service provider outage.

10. • Oversight resources are stretched thin
• Limited window before NAVs are
distributed with little time to perform a
complete set of checks across all funds
and classes to ensure their accuracy
• Oversight process often relies on
spreadsheets and manual processes,
which translates into a high likelihood
that some NAV errors are going to go
undetected
• Limited budget available for further
automationWhat’sstopping you?

11. A common view is - little has gone wrong for a period of time,
therefore the risk of oversight failures is being effectively managed.
It is not a surprise that initiatives to fortify oversight and contingent
NAV capabilities often follow an actual loss event, near miss or
regulatory directive.
“I realizethat my current oversight
processis not great,but it appears
to be working …for now at least.”

12. Independence is
key
‘88% confirmed that independence of the
oversight function from their TPA(s) was critically
or very important.’*

13. INDEPENDENCE IS KEY
Insuring againsta
serviceprovider’s
outage
Most fund managers and asset owners now seek
contingency arrangements independent of their service
provider to protect against a broader range of failure
scenarios than just the fund accounting platform.

14. What to look for in
an effective
contingent NAV
solution
ACCURACY across fund types and share classes
SPEED to meet NAV release cut off times
RELIABILITY over a multi-day outage
INDEPENDENCE of service provider availability
14

15. Does Milestone
Group have a role
to play?

16. Since 2011, our pControl™ solution has
been strengthening oversight functions of
leading fund managers globally.
How we help
A new and powerful backup NAV capability, utilizing
a NAV
Protect methodology enabling organizations to
demonstrate an effective contingency plan to deal
with the possibility of a limited or sustained service
provider outage.
BACKUP NAV CAPABILITY
Fully managed service utilizing pControl
Smartsourcing™ cloud delivery and data
management service.
CLOUD BASED DEPLOYMENT
Fully integrated with the automated pControl™
Oversight capability leading to an accurate, high
confidence and cost-effective solution for
outsourced functions.
INTEGRATED & AUTOMATED

17. Connect with us
milestonegroup.com