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Managing a major technology project without affecting client service
Upgrading your technology can be a test for any business, regardless of size.
Trying to execute major change and adapt to new systems while ensuring that day-to-day business carries on as usual is a daunting challenge. It’s no wonder we’ve seen a number of big name providers struggling with replatforming projects this year, with numerous tales of missed deadlines and sunken costs.
We embarked on our own upgrade project at the end of last year, on our core custody platform. Our goal was to improve straight-through-processing; reduce risk while adding control for client instruction processing; and enable greater scalability and sophistication of delivery for our clients.
The project was a success and it passed off without having any adverse impact on day-to-day processes. It was also a useful learning exercise, so we thought we’d share a few things that we took away from it.
1) Be clear about the benefits of upgrading
The first step in any project is understanding exactly why you’re doing it and what you want to achieve. We were clear from the outset that an upgrade was crucial if we were to have the operational, technology and infrastructure scalability to comfortably match our ambitious business growth targets for the foreseeable future.
A key part of the project was the development of a leading API, letting us connect to a wide range of partner applications. Cutting edge technologies allow us to work with a range of innovative partners, looking to leverage industry developments around blockchain, RPA and AI initiatives, all leading to a digital transformation of the industry. By ensuring that Multrees can engage in these developments, we can future-proof our offering and provide confidence to our client firms that they, alongside Multrees, are ideally placed to benefit from disruptive technological advances.
2) Have clear project governance
The success of our upgrade, completed within a nine-month timeframe and within budget, was due mostly to the robust governance of the project. This means having a clear point of accountability. Each of our Change projects has an executive sponsor, who in turn is supported by a dedicated project manager. We also have a bi-weekly Programme Board meeting, hosted by our internal Change team to monitor the status of all our projects and ensure that they are not impacting day-to-day activities.
Our best-in-class technology partners were able to assist closely during the project, being always on hand to answer questions and provide support, both onsite and remotely. This really emphasises the importance of a thorough vendor selection process - ensuring you are working with good partners from the outset makes handling future upgrade projects a lot easier.
3) Have a clear plan and roadmap for future developments
As with all of our projects, we have built on the success of our upgrade work through continuous development, with a continual stream of innovation activity seeking to improve our systems. This has included adding new self-service applications to the portal, saving manual entry for our clients as well as operational resource.
The resulting resource savings also free up time internally for us to engage in more value-add activity, such as improving the interface of the client portal through custom content applications (which, in turn, improves the overall client experience).
Our current upgrade projects include further developing our core custody platform and our web API capabilities. We all look forward to the success of these projects and making sure that the Multrees platform keeps ahead of the technology curve.
Protecting client assets
It’s now more than a decade since Lehman Brothers went bankrupt, but we were given another reminder earlier this year as to why we can’t be complacent about risks to client funds.
Retail investors were facing losses on funds they had invested with Beaufort Securities when it was declared insolvent in March, with its administrator planning to use customer money to cover the cost of insolvency proceedings.
The Financial Services Compensation Scheme stepped in but the episode reinforced that the financial services industry must still learn lessons about how to minimise risks to client funds from insolvencies.
Security of client assets is critically important and client asset custodians, who hold client assets for safekeeping, must take their responsibilities very seriously. These responsibilities were increased after the 2008 financial crisis when the Financial Conduct Authority (FCA), rigorously enhanced its Client Asset Sourcebook (CASS) in order to better protect retail investors. This Sourcebook provides rules for firms that hold or control client money and safe custody assets.
The actions taken by the FCA have helped establish the UK as a leading jurisdiction with respect to the safety and security of retail clients’ assets.
Specialist custodians that focus on servicing wealth managers should operate a low-risk business model focused on asset safekeeping and security. Being conservative, independent and un-conflicted, and having the CASS rules as the main regulatory focus of the business, helps to reduce risks to clients.
In short, the protection of clients’ assets should be at the heart of everything that a custodian firm undertakes, and it is this that Multrees aims for. The UK’s suite of rules, regulations and guidance, combined with an operation that works closely with Risk, Compliance and Internal Control teams, means Multrees has a strong holistic approach to client asset safety that permeates the whole business.
Add a low risk and conservative business model that focuses on capital adequacy, conflict avoidance and independence, and wealth management firms and their clients can be confident in Multrees.
Innovating in execution to make your life easier
Wealth managers face a number of constantly evolving challenges: increased regulatory pressure, greater margin pressure, and the need to meet the ever-changing demands of clients are just some of them.
At Multrees, we work with our clients in a unique partnership approach to develop innovative and quality solutions that allow them to focus on their clients and investment strategies. The development of our execution services offering, which we rolled out earlier this year and have continued to improve, is an example of this.
The new service lets advisers execute exchange-traded assets through existing systems architecture, making us a ‘one stop shop’ for execution and settlement.
We have recently added a range of new order types, making our service as comprehensive as possible. These include:
• Good ‘til cancelled (GTC) – the order remains active until either it’s filled or the investor cancels it.
• Good ‘til date (GTD) – the order remains active until a specified date, unless it’s been filled or cancelled.
• Fill or kill (FOK) – the order must be filled immediately in its entirety or it will be cancelled.
We are also developing the order type offering to include care orders (those that are carefully worked into the market in order to avoid market impact costs).
Making sure that our service is as comprehensive as possible helps our clients reduce the risk of managing multiple counterparties whilst enabling timely execution of trades and settlements in the market.
It is also important that we help our clients meet their compliance obligations and provide clear reporting for their clients. We already provide transaction reporting and are now developing best execution reporting functionality for our online portal, Multrees Compass. This will allow our clients to review the execution quality of transactions. We will also conduct a regular review of our broker network and quality of execution.
The development of our service will therefore give clients the scalability and efficiency of a truly automated end-to-end process. We will take care of all activity following the investment decision, allowing our clients to focus on the important work of servicing the needs of their clients.
Keeping the finger on the pulse
As a business with an intensely client-focused proposition, we find that the best way of meeting the needs of our clients is to have a regular open forum where we can discuss our upcoming projects with them.
Our Client User Groups, focus on regulatory change, product development and a roadmap of upcoming technology upgrades. They enable us to take on client feedback from an early stage and keep the needs of our clients at the heart of the constant evolution of our products and services. Our most recent Client User Group was held in August at our London office, where we discussed our upcoming projects, as well as wider issues affecting the industry at large.
The main topic of discussion was MiFID II and the requirement for those that provide investment services to disclose all associated costs and charges to their clients. Multrees will help provide reports on behalf of our clients, and we proposed a timeline for the development and delivery of these reports that puts us ahead of the April 2019 regulatory deadline.
The format of the reports will be developed in consultation with our clients, with several different options being looked at. We used an industry template provided by the Tax Incentivised Savings Association (TISA) as a starting point for discussion, before confirming the specific key requirements of our clients, such as the required granularity of the reporting.
The discussion also covered FX timestamps. We are implementing a solution that will allow FXs to be routed with automation, provide greater transparency and allow for the checking of best execution. The workshop provided us with a useful avenue to directly demonstrate this development work to our clients, ensuring openness and transparency throughout the process.
We also looked at a roadmap for some of our system upgrades. This includes processing improvements and client enhancements, following on from last year’s platform upgrade. For example, a further update to our custody platform will provide an increased number of private equity transactions types, to enhance the full service solution we have in place today. This builds upon our expertise in the custody and servicing of illiquid assets, which requires a more bespoke approach than market-listed investments.
The value of apprentices in an increasingly digitalised world
In a wealth management industry undergoing a process of digitalisation, the value of human solutions is being recognised.
Nearly 60% of investors surveyed in 2017 for an Accenture report on “wealth management in the era of hybrid advice” said they felt that human advisers provided the best customised advice.
While at Multrees our focus is on custody and investment administration rather than investment advice, we recognise that our clients feel it important that we have high quality staff that can work as an extension of their own operating team.
Developing great staff who are able to work closely with clients is therefore a priority for us as an organisation. We are particularly proud of our apprenticeship scheme, which helps to train school leavers in financial services as they start their career at Multrees.
Andrew McCaffery, our HR Manager, says that “We want to give something back and invest in the training of new employees. The main advantage in hiring an apprentice is that you’re able to lead them in how they develop from an early stage. We have five new apprentices this year and it’s excellent to see how they’ve all settled in.”
The apprenticeship lasts 12-18 months and involves a series of modules, governed by the assessment body that we work with. There are mandatory units involving numeracy and ICT, as well as other optional modules, all helping to build useful skills for the workplace and the ability to contribute to our high quality service.
“When I left school I was unsure of what I wanted to do, but I knew that I wanted to go somewhere I could progress myself and develop my skills,” says Jason Scott, a Data Management apprentice who has been at Multrees for two months. “I see an apprenticeship as the best of both worlds, where you’re able to gain training, as well as learning through working at the same time. Hopefully, in the next year or so, I can know my whole job role to a really good standard and make sure I also achieve the apprenticeship qualifications.”
Another apprentice, Kate Henry, has been at Multrees for three months and works in our Treasury department. “The key skills that I’ve had to develop are definitely organisational and time management skills,” she says. “You have to make sure that you’re on top of things, as there are a lot of different deadlines that we have to meet.”
The biggest room in the world is the room for improvement
Our process improvement work is helping us provide a more efficient service to our clients.
Innovation in wealth management is not just about embracing advanced technology like blockchain and artificial intelligence. It can be just as important to improve existing processes within a business. With this in mind, we’ve been working to improve business-as-usual processes to ensure that we offer a more efficient service to our clients.
Part of this work is automating many tasks that were previously manual processes. For example, our settlement team’s new trade check template can automatically populate some of the comments and has a button to create the ‘Nominee Payments’, ‘Expected Funds In’, ‘Settlement Today (All)’, and ‘Failed Trades’ tabs. This helps to save between two and four hours a week of resource, which can then be spent on more value-add activities!
Aiming to achieve operational efficiency is something that is very important throughout the wealth management industry. A 2016 report by Clearstream showed that 30% of wealth managers thought that improved operational efficiency was the most important thing that they needed to focus on. Efficiency gains can be achieved through automation and improved processes, with freed up resource being used to tackle the key priorities for wealth managers - staying on top of regulatory change, ensuring a high quality client experience and achieving business growth.
Our BAU process improvement project stemmed from our collaboration with the University of Surrey’s Centre for the Digital Economy. The first step in this programme was to get suggestions from staff of some of the processes that could be improved. Internal process improvement forums led to over 100 ideas being suggested by members of staff. From these, 13 ideas were identified as being priorities for improvement.
Business analysts Neil Balch and Nicole Lowes said ‘This has been a great initiative that we have enjoyed creating the roadmap for and helping the business stay on track. This has been both interesting and helpful, and it has been very rewarding hearing about the time and money saved implementing the improvements to Multrees’ current processes. We have also benefitted from getting to know people in the business that we wouldn’t usually work directly with and have also learned a lot about different areas of the business.'
Our can do attitude to Private Equity holding
Private Equity investment continued to have a stellar year in 2017 even surpassing the 2015 record by 9% to reach $681 billion, as capital poured in through traditional funds, co-investments, separate accounts and direct deals. Forbes reported that the asset class is set to make more records this year as new and current investors deposit more capital into their allocations. The magazine did sound a warning though, saying ‘both managers and investors need to be flexible and open-minded if they are to successfully negotiate the increasingly complex asset category.’
As an independent global custody, consolidated reporting and investment administration specialist, we know not all custodians are able to hold Private Equity. However, at Multrees we work with our clients as flexibly as we can to make it happen.
Due to the bespoke nature of many Private Equity funds and the lack of standard market instruments, each investment is assessed on an individual basis to identify the optimal custody arrangements. Funds often place legal or financial obligations on the legal owner of the investment, i.e. the custodian, rather than the underlying investor and at Multrees we address this by registering the holding directly in the name of our own nominee company.
We have experience of processing corporate actions, which by nature can be complex, to ensure the prompt processing of calls, distributions and the update of book costs. Clarity of reporting has traditionally been a challenge for custodians, and with our methodology, it provides transparency on the underlying private investments.
We have worked hard to structure our proposition to ensure we are well positioned to meet our clients’ needs. This year already looks set to be busier than ever as global Private Equity continues to be popular with investors.
For more information, please feel free to contact us.
Client Relationship Team - All hands on deck
Kevin Mitchell, CRM, on what relationship managers can learn from good sailors.
Our approach to client service is not dissimilar to how a sportsperson improves their technique to achieve great results. As a keen sailor, I can’t help but notice similarities between the perfect sail and how we achieve client satisfaction at Multrees. Sounds tenuous, but bear with me.
Envisage sitting back in the corner of your local sailing club after hours of midweek racing. The sun sets as you sip something cold and contemplate the day’s successes and areas for improvement. Anecdotes of decision making and strategy abound with heated passion.
Our approach to perfecting client service is a similar setting. We always take time to analyse, think and strategise. Listening to the views of others and questioning our decision making removes any room for complacency.
Adapting to surroundings and anticipating danger is essential for a good sailor. Similarly, within any business an efficient team is able to anticipate when conditions are about to change and adapt accordingly. Within such a fast paced environment, it’s paramount that effective client management and oversight is adhered to. Mitigating risk involves being proactive about navigating pitfalls.
Across all industries, the best measure of service is not on days of calm seas, but when the winds are high and there’s ample swell. Whether we are dealing with urgent client account openings, trade instructions or last minute reporting changes, the most important port of call is to isolate what is in front of you, find a solution and then work towards perfection.
A good sportsperson knows how to utilise good equipment. For us, one of our best pieces of equipment is our client and investment management platform, Multrees Compass. It’s imperative for us to consistently add value during our day-to-day interactions, as well as during more strategic relationship building initiatives. This is achieved through our other greatest asset – Multrees’ people.
Building good relationships is crucial when setting out on long voyages. Similarly, we take pride in the fact that our relationships with clients evolve into long-term strategic partnerships. That’s because we like to immerse ourselves in understanding their business. Our mission is driven by operating effectively as an extension of client firms. Championing and driving incentives – such as new product development, process improvements and striving for an STP provision – allows us to deliver for our client partners.
So when deciding how best to serve your clients, life experiences can often provide the answers to questions. For me it’s often “What would a sailor do?”
Getting to know you
Why I like my job
There are always plenty of opportunities to influence strategic change in the business; both operationally and directly for our client base.
Too many to choose from, but Tom Hardy films are always a winner for me.
Who would play me in a film about my life
Jim Caviezel or Leonardo Dicaprio.
I love music, but not a fan of going to gigs – I play the guitar.
“Doctor doctor, I think I’m a compliance officer”
Angus Johnston joined Multrees in August 2017 as our Head of Risk and Compliance.
In case you don’t know the rest of the joke, the doctor responds: “Well, have you double-checked?” Like accountants, there are a few jokes made at our expense. It’s not the most rock ‘n’ roll job in the world, but it’s certainly not a quiet one.
I joined Multrees last year, which was the next logical step given my career in enterprise risk management, as well as business governance and analysis. My current role is a progression of my previous experience, which merges the responsibilities of risk and compliance together. Joining the team felt like a natural evolution and it has been a great learning experience.
MiFID II is taking up a lot of my time at the moment, as we continue to build our capability to assist our clients in meeting their regulatory responsibilities. Longer term, I’m looking at how I can improve our policy, procedure and control framework so that we can support the business’ operating model as it grows. When the MiFID II deadline crept up on the industry earlier this year, we saw firms rush to implement the necessary infrastructure to comply with the transaction and trade reporting regulations. Fund managers are required to provide full transparency of their fees and product performance, and we are constantly evaluating new ways to help our clients pass this information on to their clients effectively.
Now that GDPR is just around the corner, we’re working to ensure that the way we store and use data is compliant ahead of the enforcement. On top of that, the Senior Manager Regime is expected to come into force next year which will require some additional regulatory adjustments. Thankfully we have an expert team at Multrees, so ensuring compliance with the new regulations isn’t a cause for concern.
In a world awash with failures, it is more important than ever to be on top of R&C within any business. Sometimes errors can be caused by fundamental system flaws, whilst some result from more simplistic human error. For example, the recent case of the Hawaii missile false alarm resulted from the ‘test’ and ‘live’ options sitting beside one another in a drop down menu. You better hope you don’t have fat finger syndrome!
Speaking of recent events, the “Beast from the East” brought weather chaos to much of the UK for several days this month. While some larger organisations struggled with business continuity meaning their operations practically shut down, by implementing our business continuity plans we were able to maintain service levels with virtually no impact to clients. This really brought home the value of proactive risk management.
Getting to know you
Why I like my job
What I like about Multrees is that everyone wants it to succeed; there are no pockets of people just plodding along doing their own thing. It’s proactive and not some big super tanker which means we can pivot very fast. Everyone is keen to solve problems.
Where Eagles Dare by Alistair McLean. A good old fashioned ripping yarn.
Best advice ever received
I read the meditations of Marcus Aurelius (Roman emperor from 161 to 180) on stoicism and liked what he said about listening to what people say. He teaches that others may have a legitimate point of view and so you shouldn’t project your way of thinking onto someone else. Good advice I try to apply on a daily basis!
Most embarrassing moment
At a corporate sporting event, I sent an ex-England rugby player, Mark Mapletoft, to the bar for me because I mistook him for a waiter. He fetched me a coke, which was very nice of him but I only had the one - I didn’t push my luck.
Budge over Brexit: 2018 is all about innovation and specialism
We have seen a vastly changing business landscape in response to economic events and shifting client needs over recent times – artificial intelligence, user experience, data integration & handling and blockchain. Now we’re into 2018, it’s difficult to predict what will come of political and economic affairs, but we can be sure that technological advancement, innovation, increased regulation and the need for specialist insight will be driving our industry’s agenda.
The wealth sector is known for being fairly traditional, but we are seeing signs of that beginning to change. Technology is moving through the gears at breath-taking speed and clients expect us to keep pace.
I’m excited about this year because it’s an opportunity for firms to seek partnerships with innovative outsourcers and develop specialist solutions, particularly as the new wealth generation present some fresh challenges.
PWC’s latest Global Fintech 2017 report showed that 77% of Financial Institutions will increase internal efforts to innovate and adopt blockchain as part of an in-production system or process by 2020. I expect these figures to increase as institutions look to gain a deeper insight into customer behaviour and ensure day-to-day operations remain efficient and cost effective.
In 2016 alone there were almost 27,000 new blockchain projects on the market, yet only 8% remain active, according to Deloitte’s paper. I think these statistics have the potential to change during a year of more blockchain R&D, so watch this space.
There’s a great need for specialism starting to surface across the industry. Tech-specialists are not the only ones in demand, regulatory experts are also highly sought after. With MiFID II and GDPR, businesses need to assess their current models and make necessary changes to comply with new laws. This is no easy feat for financial services firms and it will result in dramatic and extensive shifts throughout the industry, both in terms of staffing requirements and operational procedures. I’ll be monitoring this with interest! You can read about those regulations in this issue.
I can be found on LinkedIn, where I’ll be happy to hear your thoughts on any of these topics.
Until next time,
“GDPR, yes okay, but what does it mean for my business?”
Jaco Cebula, CTO, Multrees Investor Services, gets down to the details on the coming regulation
It is hard to imagine there is anything left to say about the upcoming General Data Protection Regulation, because it has headlined consistently for months. Despite this, many remain unsure of its implications and the changes necessary to ensure compliance. Our response is simple, you need to understand what the regulation means for your business, and then use it as an opportunity to demonstrate your firm’s robust approach to data governance.
It’s all about the data…
The GDPR – and the copious discussions surrounding it – is heavily focused on data. For financial services firms, the concept of high quality enterprise data, and the associated data governance should be no new thing. GDPR simply extends the scope of the enterprise data governance to include a wider range of personal data over and above standard financial metrics.
At Multrees, our clients rely on us to safeguard their data as well as that of their customers. We oversee thousands of investment accounts, with each one holding personal data, so we know a fair bit about the GDPR and the responsibility we all need to uphold.
For most businesses, the regulation will require a number of work streams to capture the following:
- Identification categorisation of personal data – including all underlying application databases, unstructured data and HR systems.
- Data providence – downstream and upstream analysis of the organisation’s data flows, both internal and external.
- Rationale for holding data.
- Mapping and retrieval of data, plus delivery mechanism – for example, an achievable goal may be to automate the Subject Access Request process from a downstream client, returning all data held across all system boundaries on demand.
- How to handle the process for erasure or for subject access request – key point being that these should not be ‘new’ processes, but will need to be refreshed for GDPR.
- How to report a data breach – clear understanding of responsibility, reporting mechanism, limitations of breach detection capability etc.
- Marketing, CRM and HR databases – greater risk of sensitive data.
- Upstream/ downstream clients and vendors.
This applies not just to customers and prospects, the regulation will impact internal HR data too. As seen with the final point above, businesses will need to assess whether their vendors are GDPR compliant. At Multrees, we know that our business can only move as fast as the slowest component in our process chain, and this includes our vendors. Ahead of the May deadline, 17 vendors will be assessed to ensure they are all compliant.
Multrees too will be subject to assessment as a vendor to all of our client firms, and will need to provide reassurance that we can respond in a timely fashion to regulatory requests.
The EU GDPR will be enforced on the 25th May 2018.
MiFID II transaction reporting: A race against the clock
The Financial Conduct Authority clock starts counting down the second clients make a transaction, but you don’t need to be Jack Bauer to file a report by the end of the next working day. This MiFID II rule is to help prevent market abuse, but reporting a trade can be a race against time if the data isn’t on point and quickly produced.
Clients who use our best-in-class digital platform can have the confidence and convenience of Multrees meeting the regulatory requirement on their behalf. Partnering with us as your outsourcing provider means we already store a wealth of data on each individual account that makes transaction reporting easy. And we can report directly to the FCA without our clients being burdened by any part of the process.
Transaction reporting applies to discretionary or execution only trades, forward FX and some corporate actions.
It’s just one of our quality back office services we provide for the wealth sector.
New year, new Execution Service
Clive Stelfox, COO, on how a level playing field can be a real game changer for Multrees.
Unbundling research costs from execution fees has levelled the playing field for companies like Multrees. MiFID II and its enforcement of cost transparency is a positive development, not just for us but also for our clients. Our new execution service couldn’t be better timed.
The Execution Service offers clients the opportunity of trading a range of asset types through existing systems architecture. This reduces the risk of managing multiple counterparties whilst ensuring timely execution of trades and settlement in the market.
The service covers a range of asset types and all major markets are served. The solution can be accessed through a variety of input methods (e.g. Multrees Order Management System, file transfer, SWIFT) and orders are automatically routed to brokers.
It has the following benefits:
• Comprehensive market coverage via multi-provider solution
• Simple and transparent commission schedule on a per trade basis
• Best execution ensured
• Management of counterparty risk
• Fully MiFID II compliant
As a specialist wealth management solutions provider, our Execution Service gives our clients the scalability and efficiency of a truly automated end-to-end process. Multrees can now take care of all activity post the investment decision to allow our clients to focus on servicing their clients.
Contact us using the details in the footer to discuss using our Execution Service.