Firing Up The Production Line: Optimising Product Governance and Assessment of Value Reporting

Andrew Glessing, Harry Shearer, Will Ayrton

How our clients are setting themselves apart from their counterparties

The Financial Conduct Authority’s Assessment of Value (AoV) came into effect in September 2019. Since then, UK Authorised Fund Managers (AFMs) have established frameworks to support the review of their fund ranges’ ‘value’. Over time, the availability of competitors’ reports has led to a convergence of methodologies and a move towards a common market approach to the assessment.

AFMs are now looking at ways to produce interactive reports that differentiate from competitors and integrate additional factors such as ESG and Liquidity into the assessment.

Given the effort required to complete these assessments, and the growing appetite for industry standardisation, we are finding there has been a shift of focus from meeting the minimum regulatory standards to optimisation of business processes and innovative design. This has resulted in firms reviewing their Product Governance functions to determine whether they are suitable to accommodate the evolving regulatory landscape and increased demands on the AFM Board’s time.

Figure: An AFM’s journey through the Assessment of Value

How can you optimise your AoV Process?

AFM’s are moving their processes into a state of ‘BAU’ and disbanding costly project teams that were required to meet the initial regulatory requirements. With that comes a need for streamlining processes and reducing costs to support the annual, and often manual, nature of this reporting requirement. This is especially pertinent for AFMs that have agreed to produce more frequent internal value reports for their Boards. We have seen our clients look to the following themes to support that optimisation.

  • Methodology simplification – Review previous years’ methodology and simplify approach where possible without impacting integrity of the assessment
  • Master data – Consolidate data into a golden source with an appropriate operating model established to maintain, refresh and distribute on-demand
  • Align with wider Product Governance – Realise the synergies of having a centralised Product Governance function and aligning the AoV with other reporting requirements
  • Automate report production – Transform tactical reporting work arounds used for Year 1 into a strategic technical solution that can support multiple business functions
  • Introduce workflow functionality – Develop a workflow tool to coordinate multiple business functions and introduce effective audit trail for review and sign off
  • Scalability – Develop a scalable solution that can be used for different fund ranges or geographies that can accommodate changes in regulatory jurisdiction

The benefits of establishing a centralised Product Governance function

There is a global regulatory focus on reinforcing the accountability of AFM Boards. By establishing a centrally coordinated Product Governance function that can standardise the governance process across all ranges, you are able to realise the synergies that can be made across the different reporting requirements, for example Annual Product Review, ESMA Costs Supervision and Liquidity Framework. This also helps to improve the consistency of Management Information (MI) that you are producing, empowering the board to make more insightful strategic decisions around longer term objectives.

Alpha has supported its clients in taking the next step towards optimising its Product Governance by implementing workflow and semi-automated reporting solutions. Leveraging technology allows firms to streamline their Assessment of Value process but also to enhance Product Governance across all fund ranges and regions. We have seen these tools result in the following benefits for our clients:

  • Scalability of governance and reporting
  • Interconnected business functions and reduced bottlenecks
  • Improved data accuracy
  • Standardisation of reporting and improved quality of output
  • Semi-automated reporting resulting in reduced spikes of effort and risk of human error
  • Improved audit trail and more robust controls
  • More streamlined sign off process
  • Faster time to market for report delivery

How can Alpha support you?

At Alpha, we have a proven track record in helping our clients assess value. In the first year, we delivered end-to-end AoV projects for over £250bn of UK fund assets, from regulatory impact through to methodology and reporting, working closely with all major data vendors. We continue to support our clients to scale and streamline related Product Governance work, across multiple global jurisdictions. We would be delighted to discuss our work further with you and to share further insights. If it would be of interest, please contact Andrew Glessing, Harry Shearer or Will Ayrton.

About the Authors

Andrew Glessing Alpha FMC
Andrew Glessing
Head of Regulatory Compliance and Risk

Andrew is an Executive Director at Alpha and heads up the Compliance Practice in the UK.​ With over 25 years’ financial services experience, including 7 years at the FSA/FCA, Andrew has led numerous compliance and regulatory projects for clients. Work includes regulatory change, investment compliance, conduct of business, controls, governance, oversight and risk management.

Harry Shearer
Senior Manager & Product SME

Harry is a Senior Manager at Alpha and has over 10 years' experience in asset management and consulting. He has a broad range of consulting experience, with a decade working on major product, regulatory change, technology, cost optimisation, operating model, and outsourcing initiatives, across a range of multinationals.

Will Ayrton

Will is a Manager at Alpha with over 5 years' experience consulting within the financial services industry. Will has a range of regulatory and product experience, including the implementation of a global Asset Manager’s Assessment of Value and the delivery of a Product Governance workflow and reporting solution.