Optimizing Oversight: Strategies for Effective Unit Pricing Management

William Walker

Senior Director, Consulting

William is a proven initiative-taking leader with proficiency in managing, defining and implementing innovative technology, operations and client data management solutions in the Asset & Wealth Management industry. Experience working with tier 1 asset, wealth, pension & superannuation fund managers in multiple global jurisdictions, including Australia, Asia, United States and Europe.

He has extensive knowledge of the full suite of front to back-office processes and technologies with experience devising, developing and delivering strategies in Australia as well as globally. He specializes in managing high performing delivery teams with direct involvement in technology, operations, data management, front office teams, and senior stakeholder management.

William spent 17 years at JPMorgan, initially focusing on client reporting solutions for asset managers and pension funds within the Securities Services business in London. After relocating to New York he was a central figure in the design and development of their first strategic mobile enabled, global client reporting and data management solution that was ultimately central to the client implementation effort.

Following his time in Securities Services William then took a key role in the Asset & Wealth Management Technology leadership where he was responsible for the delivery of portfolio management and portfolio implementation tools for the Private Bank Discretionary business, including; pre-trade controls, mandate management portfolio/model management and discretionary product launches. A key part of this role included managing the relationships with the Portfolio Management & Trading teams as well as senior Middle Office stakeholders. In addition to that William was a lead stakeholder in the selection process for appointing an outsourced Custodial service provider for a new product line.

In moving to Sydney William took a role as Fund Services Product Manager where a core function was to lead the response to Custodial RFPs.

Following his career in the industry William moved into consulting where he has led the search, selection & implementation of various platforms and the establishment of associated operational processes across the Australian asset, wealth and superannuation industry. This has included the implementation of Matrix and establishment of the data governance framework and middle office function. Most recently he is leading the program to define & deliver an investment platform for a major superannuation fund.

William holds a Bachelor of Commerce (Honours) from the University of Edinburgh.

Jul 10, 2024

Many factors go into selecting the best unit pricing oversight model for a firm - regulations, product complexity, service provider capabilities, risk appetite, disaster recovery, and, of course, cost all come into play.

In Cutter’s 2021 Benchmarking survey, Managing Vendors and Service Providers, participating firms referenced the following three challenges directly related to unit price oversight:

The unit price oversight process is a time-consuming and manual process
Monitoring and regularly reviewing service levels and key performance indicators are critical
Numerous and evolving regulatory requirements need to be met, and organizations must be ready for internal and external auditors

Source: 2021 Cutter Associates Benchmark Survey - Managing Vendors and Service Providers

Key Unit Pricing Challenges

Let’s expand on the challenges raised by firms in our Benchmarking survey.

Time-Consuming

When deciding to outsource, firms often underestimate the time it takes to perform oversight on unit pricing. Because firms are familiar with their own product peculiarities, validating a service provider’s unit pricing processes can take more time than you might have allocated.

Service-Level Monitoring and Management

Critical to the unit pricing process, service levels protect both parties and ensure clarity of expectations. They require well-defined roles and responsibilities, a clear understanding of requirements, and considerable negotiation.

Regulatory and Audit

Adherence to regulations is paramount, while firms increasingly wish to maintain a strong regulatory posture via internal and external audit processes. A key tip is to leverage your provider's thought leadership and best practices as guidance.

Regulatory Expectations

Not long ago, many firms shifted responsibility for unit pricing to their service providers. Clearly, this perspective has changed ─ partly due to pressure from regulators that have reminded firms of the difference between accountability and responsibility!

What do regulators expect from firms?

Review and alignment of valuation and pricing methodologies

Provide evidence of checks on unit prices calculated per client guidelines

Clearly understand their business continuity/disaster recovery capability to ensure the unit pricing function can still function during a crisis

Produce prices in the event of a service provider failure

Defined exit strategy in case the firm decides to bring the function in-house or to switch providers

NAV Oversight Pricing Model

Looking at NAV oversight pricing models, we can revisit the two traditional models and understand newer alternative models that provide more oversight and risk management capabilities.

Risk Management

Firms are encouraged to consider their risk/cost appetite when selecting an oversight model that best suits their needs. Firms with relatively low complexity may find the traditional models to be sufficient for their needs, whereas other firms may require an Independent Validation model.

Possible Vendor Solutions?

Depending on where a firm sits on the risk/cost matrix, you may wish to consider a vendor solution. A broad range of solutions are available, ranging from those integrating NAV Validation into their platforms to those with NAV Projection and Contingency NAV at their core.

Rethinking your unit pricing model or vendor strategy? Connect with Cutter for more information at [email protected].