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Bull_20140121-winter-SamiraBouaou-2329-676x450A relatively predictable bull market doesn’t pose significant challenges to investment managers short of making the best possible investments.  Assuming one has embraced a decent platform and mission-critical systems are in order, investment managers don’t need to think too hard about reporting or much else during a boom.  Investment management firms are money-making machines, and in a bull market, most tend to do that well.

When markets and returns are kind, client reporting doesn’t get much scrutiny.  This is a point exemplified by the fact that during these times some clients don’t even bother to open up their statements.  In more challenging times, client reporting gets a level of attention that has the potential to be bad for business.  And yes, I know – even during those times – there are still clients that don’t look at their statements.

Over the years, report designers like myself have created a number of dazzling client reports that can look … well … not so dazzling when returns approach zero, or worse, become negative.  In the design process, most of the time is spent looking at accounts that paint a pretty picture.  Those are the accounts that get used in sample reports, so it shouldn’t be surprising when investment managers see how ugly an account with poor performance can appear.

A survivor bias naturally minimizes any attention these accounts might receive, but in the meantime, those reporting on accounts with sub-zero performance need to make decisions like “Should we show the floor of the graph when the account is negative?” and other presentation details that most investors would rather not contemplate.

No one I have worked with says, “We want our bad performance to look good.”  They just don’t want it to look any worse than it actually is.  Though some of the changes we make to reports are purely cosmetic, most of the report enhancements we implement are designed with one thing in mind: presenting performance fairly.

Some specific examples of modifications we have made include:

  1. creating a truly representative custom index for each account
  2. producing comparative index returns and risk
  3. isolating managed asset class and sector returns to produce select time period performance
  4. providing comprehensive performance summary reports that help the clients of investment firms put occasional anomalies in perspective

 

Flashback to Q1 2016 

Coming off a relatively flat 2015, traditional investors were likely dismayed to see double-digit negative returns just two weeks into 2016.  Since many of these same investors were drafting their investment commentaries explaining the past quarter, calendar year 2015, and the outlook for 2016 (ahem), these market conditions likely spurred some very focused thought about existing client reports and how they might look next quarter based on January’s performance to date.

2016-Q1

As a result of this come-to-Jesus moment, my phone was ringing more than usual.  In January of 2016, I fielded a number of calls from firms in a few different countries and across the US.  In almost every case, decision-makers were ready to pull the trigger.  They wanted new reports and they wanted them done quickly.

Investors planning on replacing their platform with a higher-cost alternative that ultimately might address the shortcomings of existing client reports may have reconsidered those decisions for the immediate future due to concerns over time to implement, predictability and increased costs.  I have made the point in the past and I’ll make it again here: it is typically much easier to replace your reports than your portfolio accounting system.

In simple terms, it generally takes hours, days or weeks to create new reports for Axys and APX users regardless of the content.  In contrast, the time required to change your portfolio accounting system in order to leverage pre-existing reports or make new reports on a different platform is more likely three to six months.  In some cases, investors that switch to another portfolio accounting system with new reports in mind find that they still don’t have those reports a year later.

These fundamental truths along with market conditions no doubt led investors that use Advent Software products to seek out and retain the expertise of replang and SSRS report designers like me to create and implement a variety of new performance reports designed to address concerns about their existing performance reports.

In my own experience, one prospect provided me with the specifications for their new performance summary report and requested that the report be done in a week.  In another instance, I was tasked with facilitating a reclassification of securities, regeneration of performance history, and creation of a new performance report based on the reclassification before the end of January.  In each of these engagements, working as a team with responsive and motivated clients, we were able to start and complete large-scale, high-impact projects in an accelerated time frame.

As a seasoned professional services consultant, I do my best to address the needs of my retainer clients – that keep me in business – first and any new prospects second, so these non-retainer clients were fortunate that I was able and willing to commit to projects that required fast tracking on short notice.  Though I regularly take on new projects, the most interesting thing about that quarter’s new business was the timeline imposed.

There was definitely a sense of urgency associated with these reporting projects that usually isn’t there, and though consultants like me appreciate new business opportunities, investment managers cannot usually expect those results if they haven’t forged a relationship with a consultant ahead of time.

With an established, highly-motivated expert on retainer, you can call that person on impulse, have a high-level conversation in minutes with someone that is familiar with your systems, get a responsive quote for additional work if necessary, and potentially have a new report or automation created before you might be able to effectively start a dialog or get an adequate response from an alternative source.

When the financial markets take a turn for the worse, one might assume that folks like myself who make a living off of providing software products, custom reporting solutions and consulting services aimed at automating and integrating investment management systems would suffer a downturn in business.

While that is ultimately true, should the market ever become so difficult that my customers become distressed or go out of business, it is not true of “corrections” that occur in the market.  These events force the hand of investors – making them scramble to take stock of reporting, trading and any other systems that their businesses rely on with an aim to enhance, automate and improve.

The best run investment firms are constantly striving to improve their mission-critical systems and willing to retain the talent that empowers them to make changes to those systems whenever it becomes necessary or advantageous.

Investors dodged a bullet in Q1 of 2016, but doing so in the future may require changes to your client reports. I am hopeful that 2019 will be another banner year for investors, but sooner or later something is bound to change.


About the Author: Kevin Shea is the Founder and Principal Kevin Shea Impact 2010Consultant of Quartare; Quartare provides a wide variety of technology solutions to investment advisors nationwide. For details, please visit Quartare.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@quartare.com.

Axys 3.8.7 is Here

ks_leaf_smallIt is that time again… Advent has released a newer version of Axys 3.8.x.  Those of us that looked at the Advent Product Support Matrix distributed a couple years ago with a certain level of trepidation can take a deep breath since we now have a clear replacement to those versions that were once aggressively scheduled for various decreasing levels of support.

A couple of weeks ago, we installed Axys 3.8.7 at one of my client sites and had no problems whatsoever with the upgrade. My client was running Windows 7 (SP1) on their workstations and Windows Server 2012 R2 on their server hosting Axys. Though my experience to date with the latest version of Axys has been somewhat limited to reviewing the new features, installing the product, and confirming that the automation and integration we created for Axys 3.8.6 still worked, it seems to be a solid update.

A quick summary of new functionality

Axys 3.8.7 adds the following reports and capabilities:

  1. Expanded report functionality related to reconciliation
  2. The Reallocate Dividends Tool (which was previously a custom report)
  3. Currency Exposure with Market Value by Asset Class (412.rep)
  4. Country Exposure with Market Value by Asset Class (413.rep)
  5. Performance History by Region (653.rep)
  6. The ability to open aud and trn files from the Axys file open interface
  7. Mouse scroll capability in certain files
  8. Enhanced Generic Date Variables.  In the past, these variables – like {edlm} or {last} – have been easy enough to remember or figure out.  There are a number of new generic dates values, and you will need to refer to the documentation to figure them all out.

This update also introduces the following additional optional periods to the Performance History for Selected Periods Report:

  • Day to Date
  • Fiscal Quarter to Date
  • Latest 3 Months
  • Latest 6 Months
  • Latest 9 Months
  • Fiscal Year to Date
  • Latest 2 Years
  • Latest 7 Years
  • Latest 10 Years
  • Latest 15 Years
  • Latest 20 Years
  • Latest 25 Years

The Performance History for Selected Periods Report has never been difficult for me to modify so that it includes the reporting periods users desire, but these updates will make required customization to this report a less frequent request.

Advent also claims to have “improved the accuracy of multicurrency calculations when a transaction causes the balance of a cash account to cross zero.”

Some minor complications related to Windows 10

Oddly, older versions of Windows 10 (v1709 aka Fall Creators Update and v1607 aka Anniversary Update) are considered compatible with Axys 3.8.6 and certain newer versions of Windows 10 (v1809 aka October 2018 Update or v1804 aka April 2018 Update) are reportedly compatible with Axys 3.8.7.  Yes.  You read that correctly.  Axys 3.8.7 actually seems to drop support for some of the previous versions of Windows 10.

This is a marked change from the usual support tendencies.  Typically, more recent versions of an operating system would be supported and older operating systems might be dropped.  In this instance, Axys 3.8.7 continues to support Windows 7 (SP1) and Windows 8.1, but drops support for certain older versions of Windows 10 that it originally supported in Axys 3.8.6.  I can’t say whether Axys 3.8.7 literally won’t work with the older versions of Windows 10.  Perhaps Advent has just decided to limit support to the newest versions of Windows 10 in order to reduce the complexity of supporting Axys 3.8.7 on Windows 10.  It could also be that, due to the way most versions of Windows 10 eventually force their updates to occur, users are unlikely to be running these older versions any longer.

Summing it up

None of these improvements are earth-shaking in and of themselves, but altogether, the updates reflect an effort to make substantial overall changes.  I, for one, appreciate these incremental improvements and hope the trend continues in future versions of Axys.

Advent’s documentation “strongly recommends that you install its products (and any upgrades and updates) with the assistance of a consultant from Advent’s professional services organization”, but if you have regularly installed Axys and its companion products in the past, you shouldn’t have a problem with this update either.


About the Author: Kevin Shea is the Founder and Principal Kevin Shea Impact 2010Consultant of Quartare; Quartare provides a wide variety of technology solutions to investment advisors nationwide.

For details, please visit Quartare.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@quartare.com.

WhyMicrosoftThe moment I almost forget what a pain Windows 10 is, this message pops up on my PC.  Why did you have to ask me this question again, Microsoft?  Why must you remind me of my suffering?  All the details of what I have experienced are too much to cover in a single blog, so I will do my best to focus on the big issues.  As such, I won’t be whining about Windows 10 not consistently recognizing my finger, but that is a common theme here.

Nor will I spend the time rehashing various feature disruptions associated with forced updates to the degree that they deserve.  Most notably, Bitlocker comes to mind, but I cannot bring myself to go there in any significant detail. Suffice it to say that when I lost access to my encrypted Bitlocker drive due to an update, the documented fix required reinstalling an older version of Windows 10 to recover my data.  I chose to buy another hard drive since it was less complicated and time-consuming.

At one point in January of this year, I estimated that the combined dysfunction of Windows 10 and Office 365 had cost me at least two full days of productivity for my own system, never mind other people that I provide support to.  In that month alone, I personally spent over an hour a day on average dealing with issues that you would never see on a Windows 7 PC running a non-365 version of Office.

As an IT professional with thirty years of experience, I can honestly say that the Windows 10 operating system (OS) may be the most intrusive and unreliable OS ever created by Microsoft.  Computers and operating systems are intended to make our work lives more efficient and less challenging, not less efficient and more challenging.  On a regular basis, Windows 10 and its cohort, Office 365, thwart productivity through seemingly incessant and meaningless updates performed in the almighty name of compliance and security.

artificial-intelligence-155161_640

Even the most basic functionality of turning off your computer is challenged by the HAL-like behavior of this OS.  On my way out for a recent Thanksgiving road trip, I attempted to shut down my PC (four times).  Each time, my PC appeared to shutdown it came back on again.  It was clearly going to do this ad infinitum, which led to a few expletive laden Google searches like, “Windows 10 will not $&%#ing shut down!”

This is not the first time I have seen this particular issue in Windows 10 or similar quirky bugs like the black screen issue, so my patience was tested.  Eventually, I rediscovered and used the “hold the left-shift key and shutdown” method to wrestle my insubordinate PC into submission, then for good measure I actually unplugged it too.  Let’s see you restart now, Windows 10!  Thankfully, it didn’t.

Sure, this OS looks good on the surface, and in some ways it is better than its predecessor, but there are some major drawbacks.  For example, trying to use an app arbitrarily deemed as “not stable” or “incompatible” results in Windows 10 uninstalling that app without users’ permission.  Windows 10 won’t necessarily remove the app as soon as you install it, but when Windows applies updates again, it will remove the offending app and does not notify users.

Want to postpone an update or set the time updates are supposed to occur? … Go ahead.  There are settings for that, but whether you go through the exercise of configuring those settings or not, Windows 10 pretty much seems to do whatever it wants to do when it wants to.  I feel like I have lost control of my computers that run Windows 10.  Microsoft is in charge of them now and decides when and how I can use them.

If you have a critical online meeting, work that needs to be done right now, or a plane to catch, you can almost count on Windows 10 attempting to update or do some other thing that doesn’t need to be done at that exact time.  I don’t know how it does this, but it does.  It could just be that it is always doing an update.  In a nutshell, if you are familiar with the printer in the movie Office Space, Windows 10 is that printer.

Given my experiences, recommending this OS to anyone before they felt that they truly needed to move to it would be willfully irresponsible.  That said, I suspect there is a small contingent of users that Windows 10 helps stay out of trouble.  I know some of those people, but the masses should not have Windows 10 on their computers when there are other more reliable – as defined by computers that do what you want them to do when you want them to do it – alternatives.

Many of my financial services customers have likely moved to Windows 10 or plan to move to Windows 10 in the future.  For those businesses where compliance and security are paramount, staying the course on an aging OS like Windows 7 will become more difficult, given that Windows 10 is widely perceived as being more secure.

Understandably, for corporate use Windows 10 may just be a desktop environment that is used to gain access to a more secure and redundant cloud environment.  As such, the pain points I describe related to Windows 10 could be less of an issue for these users.  However, consigning users to Microsoft’s decisions about how they can use their PCs at any given time is scary.

Ultimately, the path Microsoft is on with Windows 10 is either headed toward total authoritarian rule over personal computer systems, or toward the eventual demise of Microsoft’s stranglehold on the PC OS market in favor of a more agreeable and obedient operating system.

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By way of disclaimer, I am using Windows 10 Professional, but know that Windows 10 Enterprise LTSB, which will soon be renamed to LTSC in 2019, follows the more traditional release policy and is not updated with the frequency of Microsoft’s other versions of Windows 10.  Based on my experience to date with Windows 10 Professional, the Enterprise LTSB product would probably be a much better user experience.  Also, related to Windows updates, my advanced options are set to Semi-Annual Channel (Targeted) with the option to defer feature updates by up to 180 days and security updates by up to 30 days.  I realize that I could gain a greater level of reliability and reduce the problems I experience by changing to the straight Semi-Annual Channel, which would delay feature updates by an additional 4 months.  My opinions are the result of using Windows 10 as both my primary desktop and notebook OS for the past two years.


About the Author: Kevin Shea is the Founder and Principal Kevin Shea Impact 2010Consultant of Quartare; Quartare provides a wide variety of technology solutions to investment advisors nationwide.

For details, please visit Quartare.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@quartare.com.

iStock_000000129907XSmallIn my experience working with investors across the nation both small and large, there is at least one recurring theme.  Their sophisticated workflows hinge on semi-automatic processes that rely in part or completely on people.  I suppose that is a good thing when operator oversight is a plus, but when I get involved most of these firms have realized that they literally want to push a button and have things done as simply, quickly and reliably as possible.

Ten years ago, one of my clients experienced organic growth so rapid that it drove their firm from one that managed hundreds of millions to billions in assets in less than two years. While investment managers are known to consistently take pains to build processes that allow their businesses to scale efficiently, explosive growth can strain or disrupt established workflows.

In this case, the effect of the growth was dramatic. It demanded that certain processes be automated. One of the most important processes was related to trading foreign stocks in local currencies.  The influx of trades from new business was overwhelming.  Back-office employees that were already working hard needed to work even longer hours to keep pace with the incoming business.

More specifically, the firm’s back office needed to manually enter both transactions to trade currencies and the associated equity trades. In the multi-currency version of Axys, purchases and sales of foreign stocks in local currency require three transactions: two to exchange the currency and one to buy or sell the security.  As a result, every purchase or sale required two additional transactions related to foreign currency exchange.  They were entering three manual transactions in the trade blotter for every trade they made – even partial fills of an outstanding order required these transactions.  The entries to the trade blotter were tedious, time-consuming, and a potential source of operator error; the firm knew they needed to automate them.


Money concept

Understanding the Required Workflows

As part of their process, the firm waited until they got the executed FX rates from an assortment of brokers before they could enter the corresponding trades and post them in their portfolio accounting system.  This backlog of trades created a slew of manual trade blotter work that ultimately had to be done after hours to make sure the firm was ready to trade the next day.

A homegrown Order Management System (OMS) populated the Axys trade blotters of the traders at the company with open trades. Those blotters were utilized to track open trades and never actually posted.  Once the execution info was reported, our automation needed to create the additional transactions that back-office staff was entering manually. The workflow also required that the trade blotters for individual traders be updated to reflect that the executed trades were no longer part of the open trades. In effect, our automation needed to rewrite the traders’ blotters as well as the trade blotter of the operations employee running the app and post the latter.


Building the Prototype/v1

In a relatively quick timeframe (40 hours), we built a working prototype using Visual Basic that:

  1. loaded the outstanding trades from each trader’s blotter into an Access database
  2. created a process where outstanding trades could be selected and associated with trade execution info to generate the required trade blotter entries
  3. imported executed trades to the trade blotter for review and posting
  4. updated the open positions in the trader’s blotters
  5. produced reports (via Crystal Reports) detailing trades pending and actual execution info

In short, the app pulled pending transactions from their homegrown OMS and allowed users to associate foreign currency execution rates and other specifics of trade execution with specific orders to produce the necessary Axys trade blotter transactions automatically.  Once the execution info was recorded, the user would exit the app, which in turn automatically updated the user’s trade blotter and the traders’ blotters.

Version 2

The next version of the app was under development for over six months and cost nearly 40k, but it met the needs of the firm. The core functionality of v1 with respect to workflow was preserved, but we added many features.  In terms of the initial cost, v2 was expensive, but over a period of nearly ten years it required almost no maintenance. The multi-currency trade automation solved an immediate and urgent need when it was originally developed, and continued to save the firm hours of back office processing work every week for nearly ten years, until it was finally decommissioned in 2015 as a byproduct of the firm’s transition to Moxy and Geneva.

Though the application wasn’t cheap to build or maintain initially, it paid for itself many times over during its tenure as an integral part of the daily workflow at firm that knows the value of automation.


About the Author: Kevin Shea is the Founder and Principal Kevin Shea Impact 2010Consultant of Quartare; Quartare provides a wide variety of technology solutions to investment advisors nationwide. For details, please visit Quartare.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@quartare.com.

This article is a follow-up to two previous articles: one that addresses the future of Axys and another that helps Axys users figure out whether they are on the right version of Axys for their firm.

Almost two years ago, I speculated on what would begood-bad-uglycome of Axys and whether Advent Software would answer to a growing demand among the Axys user base for major product enhancements after several years of minimal but consistent maintenance updates.

Among other things, my blog detailed an expectation for the same old thing as we have seen in the past – a maintenance release – but I also hoped that we would see a major release.  Since the current version was 3.8.5, it made some sense that version 4.0 might be the next release.

At their conference in 2013, Advent formally announced a major release that would include a user interface (UI) overhaul and the addition of permissions.  Advent also indicated that Axys 14.1 would be released in Q2 of 2014.  This was good news to many Axys clients.  I was off by 10 versions, but happy nonetheless that a major new release was in the works!

While I commend the UI overhaul and see those changes as a necessity given today’s technology standards, permissions have never been that big a deal to me or the clients I work with.  As the go-to technical resource for many firms that use Axys, I found we could almost always work around this issue.  The announcement of a major release no doubt made users hopeful that Axys would get the long-awaited attention it required.

 

Understanding Advent’s new versions…

Advent has embraced a versioning system that makes 14.1 the next release after 3.8.5.  From 2014 forward, there are two scheduled point releases one in Q2 and another in Q4. Advent’s other products also share a similar versioning and release schedule.

 

2014

As April 2014 went by I needed to remind myself that there were three months in Q2, and the release could just as easily come out in June.  Like many users I waited and listened, but heard no great news about 14.1.  As it turned out, 14.1 was a beta with no more than a handful of users outside of Advent partner firms participating in testing.   14.2 was released on a limited basis.  Thanks to the new version numbers, some Axys 3.8.5 users were thinking, “Wow! The latest release is 14; we really have fallen behind.”

Relatively speaking, a very small group of users had begun using Axys v14.x.

2015

Axys 15.1 was also released on a limited basis.  Those Axys users that want to try out the latest Axys version now need to fill out a questionnaire detailing information that helps Advent determine whether the software in its current iteration will work satisfactorily enough for them to allow or discourage testing of the Axys in each particular user’s environment.


Ten Things You Should Know About Axys 15.x

  1. The UI is a ribbon bar similar in style to more recent versions of Office.
  2. Though the software and data still resides locally, Axys 14.x and beyond require an internet connection to authenticate users via Advent Direct.
  3. The file formats are the same as Axys 3.8.5; that is one piece of good news for integrators.
  4. The ancillary products that work with Axys remain the same for now. Report Writer Pro, DTCC, Dataport and Data Exchange. There has been no change to those products yet.
  5. Reports can now be produced from the Axys program rather than the reports program (rep32.exe) alone.
  6. The function of specifying lots when positions are sold off has changed. It is no longer a pop-up.  Now users must specify the close method in a comment line that immediately follows the transaction.
  7. An additional server running SQL CE is recommended for the parallel testing phase.
  8. Scheduled scripts need to be amended to include authentication credentials.
  9. It is not available to Axys users running the single user version, but support for single user installs is planned for v15.2.
  10. Advent recommends running Axys 15.1 in a test environment for at least a quarter.

Axys users should understand the need to do a phased and methodical release.  This need is predicated on how long Axys has been around and how many programs and interfaces connect with it.  As it was designed and marketed to be, Axys is still the hub of operations for many firms.  By and large, Axys users have had the product for several years and many have built and or purchased additional tools that integrate with Axys.

Advent wants users to start using 15.x, but only after they have thoroughly tested all of their processes.  The easiest way to accomplish that, as Advent recommends, may be running Axys 15.x in parallel with Axys 3.x for an entire quarter.  One of the best things Axys has going for it is the fact that it works so reliably.  With that in mind, the last thing Advent would want to do is destabilize the platform and call their clients’ favorite thing about Axys into question.  However, a greater sense of urgency with respect to facilitating Axys 15.x implementations and bringing more substantive enhancements to Axys would be refreshing to see.

In 2013, Advent made an informal and perhaps unspoken promise to continue to make substantial improvements to the Axys platform through announcing their upgrade plans and committing additional resources to make enhancements to Axys.  Though Axys users can clearly see the signs that Advent has made a significant additional technology investment in Axys, the majority of Axys users have not been able to take advantage of those improvements yet.

Future improvements aside, the primary reasons to stay the course with Axys remain the same as they have for quite some time:

  1. it is an established standard
  2. function over form
  3. simple to host and maintain
  4. relatively low-cost versus most emerging alternatives
  5. a platform you can build on

Firms that want to adopt the latest version of Axys in 2015 will need to work to make it happen.  I suspect that the best-case scenario for many firms would be for them to start testing with 15.x in 2015 and eventually go live in 2016 after year end processing has been completed.  Given the competitive nature of today’s portfolio management systems, the slow motion release of major Axys updates could lead to more firms leaving Axys (and possibly Advent) to pursue alternative solutions with enticing features they may be able to take advantage of on a more predictable timetable.



About the Author: Kevin Shea is the Founder and Principal Kevin Shea Impact 2010Consultant of Quartare; Quartare provides a wide variety of technology solutions to investment advisors nationwide.

For details, please visit Quartare.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@quartare.com.