GOVERNMENT AND INSTITUTIONAL INVESTMENT SURVEY REPORT 2017

Transcription

1 GOVERNMENT AND INSTITUTIONAL INVESTMENT SURVEY REPORT 2017

2 INTRODUCTION Treasury and investment accounting professionals face numerous challenges: transparency to their constituents; shifting regulatory requirements; investment policy compliance monitoring; pressure to provide accurate and timely information to stakeholders; and more. Clearwater Analytics recently conducted the 2017 Government and Institutional Investment Survey to explore these challenges and the solutions governments and institutions have found to solve them. Survey respondents, including accountants, managers, directors, treasury and investment professionals, controllers, portfolio managers, and more, provided information about team structure and strategy, key accounting and reporting processes, and investment allocations. The following report provides an overview of the investment accounting and reporting environment for governments and institutions and key benchmarking data so organizations can compare their processes, strategies, and common challenges against those of their peers. ABOUT CLEARWATER ANALYTICS Clearwater Analytics provides industry-leading webbased investment portfolio reporting and accounting services for government entities, institutional investors, corporate treasuries, insurance companies, and investment managers. For more than a decade, Clearwater s daily-aggregated and reconciled solutions have delivered quality portfolio transparency for clients such as City of Newport Beach, Orange County Transportation Authority, Knights of Columbus, Sagicor, Guarantee Trust Life, Cisco, Facebook, Oracle, and Starbucks. Clearwater reports on more than $2 trillion in assets across thousands of accounts daily.

3 Table of Contents SURVEY HIGHLIGHTS 4 DEMOGRAPHICS 6 TIME AND PROCESSES 12 CHALLENGES 20

4 SURVEY HIGHLIGHTS Growth vs. Scalability As shown in the graph on the right, team size was primarily divided between small and large, with most respondents working on teams of one to two, or eight or more. Both groups included those at organizations with large portfolios of more than $5 billion. For team size, governments and institutions are choosing between two distinct strategies: growing or scaling. Growing team size simply means adding personnel to overcome new challenges. Scaling, on the other hand, is achieved by leveraging tools and technology to do more work without adding staff. With respondents managing such large and seemingly complex portfolios with teams the fraction of the size as others, it is clear that many organizations are implementing the right tools to achieve true scalability >8 > $5B $1 - $5B $500M - $1B $250 - $500M $100 - $250M < $100M SURVEY HIGHLIGHTS 4

5 Automated Processes vs. Manual Processes 39% of those surveyed no longer rely on spreadsheets and manual data entry for investment reporting, with the majority using some type of technology for automation. The other 61% still rely on manual spreadsheets and data entry. Of that group, an overwhelming 90% rely on custodian and asset manager data to aggregate and reconcile data, and then calculate accounting entries, which slows reporting and period-end close times considerably. This information is telling: governments and institutions have room for improvement when it comes to updating their data management infrastructures. Automating investment accounting and reporting processes is a key way to do this. Gaining Efficiency Through Automation More than 50% of respondents take longer than a week to close their books at period-end, and 17% require more than a month to close. Long and cumbersome close processes are a hallmark of manual investment data aggregation and reporting for institutions and government entities. Leveraging an automated investment accounting and reporting platform can be a key tool many institutional investors do not take advantage of to help them gain efficiencies. Infrequent Interperiod Reporting Having daily access to investment policy compliance status, portfolio risk exposure, and overall performance metrics provides transparency for constituents and stakeholders, especially during times of market volatility. However, 73% of those surveyed do not provide interperiod reporting. SURVEY HIGHLIGHTS 5

6 DEMOGRAPHICS With survey responses from a wide array of professionals who handle a variety of portfolio sizes, the 2017 Government and Institutional Investment Survey captured a snapshot of industry challenges, perspectives, and strategies leveraged by treasury professionals. DEMOGRAPHICS 6

7 Which of the following best describes your role? 21% 6% Other Treasury/Investment Professional 4% Portfolio Manager 31% Accounting Professional 27% 11% Controller Manager/Director DEMOGRAPHICS 7

8 What is the approximate size of your institution s investment portfolio? 16% > $5 billion 35% < $100 million 9% $1 $5 billion 13% $100 $250 million 11% 16% $500 million $1 billion $250 $500 million DEMOGRAPHICS 8

9 Which assets are you currently invested in? 81% 72% 67% 51% 43% 33% Government agencies Certificates of deposit Money market funds Municipal bonds Commercial paper Corporate debt 28% 24% 19% 15% 14% 9% Mortgage-backed securities Mutual funds Asset-backed securities Common stock Treasury Inflation-Protected Securities (TIPS) Preferred stock 5% 5% 5% 15% Forwards Futures Options Other NOTE: Respondents were asked to check all categories that apply to their organizations, so the sum of all percentages is greater than 100%. DEMOGRAPHICS 9

10 Approximately how many people work on your investment finance/accounting team? 31% 32% 20% 11% 6% or more DEMOGRAPHICS 10

11 What is your target duration? 14% 32% > 24 months months 14% months 4% 1-3 months 24% 11% 4-6 months 1% 7-9 months months DEMOGRAPHICS 11

12 TIME AND PROCESSES Treasury professionals and accountants rely on a variety of tools and processes to meet their investment accounting and reporting requirements. New GASB requirements have only added to these challenges, and governments are relying on many types of solutions to deliver the in-depth reports they need. We asked survey respondents about the time they spend on investment accounting and reporting, which software solutions they employ, and more. TIME AND PROCESSES 12

13 What systems or services do you use for investment accounting? 61% 48% 26% 24% Spreadsheets and manual data entry Custodial statements Rely on asset manager(s) for reporting Web-based reporting solution 16% 16% 9% Consultant Installed reporting software Other NOTE: Respondents were asked to check all categories that apply to their organizations, so the sum of all percentages is greater than 100%. TIME AND PROCESSES 13

14 Do you hire external asset managers/consultants to help with GASB disclosure reporting? 70% 24% 6% Yes No I do not work with external asset managers TIME AND PROCESSES 14

15 How much time does it typically take you to close at period-end? 22% 28% 24% 17% 9% 1-3 days 4-7 days 1-2 weeks 2-4 weeks > 4 weeks TIME AND PROCESSES 15

16 How many outside asset managers/brokers do you work with to manage your portfolio? 28% 25% 27% 20% None One Two > Two TIME AND PROCESSES 16

17 Approximately what percentage of investments are managed in-house? 7% 23% Not managed in-house < 25% managed in-house 6% 44% 100% managed in-house 7% 13% 75% managed in-house 25% managed in-house 50% managed in-house TIME AND PROCESSES 17

18 Do you currently provide interperiod reporting to other government agencies? 73% 21% 6% No Yes this interperiod reporting is performed in-house Yes this interperiod reporting is supported externally TIME AND PROCESSES 18

19 Have new GASB standards required any of the following? 24% 11% 5% Reorganization of existing processes Change of custody or reporting needs Acquisition of third-party data provider 3% 66% 1% Hiring of additional team members None Other NOTE: Respondents were asked to check all categories that apply to their organizations, so the sum of all percentages is greater than 100%. TIME AND PROCESSES 19

20 CHALLENGES Regardless of an institution s size, long-term goals, or portfolio complexity, investment and accounting teams are concerned about how to overcome their data-related challenges. We asked survey respondents about their immediate concerns and biggest challenges. Their answers provided perspectives directly from the institutions affected by GASB reporting and insights on executing a thorough, timely, and accurate filing process. CHALLENGES 20

21 How satisfied are you with your current investment accounting process? 47% 27% 14% 8% 4% Extremely satisfied Satisfied Neutral Unsatisfied Extremely unsatisfied CHALLENGES 21

22 How disruptive have new GASB requirements been to your established reporting processes in the last two years? 52% 28% 16% 4% Slightly disruptive Unaffected Disruptive Very disruptive CHALLENGES 22

23 Which GASB report has been the most challenging for you to complete? 45% 28% 9% 10% 8% GASB 31 GASB 40 GASB 68 GASB 72 Other CHALLENGES 23

24 Best Practices Through Benchmarking Industry benchmarking is an important practice for institutions dedicated to evaluating and improving their investment strategies and investment accounting and reporting processes. At a time when technology is revolutionizing how organizations are managing, analyzing, and effectively leveraging their data, treasury professionals benefit from participating in the conversation around operational best practices and solutions. Clearwater is dedicated to providing benchmarking data that will help treasury and investment accounting professionals do their jobs more effectively. This data will be updated in subsequent annual editions of this report. INQUIRIES (208) sales@clearwateranalytics.com info@clearwateranalytics.com clearwateranalytics.com WORLDWIDE OFFICES Boise, Idaho Edinburgh, UK Copyright 2017 Clearwater Analytics. All Rights Reserved 8.17 v1. CC CHALLENGES 24