Asset data and Transparency … who is best positioned to manage it?

Aside from the uncertainty over the timeline, and long-term guarantees, there are a number of issues that still come up at conferences as unresolved and posing problems for all in the Solvency II world. Access to asset data is one that stands out. It may seem to be a simple question of receiving permission (or not) to receive the data but when you analyse it more deeply, there are some unresolved issues.

Insurers who ran the gauntlet in the early years of Solvency II seem to have received a consistent reaction from asset managers they approached for data, and it wasn’t a positive one. . Basically the story was, you can have the data if (a) you own us or (b) you have a segregated account. If not, you can’t have it, or certainly not within a given timeframe.

Effectively, asset managers are concerned about issuing data too soon after month end (T+1 to T+3) and about who receives the data. But, if they fail to provide this information to their investors, they risk losing assets. It is well known in the market that one asset manager has lost big insurer mandates, and that another lost out in the RFP process due to not being able to confirm that they would be in a position to provide holdings data within a given timeframe.

But asset managers have moved a long way over the past 12 months –  from operating a closed-door policy to thinking about their strategic positioning, and looking at the opportunities that could be there for their business.

What they fail to see is how much interdependency lies between asset managers. I have spent some time looking at fund of funds managed by about 10 asset managers that are household names. Nearly every asset manager would require data from each other to resolve granular portfolio data issues. For this reason, some asset managers have been approaching others with requests for asset data. Unsurprisingly, the response has not been positive. Asset manager to asset manager transfer does not logically work, at least one feels , not for the next decade anyway.

Asset managers have an interest in each other’s data, so it seems that the most sensible way to solve this problem is to find a third-party who does not have any interest in their data to resolve the issue.  Insurers do not have this asset data expertise and it would seem that third-party administrators would be best suited to providing a solution in this space.