IPS Capital Case Study

Client profile

IPS Capital manages the assets of UK and international private clients, trustees and pension schemes. Founded in 2007, it provides an active, multi-asset investment approach tailored to clients’ needs and risk profile, with the aim of delivering an optimal blend of capital protection and long-term growth. Portfolio decisions are based on in-depth institutional research and the firm’s custom-built risk analysis and management system, IPS ART.

The problem

IPS Capital’s problem was a common one faced by investment management businesses: because the systems it uses don’t have comprehensive validation rules built into them, the firm didn’t have total confidence in the accuracy of its data.

As IPS Capital’s Head of Operations Guy Shirley observes, poor asset data can lead to issues such as incorrect dealing instructions or tax treatment. Client data errors are a common factor in customer decisions to leave a business.

Regulatory compliance was a further consideration. Regulatory reports demand high quality, accurate data, while under the Financial Conduct Authority’s Senior Management Arrangements, Systems and Controls (SYSC) rules, executives need to ensure that the data used by firms to assess their risks is fit for purpose in terms of quality, quantity and breadth.

A key issue was that much of the data fuelling IPS Capital’s processes was stored outside its core portfolio management system (PMS) and used manually, notes Shirley. That presented two challenges. One was to move every bit of core data from wherever it happened to be into their PMS. The other was to create an environment where internal and external customers of the data had assurances that the data was right, and would stay right.

So IPS Capital turned to Data Compliance & Integrity (DCI).

The DCI solution

The smallest of errors or gaps in the data held against clients, their portfolios or the instruments a firm invests in can create a ripple effect throughout its downstream systems and processes. The DCI solution ensures investment managers maintain accurate and consistent data at all times, and so avoid the potentially critical failings that stem from poor or missing data.

DCI’s software continuously monitors the data using a comprehensive set of unique rules to identify any integrity and systemic issues, and provide detailed, evidential audit reporting. Sophisticated workflow tools automatically assign errors to appropriate users or teams, along with detailed solution narratives that can be used to proactively address the risks. A dashboard provides oversight of any data issues, keeping senior management fully informed with core KPIs at all times.

A major attraction for IPS Capital has been DCI’s collaborative ethos to solution development. “The DCI team’s experience and track record means they understand what we’re trying to do as a business,” says Shirley. “They’re good at listening to what we want, but also have the expertise to offer better solutions if they have them.”

The DCI team’s experience and track record means they understand what we’re trying to do as a business.

Business benefits

“Having DCI in our toolkit allows us to spot data issues quickly before they become a problem,” says Shirley. “It could be controlling the quality of the client data that feeds into our reports, to minimise the number of adjustments we have to tell clients about, or detecting erroneous client commissions processed externally. By having DCI plugged into our PMS, we know that whatever is propagated elsewhere will be consistent.”

Having DCI in our toolkit allows us to spot data issues quickly before they become a problem.

Much of the data that hits the portfolio management system is initiated by third parties, Shirley explains. “DCI allows us to identify problems and challenge the third party before it issues an updated tax report or something similar for a client. This has given us much more confidence in that space.”

Thanks to the DCI solution, IPS Capital can also carry out root cause analysis for any errors and make sure they don’t happen again. “It means we deal with issues as they come up, and that problems don’t go under the radar,” says Samantha Moore, Operations Control and Reporting Manager with IPS Capital. “Previously things happened that we only found out about months after the fact or didn’t realise were even there. But DCI highlights any trouble in good time. We are much more aware of our data quality now. And increasing that data confidence internally can have really positive effects, because so much is produced from the data.”

Increasing that data confidence internally can have really positive effects, because so much is produced from the data.

For example, IPS Capital recently migrated a business it had taken over into its PMS environment. “Doing that with the DCI controls in place gave us enormous comfort that the data quality was being checked from the word go,” notes Shirley. “The sort of errors one might expect after a migration like that just didn’t happen.”

Such automated data checking and quality improvement brings huge commercial value. As Shirley observes, investment management firms would have to employ various people to do what DCI does. “And someone checking this all day every day would do a worse job than DCI. Using DCI means staff are dealing with problems that have been found for them, not having to first identify those problems. So it is exception only.”

Using DCI means staff are dealing with problems that have been found for them, not having to first identify those problems. So it is exception only.

Next steps

Having seen the DCI system’s potential and started realising the benefits, IPS Capital is now keen to expand its use to other teams internally, says Moore. “Giving the compliance side of the business a tool that tells them if something they want to know about has happened would be a huge value-add.”