Moving Beyond Excel in the Front Office

Jon Chandler

Director, Research

Jon Chandler has 20 years of experience in the financial services industry. Prior to joining Cutter Associates in 2014, Jon was a senior business analyst for State Street Global Advisors (SSGA), where he was involved in a number of projects for the front and middle office, including UAT design and execution for an order management system (Fidessa IMS), the implementation of a web-based due diligence platform (FundInsight), and an enterprise solution to support blended benchmarks. Prior to his project roles, Jon was a principal in fixed income trade operations at SSGA. He has extensive experience with post-trade operations and applications, such as OASYS/CTM, PORTIA, MBSExpert, and FailStation. Jon earned a bachelor of arts in history from the University of Florida and an MBA from Northeastern University.

Recent research assignments and publications include the following:

Alternative Investment Systems
Cutter Benchmarking: Alternative Investments
Cutter Benchmarking: Derivatives and Collateral Management
Cutter Benchmarking: Investment Risk
Cutter Benchmarking: Performance Measurement and Attribution
Derivatives and Collateral Management Solutions
Execution Management Systems
Managed Data Services
Order Management Systems
Outsourcing Solutions
Performance Measurement and Attribution Systems
Portfolio Analytics Solutions
Private Debt
Risk Management Systems
The Evolving Front Office Support Model

Cole Castelain

Director, Consulting

Cole Castelain, a Director at Cutter Associates, has been with the firm since 2018. At Cutter, Cole has been involved with a wide variety of strategy projects including operating model assessments and system search and selections for business capabilities servicing investments, operations, and client servicing. Cole has also completed implementations of OMS and Performance systems with asset managers, insurance companies, and pension funds. Cole began his career at Cutter in our Data management practice assisting with data governance assessments and data framework implementations with a variety of asset managers and owners.

Cole’s experience with fixed income products is robust. Prior to joining Cutter, Cole worked in multiple capacities for Capital Group in support of its fixed income business including as a business analyst on a cross functional team responsible for launching automated optimized fixed income vehicles, implementing systems, and assisting in the development of technology. Cole began his career at Capital Group as trade analyst supporting the fixed income trading team. At Cutter Cole has assisted multiple Fixed income focused asset managers including an active Muni-Bond Manager

An experienced project manager, Cole has ensured the on-time delivery of multiple complex projects. These included two Aladdin implementations, an issue management system, a data governance framework, and an operating model. Cole leverages his familiarity with Agile, Kanban, modern development software, and BI tools to clearly track milestones, execute initiatives, and monitor issues. Cole reports on these metrics utilizing PowerBI to present clear and timely status reports.

Feb 15, 2024

Most investment managers, if not all, remain overly dependent on Excel spreadsheets. But Excel is not always the best solution.

They say that necessity is the mother of invention. And while ingenuity and resourcefulness should be encouraged, sometimes it’s better if we just find the right tools for the job.

And yet in our billion-dollar industry of investment management we often see the opposite approach. We look for shortcuts and Band Aids rather than addressing the real issues, sometimes creating more problems for ourselves when we try to get creative.

Most investment managers, if not all, remain overly dependent on Excel spreadsheets.

But Excel is not always the best solution. Your front office needs the right tools for the job.

The Problem: Excel Is Always Available

Excel workbooks are a fundamental part of any investors’ day and they provide a convenient and flexible tool for many tasks. However, when Excel is used to accomplish tasks that it’s not designed for, it signals that your firm lacks the right technology to operate in today’s complex and challenging environment ─ or even to continue to compete in tomorrow’s world. And we all know that the problem with Excel macros is that they break, and often only a select few individuals know how to fix them.

Excel falls short of meeting the complex demands of modern investment management firms. Although Excel can help automate processes and augment outdated technology, it also creates a number of challenges, including the following:

Inherent errors and risk: Manual data entry, complex formulas, and version control issues increase the risk of errors that can have detrimental effects on investment decisions and portfolio performance. Audit capabilities are also limited.
Lack of real-time data: Data can go stale, and rarely do firms build Excel tools that are enriched with real-time data.
Collaboration constraints: Excel’s lack of robust collaboration features hampers teamwork, data sharing, and the consolidation of information across multiple stakeholders.

The Solution: Purpose-Built Vended Solutions for Investment Managers

Excel is not going away anytime soon, but we need to stop trying to get creative, and instead find the right tools for the job.

Purpose-built vended solutions offer a range of advantages over Excel. Here’s why they work:

Increase scalability: Fit-for-purpose vended solutions are designed to handle large data volumes and accommodate evolving business needs, with appropriate controls and safeguards. Designed for industry best practices, they allow investment managers to expand their operations without compromising performance, efficiency, reliability, and security.
Accelerate time to market: These vendor products should have dedicated product development resources continuously working on new features to meet industry and regulatory requirements. Development is not hampered by the same capacity constraints or a backlog of other competing projects that your firm may face with proprietary tools and Excel.
Allow the front office to refocus: Robust vendor products have the potential to reduce the number of touchpoints for the front-office users and will lessen “swivel chair” activities for portfolio construction and portfolio analysis. Instead, more time is available to focus on the investment decision process.

Ensure Adoption in the Front Office: Strategies for Success

But adoption of these vendor tools is another story.

Adopting purpose-built vended solutions requires a well-executed change management approach in which you will need to convince stakeholders to invest in the new solution.

A detailed gap analysis can help with this, especially if you can identify the pain-points that have forced those users to seek their own solutions in Excel.

The front office may be required in some configuration design and testing, so it will be important to demonstrate how the vendor solution will help in a way that is worth the initial disruption.

Here are some key strategies to ensure successful adoption by the front office:

To learn more about this topic, or speak with a research analyst or consultant, contact us at [email protected].