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The Art of Implementation

Implementing a new portfolio accounting system is never accomplished at the press of a button. The process of ‘implementing” the system requires genuine rigor to ensure nothing is lost in the hand-off.

Balance sheets have expanded and increased in complexity to the point that the traditional patchwork of retail solutions is not up to the task. Many family offices and advisories are evaluating whether adopting a more institutional-grade accounting system to handle their portfolio cash management back and middle office operations makes sense. To help identify this need, family offices should ask themselves the following questions:

  • Does the expansion of our family’s or clients’ activities and legal entity and partner composition demand further expertise to accommodate current activity plus future plans?
  • Have our systems been able to keep up with our account aggregation, reporting and forecasting needs?
  • Is the regulatory and tax environment changing so quickly that we need a more sophisticated general ledger?

If the answer is ‘yes’ to any of the above, then typically it’s time to consider upgrading back and middle office functions. This means thinking about the first and most important step in an upgrading event — the implementation process.

Juggling formats

Whenever a new system is adopted, a firm’s legacy and continuous data represent the single biggest challenge. Since data is often stored in many different formats such as spreadsheets, databases and/or commercial general ledger (G/L) systems, bringing both financial and non-financial data from disparate sources into a new system can be a Herculean task. Do not underestimate how large and complex a portfolio accounting system implementation can be and how important it is to employ experienced and disciplined project management that includes effective risk assessment and sound contingency planning. While the big-bang approach might be feasible for some firms, in many cases, a phased conversion, migrating groups of accounts/portfolios with similar characteristics, is a more manageable approach.

Import, Import, Import

Your conversion strategy needs to carefully examine your reference data requirements. It needs to take into consideration the source(s) of reference data, how much historical data will need to be converted (tax lots, tranches, basis, etc.), and the amount of data cleansing that will need to be done during the conversion process.

From a technical perspective, a successful implementation process begins with fundamental and historical templates. Providers use these as a bridge to transport your data into the new accounting system. An effective template allows data to be organized into categories such as household, legal entity, vehicle and investor(s). It also allows the implementation team to configure the set of rules that will be used to validate the data. Once these steps have been completed, the implementation team will use the data in the template to begin initializing the accounts on the new accounting system.

A mature implementation process persistently tests and reconciles the data and applied rules and provides detailed exception reports throughout the process. Because this is an iterative process, the error reports should be archived, making any future queries against error logs easier.


Any major system implementation must be accompanied by a review of current processes and careful refinement of workflow, operating procedures, and even human resource practices. You will likely need to redefine some business processes and get people to work differently to make the new accounting system successful for your firm.


Critical to the success of a new portfolio accounting system are carefully designed interfaces – interfaces from the trading system(s) to the accounting system; interfaces to/from the pricing system; and interfaces to cash management, performance and attribution, portfolio valuation reporting, custody and more. Seamless and secure data sharing to and from all upstream and downstream systems is essential for firm-wide operational efficiency and internal and external data management. Some providers are increasingly turning to third-party aggregation and integration firms like PCR to provide dedicated data management services.

Work with a partner

A good partner should know what it is like to have a complicated structure, investment portfolio and specific client or family needs and be able to strategize during the implementation phase to make sure those needs are addressed. However, before the project begins, ensure that you have defined staffing requirements for the project. People selection plays a key role in the success of any project. Your project implementation team should include staff that participated in the system evaluation and selection process as well as dedicated core staff that stay on from testing through production to ensure continuity. You will require a strong project manager with the finesse to navigate your internal organization as well as the vendor organization. Above all, communicate. Regularly and proactively communicate project status, issues, and successes. A coordinated communication plan is a good way to reinforce project goals, timelines, benefits, and constraints.


Implementing a new portfolio accounting system is difficult, but with proper planning and a proven vendor process, it need not be a “mission impossible.” What you’ll get from a modern solution is the flexibility to quickly respond to changing market conditions and customer preferences, and give your firm the scalability it needs to grow.

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