Clime Asset Management - Case Study Summary

Business Overview

Clime Asset Management are a manager of individual and discrete private client portfolios. Founded in 2002, Clime has grown their business to a point where efficiencies of scale in mass portfolio management are going to be critical to the business moving forward.

A popular and key feature of their Individually Managed Account (IMA) service is the individual, transparent and personalised holding of securities for clients as opposed to the ‘pooled’ holding that characterise unit trusts. Like many industry participants, Clime realised that although this can be a significant business differentiator and growth driver, it also has an incremental increase in the costs of maintaining client portfolios.

The Challenge

The challenge for Clime was to continue to build their IMA business and yet achieve efficiencies of scale in the management of these client portfolios. Clime set about identifying the procedures and systems that could be improved to yield efficiency gains while supporting compliance obligations.

The company was using spreadsheets to manage portfolio re-balancing, trade execution management, allocation and compliance. The existing process was expensive in both time and cost and was restricting the company's potential to grow its business. Clime needed a solution that would streamline their portfolio re-balancing, trade management, compliance and administration processes.

The key challenges facing Clime were the linear relationship between increasing funds under management and managing the cost of administration. Re-balancing and allocating securities to individually customised customer portfolios created escalating complexities and subsequently increased costs. Clime had a real concern that their business model would not yield economies of scale with their forecast expansion as their processes were not scalable.

Clime understood that their dilemma was not unique in the market and saw an opportunity to leap frog their competition through best practice Individually Managed Account software. Clime scanned the market for a provider who could provide a system that:

• Reduced time-consuming administration tasks in a compliant manner.
• Operated at a summary rather than detail level so that research and recommendations can be applied ‘across the board’ rather than examining and assessing each client portfolio as an individual task.
• Removed the need for many spreadsheets as a management tool, introducing both process, risk management and efficiency into the business
• Was truly scalable to support Clime’s growing practice in years to come.

If this could be achieved the opportunity for sustaining growth without an incremental increase in costs became compelling. Clime felt that if they could achieve this goal, it would give them a significant competitive advantage from other providers in the market.

The Solution

Clime implemented a capability developed by Financial Simplicity, Australia's latest offering in IMA industry best-practice. Financial Simplicity has revolutionised Clime’s business model in the 3 months that it has been fully operational. "The system now completely automates mass portfolio re-balancing management and administration that used to take us hours to complete,” states Roger Montgomery, Clime’s Managing Director.

The major manual tasks previously associated with Clime’s portfolio administration processes have been completely removed from the work flow. Internal job functions are now clearly defined and easily managed. Financial Simplicity removed the need for detail level and/or exception-only processing. “It is now a hands-free process model that provides remarkable efficiencies for us.” observes Montgomery.

Results

Clime’s Managing Director, Roger Montgomery remarks:

“Financial Simplicity has so many benefits for us. Our lives have changed in the organisation. I used to re-balance the customer portfolios and would work back to 3am in the morning doing the allocations and reconciliations. Now I’m home at 6pm with the family knowing that the day’s transactions are complete and accurate. The system enables me to rebalance at any time, as many times as I need to, allowing me to take advantage of market opportunities as they arise.”

The success of the Financial Simplicity implementation at Clime is clearly evident to Roger Montgomery and his team.

“We can expand our business infinitely by running the Financial Simplicity system. Our time is now spent on research and not administration with the added bonus of being able to do a re-balance of individual customer portfolios or interdependent model portfolios at the click of a button. It’s a good position to be in.”

The Clime team can now boast on-line re-balancing capabilities for an infinite number of portfolios whilst taking into account individual customer preferences and constraints in real-time.

“Our customers now enjoy a level of service that leads the way in the market. By installing Financial Simplicity, we now spend time working for our customers rather than just managing them.” observes Montgomery.

For Clime, the company can now expand to its target levels whilst providing a better level of customer support. They see this as a major advantage in the market place. The company is enjoying qualitative paybacks by providing customers with high quality research recommendations and more personalised service.

“There was no option for us. We had no doubts about the Financial Simplicity system and the benefits we would reap from it. We didn’t even need to do a cost benefit analysis. The value proposition was so compelling. We had to go with Financial Simplicity.”