10 Ways to Successfully Monitor Investment Portfolios for Institutional Investors

If you are not monitoring your portfolio, you should.

Institutional investors have a massive responsibility when it comes to how to best monitor investment portfolios. It is a complex and involved process. What is more, if not done properly, it can result in the loss of millions of dollars for their organization, members, and investors.

While it is a very big job, institutional investors aren’t alone in it. In this article, we’ll examine 10 ways that they can do this crucial aspect of their job more efficiently and effectively.

1. Hire Outside Firms to Help Monitor Investment Portfolios

One of the most valuable tools that you can use to monitor investment portfolios is by using outside experts who specialize in this niche skill. It is their job to watch any and all securities actions, help analyze your eligibility, and help file claims on your behalf.

The best way to find these people and companies is to let them come to you through an RFP (request for proposal). In your proposal, include exactly what you’re seeking and accept ready-made offers from some of the best firms.

2. Communicate with Those Firms Regularly

Obviously, it isn’t enough just to hire these firms, you also must regularly communicate with them. They should send you periodic reports annually, biannually, quarterly, or monthly, depending on your needs and the agreement you’ll both sign. These reports should contain both analytics and records of how they’re working for you.

Don’t wait for them to come to you every time; otherwise, it could be too late and your investors may lose out. Be sure to send them updates of your own, especially when your company or firm makes relevant changes.

Don’t wait for them to come to you every time; otherwise, it could be too late and your investors may lose out.

10 Ways to Successfully Monitor Investment Portfolios for Institutional Investors

3. Sign Only Nonexclusive Monitoring Agreements

Just as your business is distinct in specific ways from your competition, so are monitoring firms. That is why it is a smart idea to work with more than one. To do so legally, make sure that the agreements you sign are nonexclusive.

Working with multiple firms means that similar information will be presented in different ways, which makes it easier to understand. It also offers you more protection. Finally, in the event that you need to move to litigation, these firms will compete over your business, which saves you money and makes sure you wind up with the best.

4. Institutional Investors Must Make Their Own Decisions

If you’ve been successful in business, you have probably already learned that you must never let anyone else make decisions for you. The same rule applies here.

Certainly, take the advice offered by counsel into serious consideration; that’s why you hired them. But maintaining your independence prevents them from giving you misdirected guidance (as does hiring multiple firms). You don’t want to decide to litigate based on shaky evidence, only to learn of your mistake thousands of dollars down the line.

5. Rely on the Right Technology

Monitoring is done by machines just as much as people, which is why the hardware and software that you use, as well as those used by whichever outside monitoring firm you hire, is so critical. Technology can make or break you.

6. Use Active Monitoring Techniques

Monitoring investment portfolios isn’t something that you can delegate to another firm and then forget about. You, too, need to be actively involved in the process. In addition to receiving (and fully comprehending) their reports, stay in regular contact and request informal updates more frequently.

In addition, some of the monitoring must still necessarily fall on your shoulders. After all, if there is a failure, it will be your responsibility to answer for it.

7. Keep a Close Eye on Class Action Settlements

Millions upon millions of dollars every year go unclaimed from class action lawsuits, and it happens to many people. Don’t let your company or your clients be among them. While the outside firms you hire will do some of the heavy lifting, you need to keep an eye on them yourself.

Make it a daily or weekly task to skim through recent news and court reports about class action suits being filed and litigated, and make smart decisions about where to invest your time from there.

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8. Designate and Delegate

Institutional investors have a huge responsibility, and because of this, they also have a lot of work to do. That is why it is so important to designate tasks and delegate wherever possible.

One of the biggest ways you can do this is by hiring or selecting someone to handle proof of claims. This is an enormously time-consuming aspect of this process that can easily be taken over. What is more, it takes time and expertise to handle it properly.

Remember that when you pass these items along, you aren’t forgoing responsibility for them, so check in with your delegates and designees frequently.

9. Accurate and Efficient Record Keeping

It should go without saying that accurate record keeping is important, but it is even more so in this industry than perhaps anywhere else. In a field wherein you have no idea what could be relevant to future litigation, it’s an absolute must.

You also need to be efficient. You have a massive amount of information, no matter how you keep it. Luckily, there are many tools that can help firms with this enormous task. Consult with experts about how they can best serve you.

10. Protect Against Data Breaches

You are the gatekeeper for a lot of valuable information, from your clients’ sensitive personal information, to their investment portfolio and more. Today, the big business in crime is found in cyber breaches that collect and then sell this kind of information.

Nothing is more dangerous to your firm than data breaches. You should also have monitoring firms protecting you and your clients in this realm, so that you can act swiftly and quickly seal any digital hole someone can find.

There is no denying that monitoring investment portfolios is a very big and important job. However, there are several things that institutional investors can do to make it a bit easier. Let me know how you handle it in the comments below.

Eduard Korsinsky | Litigation View

About the Author: Eduard Korsinsky

Eduard Korsinsky has represented clients in securities cases, derivative actions, consumer fraud, and complex commercial matters for over 20 years. Since 2003, He has been a Managing Partner of Levi & Korsinsky LLP, a firm with over 65 employees in four offices.
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