F&C Management Ltd

Case Studies

F&C Management Limited

Fund Administration and Middle Office Outsource Supplier Selection and Implementation

F&C Asset Management is a significant investment management firm with circa £95 billion assets under management*.

F&C launched a strategic initiative to simplify its operating infrastructure and introduce greater flexibility within its cost base. A key component of how this could be achieved was outsourcing the majority of F&C’s Middle Office Operations and by consolidating those Back Office functions that were already outsourced (or which remained in-house) with a single third party Service Provider. 

Business Challenge

The challenge comprised two distinct phases:

  1. To select the most appropriate outsource provider for the joint F&C and Thames River Capital business model and agree contractual terms including service levels, operational responsibilities, organisational changes and migration plans.
  2. To migrate F&C and Thames River operations from their existing platforms and service providers, onto the selected third party platform. This would include a significant IT integration and operating model re-engineering programme. 

Solution Approach

The approach used to choose a preferred provider was a rigorous and thorough selection process based on responses to a detailed RFP and subsequent due diligence. After final evaluation, State Street was selected as preferred provider and a Heads of Terms agreement was signed in February 2011.

To provide contemporary industry input to the selection, Knadel, as an outsource specialist consultant, was engaged by F&C to assist with the selection process and on-going programme management post selection.

F&C management understood the significant magnitude and complexity of the upcoming migration onto the State Street Enterprise platform and, in assembling the expertise for the Project Team engaged Knadel to resource a number of key roles within the programme including overall programme management; design and management of the operating model changes and the management of the IT build to integrate multiple front office systems data flow to and from the State Street Enterprise platform. Knadel also contributed to programme governance and steering group meetings.

The transfer of fund administration services was run in parallel with the middle office migration beginning with the F&C UK OEIC ranges in Q4/2011, followed by F&C Alternative Investment vehicles, F&C Luxembourg fund platforms, Thames River Capital funds, F&C Investment Trusts and finally the F&C Dutch (Stichting) funds at the end of 2012. Transitions were synchronised with the termination provisions of existing contracts and funds’ financial year-ends. 

The migration of middle office services was linked to the design, development and deployment of a new technology implementation and numerous changes to the legacy operating model. This required substantial internal testing prior to joint system integration testing (JSIT) with State Street. When JSIT commenced a project management regime was implemented with a clear set of success criteria incorporating test outcome thresholds that needed to be met to progress to subsequent phases of both JSIT and user acceptance testing (UAT). The overall conversion process and procedures were also tested over three “dress rehearsals”.

Conversion onto State Street’s Enterprise platform was completed in a single weekend in March 2013. Following the migration of the Investment Book of Record, Knadel resources worked closely with F&C Management and staff over a 4-week stabilisation period on issue management and resolution as well as completing any remaining handover items.

Knadel Value

Knadel fulfilled key roles during the selection and implementation stages of the Outsource Programme providing day-to-day management, governance and advisory services, resulting in continuity and coherence for the period of the programme.  Knadel staff integrated and interfaced effectively with F&C’s change teams and senior management. Knadel provided experience at every stage of the process including:

  • Outsourcing service provider selection
  • Contract and service negotiation
  • Programme and project management
  • Operating model design
  • IT and data strategy

Outcome and Business Benefit

Having successfully completed the outsource of Operations and consolidated Fund Administration services with a single provider, F&C was able to meet the stated objectives of achieving cost flexibility and simplifying its operational infrastructure. The change enabled F&C to realise substantial consequent savings within its retained model whilst maintaining a strong platform.

*as at 31 December 2012.