Copyright 2002

Confidential
Copyright 2002

The MIS Handbook

for Asset Managers

Guido Cornella (SW/ZRH)

Bernd Heinemann (GE/MUN)
Martin Huber (GE/CGN)
Markus Kobler (SW/ZRH)
Philipp Koch (GE/MUN)
Patrick Schmid (SW/ZRH)
Niklas Siebenmorgen (GE/STU)
Gregor Theisen (GE/FRA)
PREFACE

• Document is a sanitized version of an MIS

handbook McKinsey has developed during a client
engagement
• Primary objectives of the document are to share
–Key processes to build up an MIS for an asset
management client
–Endproducts of an MIS project
• Although client details have been removed and
client-specific formats have been changed,
document is for internal use only (customize
exhibits for client use)

Source: McKinsey 1
MIS HANDBOOK – OBJECTIVES
Description Benefits
• Documenting the MIS design • Understanding concept,
and implementation process logic and scope of MIS
MIS concept with focus on the underlying reporting
rationale and implementation
approach

• Describing processes • Documentation of activi-

to produce a monthly MIS ties, processes, and
Monthly reporting report responsibilities needed for
sustainable monthly MIS
reporting

• Sharing key success factors • Creation of awareness for

Success factors and major challenges for strengths and weaknesses
and challenges ongoing successful report of current MIS reporting
production

• Outlining the potential future • Identification of opportu-

Future development of MIS nities to leverage currently
development reporting and methodology implemented MIS process

Source: McKinsey 2
TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

Source: McKinsey 3
 Client Logo Copyright 2002

Management Information System

Handbook
Version 1.0
Last updated xx yy, zzzz

Contact person:
First name, last name
E-mail
Phone number

Source: McKinsey
CONTACT DETAILS ILLUSTRATIVE

Name Reporting unit E-mail Phone

•… •… •… •…

All persons involved in

process to be listed here

Source: McKinsey 5
INDEX ILLUSTRATIVE

Keywords Page

• Absolute period performance …

• Administration expenses …
• Assets under management …
• AuM allocation …
• AuM per headcount …
• AuM reporting …
• Average asset volume per new client …
• Benchmark linking …
• Benchmark use …

All keywords to
be listed here

Source: McKinsey 6
TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

Source: McKinsey 7
PURE SIZE DOES NOT EXPLAIN EFFICIENCY OF ASSET MANAGERS …

Theory Reality (1997 - 2000)

Operating expenses per AuM
bp
0.010
Costs
per 0.008
AuM 0.006
0.004
0.002
0.000
AuM 0 200 400 600 800 1,000
AuM, EUR billion

Economies of scale in AM due to cost No clear scale effects observed

savings in • Average operating expenses not lower
• Research with growing AuM
• Fund administration • Size (in terms of AuM) is limited as
• Corporate services (e.g., HR, controlling) explanation for efficiency

Source: McKinsey 8
… BUT OPERATING EXPENSES ARE WELL EXPLAINED BY AuM PER
HEADCOUNT
Statistical analysis Key insights
Change in operating expenses
(in bp), Percent
120
100 • AuM per headcount used as proxy to
80 capture operational efficiency
60
40 • Significant correlation between change
20 in AuM per headcount and change in
0 operating expenses (in bp)
-60 -40 -20 -20 0 20 40 60 80 100
-40 – AuM per headcount accounts for 36%
-60 Change in AuM/FTE of variation in operating expenses
-80
Percent
– AuM per headcount is relevant
efficiency driver with significant F-value*
Dependent variable: Operating expenses – Significant size of coefficient
Coefficient t-Statistics
• Results highlight importance of making
Intercept 14.7 3.6 non-financial data transparent
AuM per -0.4 -4.4
headcount
Adjusted R2 = 0.36 F-Value: 19.37

* F-value measures significance of identified correlations

Source:McKinsey 9
EXPENSE POSITION DETERIORATED IN ASSET MANAGEMENT
INDUSTRY…

Leading AM players AuM

EUR billion

CAGR
10.6%
2,453
2,404
AuM per headcount
2,077
1,814 EUR million per headcount

CAGR
1997 1998 1999 2000 -2.5%
107 109
Headcount 102
99
Number

CAGR
13.5% 24,741 1997 1998 1999 2000
22,084
20,455
16,928

1997 1998 1999 2000

Source: McKinsey 10
… AND EFFICIENCY DECREASED CAGR
Cost-income ratio, percent

19.6% 89
58 68
52
• Cost-income ratio
deteriorated in
2001 due to lower
2.5%
revenues while
66 64 68 71 costs remained
unchanged
• AM industry now
2.5% paying for buildup
79 79 78 85 during years of
growth
• Level of trans-
parency created
1.6% supports develop-
82 87 85 86 ment of lean
organizations

1998 1999 2000 2001

Source: Company reports, McKinsey 11

REQUIRED MANAGEMENT TOOL – MANAGEMENT INFORMATION
SYSTEM (MIS)

Implications
Immediate access to financial/non-
financial information

Transparency on key performance

indicators

Management
Information System Identification of issues through internal/
external benchmarking

Appropriate strategic/operational
decisions to improve profitability

Source: McKinsey 12
BUSINESS EXAMPLE – MICROSOFT MIS

Before Remedy Impact

Cost-income ratio
Percent
51
-11
-11
40

Financial mess due to Global financial

rapid growth reporting system
• Top management • Streamlined reporting
make decisions on processes, e.g., books
no/outdated closed in 3 days
1995 2001
information, e.g. • Standardized data and
– Headcount unknown reporting templates Improved operational
– 21 days to close • Benchmarking of BUs effectiveness
books possible • Corporate services staff
– Geographical and • Central data reduced
BU managers warehouse • Cost savings of USD 2.6
squander resources • Implemented in billion over 6 years
to build local data 1 year
provision

Source: Harvard Business Review, McKinsey 13

MANY CLIENTS IN SIMILAR SITUATION LIKE MIKROSOFT
Prior status
• Management without
centrally implemented
information/reporting tool
covering entire business
regions, and business lines
• Management with strong need
to obtain quick access to
accurate information about
financials and key
performance indicators
Source: McKinsey
Expected impact of MIS report
• Management to gain
comprehensive overview of
– Basic financial data
– Revenue and cost drivers with
explanatory power for financial
result
– Performance along value chain
• Enhanced level of transparency
to be achieved for key regions
14
TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

15
MIS BUILDUP – PROJECT APPROACH

End product

Concept design MIS implementation

Timeline • 2 months • 4 months

Activities • Understand AM business • Collect data
logic – Design data collection
– Compare existing process
reporting systems – Collect and evaluate
– Develop AM earnings data
tree – Follow up missing/
• Derive KPIs incorrect data
– Identify available data • Buildup database
– Define key indicators – Develop database
– Design reporting structure and data-feed
template process
• Identify scope of MIS – Start database imple-
• Validate concept mentation (structure and
– Discuss with top and data transformation
middle management routines)
– Integrate feedback – Test routines and
populate database
• Produce report

Source: McKinsey 16
MIS CONCEPT DESIGN BASED ON BUSINESS LOGIC Key value drivers
AND KEY VALUE DRIVERS
1 Map business logic 2 Agree on key value drivers

….
Fee ….
revenues
…. ….
Revenues ….
….
Net interest ….
income
….
Miscella- ….
Operating neous
…. ….
income
Marketing
….
….
….
….
Adminis- ….
Expenses tration
…. ….

…. Monthly reporting of manage-

Depre- able number of KPIs that
ciation capture key value drivers of
…. AM business, and are up-to-
date and comparable across
business/regional units

Source: McKinsey 17
BUSINESS LOGIC – EARNINGS TREE 020116MS8_MU_0213_v5 (Dobberke)_12h00

AuM Retail Brokerages Number of existing Customer Past performance

Management fee customers satisfaction (actual) Transparency of
Average Sales/promotion Repeatability of investment process
IFAs AuM beginning Inflows equity Reinvestment rate
management fee of period global activity process Communication of trans-
parency of investment
Retail Bank Inflows equity Inflows existing Avg. reinvestment Mix of existing Level of performed process
AuM Inflows service
Europe customers volume customers
Advisory fee
Average Insurance agents Inflows new Number of new Past performance
Inflows
advisory fee Outflows customers clients (perceived)
balanced
AuM of out- Others
performing funds Inflows quant Awareness
Fee revenues Performance fee Avg. performance
premium Institutional Pension funds Consideration
Interest income Loading fee
Net income Inflow Insurance
Asset mix companies Availability
Net revenues Interest expense Past performance
Entrance fee
Average load fee Fee by asset class Banks Ultra-high net worth
Revenues from Delivery client (>EUR 5m)
investment (net) Exit fee Delivery
Outflow Industrial clients High net worth client
Miscellaneous AuM Abs.per.perf. (EUR 0.5 - 5m)
Trading revenues Other provision Average asset volume per
Mix of new clients Awareness
revenues new client
and fee revenues Average exit fee Trust funds equity global Affluent client
Average commission (EUR 0.1 - 0.5m)
Other revenues fee per Aum Abs.per.perf Weighted Consideration
Commission – inhouse/ Absolute period Research
acquisition expenses equity Europe benchmark Mass market client
Commissions* Inflows performance (<EUR 0.1m)
Commission – Abs.per.perf. Out-/Under- Portfolio Availability
Third party balanced performance management
Average commission
Abs.per.perf. Execution Delivery
Number of marketing quant
campaigns
Advertising
Marketing Average
expenses campaign costs
Other

Number of FTEs
Staff expenses
without bonus Personnel mix
Average personnel
costs Average salary
per salary class
Number of FTEs
Bonus Personnel mix
Average bonus and Number of FTEs
Operating income gratification Average bonus
per salary class Average software
maintenance expenses
Software
IT maintenance maintenance costs
Number of FTEs
expenses Hardware
maintenance costs Average hardware
maintenance expenses

Software license Number of leased

IT license/leasing
expenses
expenses

Hardware leasing
expenses
software items
Average leasing fee Identification of under-
Administration Number of leased
expenses
IT expenses
Data services
No. of market data
system licenses
Average license fee
hardware items

Average license fee Number of FTEs Number of executive

management
Number of covered
companies
lying business logic by
Number of companies

• Developing earnings
Number of phone Average number of covered per researcher
Number of research
Voice communication calls phone calls per FTE
staff
expenses Average expenses Average duration of Number of portfolios
per phone call phone call Number of PM staff
Number of funds/man-dates
Required data Average expenses managed per PM
Number of Number of executive

tree
Communication Data communication capacity per minute
production staff staff
expenses expenses Expenses per unit of Number of trades
Number of executive
data capacity management Average number of
Operating Number of video trades per trader
expenses Video communication conference call Number of sales staff

• Building on existing
Number of
expenses Avg. expenses per distribution staff Number of marketing
video conference call
Number of FTEs staff
G&A expenses Expenses on office space, Number of client
furniture, fixture Number of service servicing staff
Average office and
staff

controlling structure
furniture expenses Number of executive
Average duration of management
Number of working engagement Number of account
temporary staff Monthly expenses of servicing staff
External personnel temporary staff
Average temporary Number of call center
staff expenses Number of newly staff
hired FTEs
Average hiring IT support
Hiring expenses
expenses
Staff expenses
Hiring, training and Number of FTEs Human resources
Training expenses without bonus
transfer expenses
Average training Bonus and profit
Finance
Transfer expenses expenses sharing
Number of transfer Compliance/risk
Number of consulting IT expenses
FTEs management
Investments IT investments projects
Consulting fees Average transfer Fund administration G&A expenses
Depreciation Average consulting expenses
Depreciation rates Other investments expenses
Travel, entertainment Performance
and gifts Number of FTEs measurement
Other operating Total Corporate
Average travel Facilities
expenses Functions expenses
expenses
Corporate Functions Share of ADAM/LoBs Public relations and
expenses on total FTEs other costs

Source: McKinsey 18
STRUCTURE OF BUSINESS LOGIC BACKUP

Controlling structure Underlying determinants

A B C E
Assets under Reinvestment
Fee revenues Inflows
management rate

D F
G Average asset
Absolute period
Distribution volume per
performance
expenses and new client
Gross depreciation
revenue
I
Operating
income Number of
FTEs
Operating
expenses H J K
Administration Communication
IT expenses
expenses expenses

L M
Corporate
G&A expenses Functions
expenses

Source: McKinsey 19
 A DETAILED DESCRIPTION OF FEE REVENUES BACKUP
Controlling structure Underlying determinants

AuM B
Management fee
Average management
Asset mix
fee

Fee by asset class

AuM of out-performing
funds
Performance fee
Average performance
premium

Inflow
Fee revenues Loading fee
Average load free

Entrance fee

Outflow
Exit fee
Average exit fee AuM
Other provision Average commission
and fee revenues fee per AuM
Sales commissions –
inhouse
Inflows
Sales commissions
Sales commissions –
Third party Average commission
Source: McKinsey 20
 B DETAILED DESCRIPTION OF ASSETS UNDER MANAGEMENT BACKUP

Underlying determinants

Brokerages

IFAs Inflows Equity

AuM beginning
of period
Inflows Fixed
Retail Retail Bank
Income C
Inflows
Insurance Inflows Real
agents Outflows Estate

Others Absolute period Inflows AI

AuM performance

Pension funds D
Insurance
companies

Institutional Banks

Industrial
clients

Trust funds
Source: McKinsey 21
 C DETAILED DESCRIPTION OF INFLOWS EQUITY EUROPE BACKUP

Underlying determinants

Number of existing
customers

Inflows existing
customers
Reinvestment rate E

Average reinvest- Mix of existing

ment volume customers
Inflows Fixed Past performance
Income (perceived)

Awareness
Number of new
clients
Consideration
Inflows new
customers
Availability

Delivery

Average asset vol-

ume per new client F
Source: McKinsey 22
 D DETAILED DESCRIPTION OF ABSOLUTE PERIOD BACKUP
PERFORMANCE

Underlying determinants

Weighted
benchmark
Abs. period perfor-
mance Equity

Abs. period perfor-

mance Fixed Income Research
Absolute period
performance
Abs. period perfor-
mance Real Estate Out/Under- Portfolio
performance management
Abs. period perfor-
mance AI
Execution

Source: McKinsey 23
 E DETAILED DESCRIPTION OF REINVESTMENT RATE BACKUP

Underlying determinants

Past performance
(actual)
Transparency of
investment process
Customer Repeatability of
satisfaction process
Communication of
transparency of
investment process
Level of performed
service
Reinvestment rate

Sales/promotion
activity

Source: McKinsey 24
 F DETAILED DESCRIPTION OF AVERAGE ASSET VOLUME BACKUP
PER NEW CLIENT

Underlying determinants

Ultra-high net worth

client (EUR > 5 million)

High net worth client

(EUR 0.5 - 5 million)
Average asset volume
Mix of new clients
per new client
Affluent client
(EUR 0.1 - 0.5 million)

Mass market client

(EUR < 0.1 million)

Source: McKinsey 25
 G DETAILED DESCRIPTION OF DISTRIBUTION EXPENSES BACKUP
AND DEPRECIATION

Controlling structure Underlying determinants

Number of marketing
campaigns
Advertising
Marketing Average
expenses campaign costs
Other

IT investments
Investments
Depreciation Other investments
Depreciation
rates

Source: McKinsey 26
 H DETAILED DESCRIPTION OF ADMINISTRATION EXPENSES BACKUP

Controlling structure Underlying determinants

Number of FTEs I
Staff expenses
without bonus
Personnel mix
Average personnel
expenses Average salary per
salary class

Number of FTEs I
Administration
Bonus
expenses Personnel mix
Average bonus and
gratification* Average bonus per
salary class
IT expenses J

G&A expenses L

* Including equity compensation

Source: McKinsey 27
 I DETAILED DESCRIPTION OF NUMBER OF FTEs BACKUP
Underlying determinants
Number of executive
management Number of covered
companies
Number of research
%
staff Number of companies
covered per researcher
Number of production
staff Number of portfolios
Number of PM staff %
Number of funds/man-
dates managed per PM
Number of execution
staff
% Number of trades
Number of executive
Number of FTEs management
Average number of
trades per trader
Number of sales staff
Number of distribution
staff Number of marketing
staff
Number of client
servicing staff
Number of executive
management
Number of account
Number of service staff
servicing staff
Number of call center
staff
Source: McKinsey 28
 J DETAILED DESCRIPTION OF IT EXPENSES BACKUP

Controlling structure Underlying determinants

Number of FTEs
Software maintenance
expenses Average software
maintenance expenses
IT maintenance
expenses
Number of FTEs
Hardware maintenance
expenses Average hardware
maintenance expenses

Number of leased
Software license software items
expenses
Average leasing fee
IT license/leasing
IT expenses
expenses
Number of leased
Hardware leasing hardware items
expenses
Average license fee
No. of market data
system licenses
Data services
Average license fee

Communication
expenses K

Source: McKinsey 29
 K DETAILED DESCRIPTION OF COMMUNICATION COSTS BACKUP

Underlying determinants

Number of FTEs
Number of phone calls
Average number of
Voice communication phone calls per FTE
expenses
Average duration of
Average expenses per phone call
phone call Average expenses per
minute

Required data capacity

Communication Data communication
expenses expenses
Expenses per unit of
data capacity

Number of video
conference call
Video communication
expenses
Average expenses per
video conference call

Source: McKinsey, Gartner 30

 L DETAILED DESCRIPTION OF G&A EXPENSES BACKUP

Controlling structure Underlying determinants

Expenses on office
Number of FTEs I
space, furniture, fixture Average office and
furniture expenses Average duration of
working engagement
Number of
temporary staff Monthly expenses per
External personnel temporary staff
Average temporary
staff expenses Number of newly hired
FTEs
Hiring expenses

Hiring, training and Average hiring expenses

Training expenses
transfer expenses
G&A expenses
Transfer expenses Number of FTEs

Number of consulting Average training

Consulting fees expenses
projects
Average consulting
expenses Number of transfer FTEs
Travel, entertainment
Number of FTEs Average transfer
and gifts
expenses
Other operating Average travel
expenses expenses
Corporate Functions
expenses* M
* Indirect costs allocated from Corporate Functions according to number of FTEs
Source: McKinsey 31
M DETAILED DESCRIPTION OF CORPORATE FUNCTIONS BACKUP
EXPENSES
Underlying determinants

IT support Staff expenses without

bonus

Human resources

Bonus
Finance
IT expenses
Compliance/risk
management G&A expenses
Total Corporate
Functions expenses
Corporate Functions
expenses Fund administration
Share of Business
Lines on total FTEs
Performance
measurement

Facilities

Public relations and

other expenses

Source: McKinsey 32
IDENTIFICATION OF KEY VALUE DRIVERS
Normalized Key value drivers

118 100 30

Gross fee AuM Retail

95 revenues
Fee revenues
-23 40 bp 70

Sales Av. mgmt. fee Institutional

commissions

100 5 25

Net 1 Interest income Inflows

revenues
Net interest
income -4 35 bp

Interest Av. front load

4 expenses
15
Miscellaneous
Operating revenues -44 100 26
earnings
Total staff Total headcount Production
-77 expenses

Administration -5 EUR 200,000 29

-6 IT expenses* Av. staff costs Distribution

-85
Operating Marketing* -28 55
expenses
G&A Services
-2 expenses*

Depreciation

* Non-staff expenses only

Source: McKinsey 33
STRUCTURE OF KEY PERFORMANCE INDICATORS
KPI dimensions Rationale

1
Financials • Overview of basic financial data (based on existing
controlling structure) regarding
– Revenues
– Expenses
– Earnings

2
Revenue/cost drivers • Further explanation of key financial data (not
necessarily based on controlling structure) outlining
revenue and cost drivers
• Information about underlying determinants (e.g., AuM,
headcount)
• Assessment of main drivers for financial results

3 • Selected non-financial metrics for production,

Business performance drivers
distribution and services
• Performance assessment* of
– Fixed Income/Equity production process
– Retail/Institutional distribution channels
Production Distribution (Service)

* Limited set of service indicators

Source: McKinsey 34
KPIs – FINANCIALS AND REVENUE/COST DRIVERS
Phase II indicators

1 Financials 2 Revenue/cost drivers

Management level Operational level

• AuM • Front load per
Fee revenues • Inflows inflows
• Outflows • No. of new man-
• Abs. period dates/ inter-
Net performance** mediaries
revenues Net interest • Management fee • Total mgmt. fee
income per AuM • Asset mix
• Operating margin • Avg. sales
Miscellaneous commissions
revenues
Operating Total staff • Headcount • Staff costs split
earnings expenses • No. of funds/ by function
Administration
IT expenses
accounts • Staff costs per
expenses • IT project costs AuM
G&A
expenses
Operating Marketing • Marketing
expenses expenses expenses per
AuM
Depreciation

* Market appreciation plus/minus outperformance

Source: McKinsey 35
KPIs – BUSINESS PERFORMANCE DRIVERS (1/3)
Phase II indicators

3 Business performance drivers

Area Management level Operational level
Production • Share of outperforming funds vs. • Average size of funds
benchmarks by • AuM weighted performance vs.
– Number of funds benchmark (monthly, YTD, 1 year,
– AuM 3 years, 5 years)
• Peer group comparison - retail (1st – 5 largest retail funds
quartile %) – 5 largest institutional funds
• Peer group comparison (1st, 2nd,
3rd, and 4th quartile)
– Retail
– Institutional
• Percentage of automated trades

Source: McKinsey 36
KPIs – BUSINESS PERFORMANCE DRIVERS (2/3)
Phase II indicators

3 Business performance drivers

Area Management level Operational level
Distribution • Marketing expenses (retail) • Inflows per sales channel/person
• Average management fee per new (retail)
inflows • Inflows per mandate
– Retail (new/existing)/(retail)
– Institutional • Share of inflows from mandates
• Number of funds below critical size (new/existing)
(older than x years) • Average share of wallet by distribution
channel
• Number of institutional mandates
• Number of new funds (started within
last x months)
• Success rate of new funds (larger
than minimum size after x months)
• Customer acquisition costs
• Churn rate (institutional)
• Retention rate by
– Number of mandates
– AuM

Source: McKinsey 37
KPIs – BUSINESS PERFORMANCE DRIVERS (3/3)
Phase II indicators

3 Business performance drivers

Area Management level Operational level
Services • Operating costs per account (retail) • Assets under custody (AuC)/AuM
– Own funds
– Third-party funds
• Number of retail accounts
• Service level
– Call center reachability
– Call center 10s pick-up
– Error rate (e.g., % of falsely
processed orders)
• Call center costs per account (retail)
• Number of accounts serviced per
FTE (in client service)

Source: McKinsey 38
MIS REPORT – STRUCTURE AND FORMATS

KPIs Relevant splits Reports

Financials Regional split
I
• Operating • Global LoBs
income • Region 1 (e.g., US) Regions
– Net revenues • Region 2 Executive Committee
– Operating level
expenses Unit split
II Revenue/cost • Unit 1
drivers • Unit 2
• Revenue
drivers
=
• Cost drivers
III Business Functional split
performance • Function 1
drivers (e.g., global institutional)
• Production • Function 2
• Distribution
• Services

Source: McKinsey 39
MIS REPORT – REPORTING TEMPLATE

Reporting of actual and budget

figures for
• Current month
• Year-to-date

Highlighting of key issues

Benchmarking (actual against

budget) supported by color coding

Business performance drivers

focusing on actuals

Short executive summary on each

of KPI category including outline of
key trends

Source: McKinsey 40
OUTPUT DATA CATEGORIES
1 2
Financials
• Operating income
• Net revenues
• Fee revenues
• Operating expenses
• Administration expenses
• Total staff expenses
• IT expenses
• Marketing expenses
• Operating margin
Source: McKinsey
Revenue/cost drivers
• AuM
• thereof 3rd party
• Inflows
• Outflows
• Absolute period performance
• Management fee per AuM
• Headcount
• Number of funds/accounts
BACKUP
3
Business performance drivers
Production Distribution (Service)
• Share of outperforming
funds/mandates by number
• Share of outperforming
funds/mandates by AuM
• Peer group comparison (retail)
• Number of funds below critical
size (retail)
• Number of mandates below
critical size (Institutional)
• Marketing expenses per inflows
(retail)
• Avg. mgmt. fee per net inflows
(retail)
• Avg. mgmt. fee per net inflows
(institutional)
• Operating costs per account
(retail)
• Operating costs per AuC/AuM
(retail)
41
1 OUTPUT DATA DEFINITIONS – FINANCIALS BACKUP

Raw data categories Units Definition*

• Operating earnings EUR million • Net revenues – Operating expenses

• Net revenues EUR million • Fee revenues + Net interest income + Miscellaneous
revenues

• Fee revenues EUR million • Management fee + Performance fee + Loading fee +
Entrance fee + Exit fee + Other provision and fee
revenues – Sales commissions

• Operating expenses EUR million • Administration expenses + Distribution expenses (excluding

sales commissions) + Depreciation
Financials

• Administration EUR million • Total staff expenses + IT expenses + G&A expenses

expenses

• Total staff expenses EUR million • Staff expenses without bonus + Bonus

• IT expenses EUR million • IT maintenance expenses, IT leasing expenses, IT current

expenditure, data services, telephone costs; without IT
depreciation

• Marketing expenses EUR million • All costs for marketing, advertisement and sales (except
personnel costs)

• Operating margin Percent • Operating earnings

Net revenues

Source: McKinsey 42
2 OUTPUT DATA DEFINITIONS – REVENUE/COST DRIVERS BACKUP

Reporting categories Units Definition

• AuM EUR billion • Cumulated AuM of all portfolios at end of reporting period
• Portion of AuM of all portfolios at end of reporting period
• Thereof 3rd party EUR billion from third party
Revenue drivers

• Inflows EUR billion • Cumulated inflow to all funds during reporting period
• Outflows EUR billion • Cumulated outflow from all funds during reporting period
• Absolute period EUR billion • Cumulated absolute performance per portfolio (market
performance appreciation plus out-/underperformance); market impact or
market change

• Management fee per bp • Cumulated management fee x 12

AuM (annualized) Average AuM No. of months

• Headcount FTE • Number of FTE at end of period (not weighted over time,
i.e., employee starting in May, working 50% counts as 0.5
FTE in December)
Cost drivers

• Number of funds/ Number • Total number of retail and institutional funds or accounts
under management
accounts

Source: McKinsey 43
 3 OUTPUT DATA DEFINITIONS – BUSINESS PERFORMANCE DRIVERS
Reporting categories
• Share of outperforming
funds/mandates by number
Production
• Share of outperforming
funds/mandates by AuM
• Peer group comparison (retail)
• Marketing expenses per inflows bp
(retail)
Distribution
• Average management fee
per net inflows (retail)
• Average management fee
per net inflows (institutional)
• Number of funds below critical
size (retail/ institutional)
• Operating costs per account
Services
(retail)
• Operating costs per AuC/AuM
(retail)
Source: McKinsey
Units Definition
% Number of funds/mandates outperforming their benchmark
Total number of tracked funds/mandates
% Cumulated AuM of funds/mandates outperforming their benchmark
Cumulated AuM of all funds/mandates
1st Number of retail funds ranked within first quartile
of relevant peer group
Qtl %
Total number of ranked retail funds
Retail marketing expenses
Retail inflows
bp Total net management fee of net inflows retail
Total net inflows retail
bp Total net management fee of net inflows institutional
Total net inflows institutional
Number Number of funds older than three years below critical size
Total number of funds older than three years
EUR Total operating costs
Total number of serviced accounts
bp Total operating costs
Total AuC/AuM within services
44
 3 OUTPUT DATA RATIONALE – BUSINESS PERFORMANCE DRIVERS
Reporting categories Definition

• Share of outperforming • Measure of absolute production quality (relative performance vs.

funds/mandates by number benchmark)
Production

• Share of outperforming • Measure of absolute production effectiveness (relative

funds/mandates by AuM performance vs. benchmark)

• Peer group comparison (retail) • Measure of relative production quality (relative performance vs.
peer group)

• Marketing expenses per inflows • Measure of marketing efficiency

(retail)
Distribution

• Average management fee • Measure of comparative value of new inflows (retail)

per new inflows (retail)
• Average management fee • Measure of comparative value of new inflows (institutional)
per new inflows (institutional)
• Number of funds below critical • Measure of cost efficiency
size (retail/ institutional)

• Operating costs per account • Measure of (direct) cost efficiency of account servicing; for
Services

(retail) external benchmarking purposes

• Operating costs per AuC/AuM • Measure of (direct) cost efficiency of account servicing (based
(retail) on account size distribution)

Source: McKinsey 45
TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

46
MIS IMPLEMENTATION – PROCESS APPROACH

1 Data 2 Database build-up

collection
• Design data collection process
(including reporting template)
• Identify primary data owners
• Collect/evaluate data
• Follow-up missing/ incorrect
data
• Develop database structure and
data feed process
• Implement database including
structure and data transformation
routines
• Testing

Popu-
lation of
database

3 Report production
• Calculate KPIs
• Interpret, based on internal/ external benchmarking
• Elaborate executive summary
• Produce hand-outs and disclaimer

Source: McKinsey 47
MIS IMPLEMENTATION – GUIDING PRINCIPLES

Guiding principles
• Collect data at highest available aggregation level
• Evaluate most important KPIs by
Data – Comparing with primary data
collection – Checking with unit responsibles
• Record all activities and feedback to evaluate
current process and streamline further approach

• Use existing infrastructure wherever possible

Database
build-up • Design database on an expandable platform to
allow future automation of process

• Produce hand-out with "look and feel" of template

Report
early and present it to management
production

Source: McKinsey 48
DATA COLLECTION – INPUT DATA CATEGORIES
Performance
Financial data Services data
data

• Closing third-party assets • Number of outperforming funds • Operating costs client service
• Fee revenues • Number of tracked funds • Number of serviced client accounts
– Management fee • Total number of funds • AuC/AuM within client service
– Performance fees • AuM of outperforming funds
– Loading/entrance/exit fee revenues. • AuM of tracked funds
– Other provision and fee revs. (net) • Total AuM of funds
– Sales commission expenses • Number of first quartile ranked funds
• Sales commis. exp. - inhouse (retail)
• Sales commis. exp. - third party • Number of ranked funds (retail)
• Net interest income • Number of funds below x EUR million
– Interest income (retail)
– Interest expense • Number of funds below x EUR million
• Miscellaneous revenues (institutional)
– Trading revenues
– Other revenues
• Administration expenses
– Staff costs w/o bonus
– Bonus
– IT expenses
– G&A expenses/ other expenses
• Marketing expenses
• Depreciation
• Operating income

• Opening AuM
• Asset inflow
• Asset outflow
• Market appreciation
• Closing AuM
• Staff total (headcount)

• Total mgmt. fee from new inflows (retail)

• Total mgmt. fee from new inflows
(institutional)
Source: McKinsey 49
DATA COLLECTION – FINANCIAL DATA DEFINITIONS (1/5)
BACKUP

Reporting category Definition

Management fee

Performance fee

All data categories and reporting

guidelines to be defined in cooperation
Loading fee/entrance with client according to
fee/exit fee revs.
accounting/controlling structure

Other provision
and fee revenues

Sales commissions –
inhouse

Source: McKinsey 50
DATA COLLECTION – FINANCIAL DATA DEFINITIONS (2/5)
BACKUP

Reporting category Definition

Sales commissions – third

party

Interest income

All data categories and reporting

guidelines to be defined in cooperation
Interest expenses with client according to
accounting/controlling structure

Trading revenues

Source: McKinsey 51
DATA COLLECTION – FINANCIAL DATA DEFINITIONS (3/5)
BACKUP

Reporting category Definition

Other revenues

Staff expenses without

bonus

All data categories and reporting

guidelines to be defined in cooperation
Bonus with client according to
accounting/controlling structure

IT expenses

G&A expenses

Source: McKinsey 52
DATA COLLECTION – FINANCIAL DATA DEFINITIONS (4/5)
BACKUP

Reporting category Definition

Marketing expenses

Depreciation

All data categories and reporting

guidelines to be defined in cooperation
Operating income with client according to
accounting/controlling structure

Source: McKinsey 53
DATA COLLECTION – FINANCIAL DATA DEFINITIONS (5/5)
BACKUP

Reporting category Definition

Opening AuM

Asset inflow

Asset outflow
All data categories and reporting
Market appreciation
guidelines to be defined in cooperation
with client according to
accounting/controlling structure
Closing AuM

Staff total (headcount)

Total mgmt. fee from new

inflows (retail)

Total mgmt. fee from

new inflows (institutional)

Source: McKinsey 54
DATA COLLECTION – PERFORMANCE DATA DEFINITIONS (1/2)
BACKUP

Reporting category Definition

Number of outperforming
funds

Number of tracked funds

Total number of funds

All data categories and reporting
guidelines to be defined in cooperation
AuM of outperforming with client according to
funds accounting/controlling structure

AuM of tracked funds

Total AuM of funds

Number of first quartile

ranked funds (retail)

Source: McKinsey 55
DATA COLLECTION – PERFORMANCE DATA DEFINITIONS (2/2)
BACKUP

Reporting category Definition

Number of ranked funds

(retail)

Number of funds below x

EUR million (retail)

Number of funds below x

EUR million (institutional) All data categories and reporting
guidelines to be defined in cooperation
with client according to
accounting/controlling structure

Source: McKinsey 56
DATA COLLECTION – SERVICES DATA DEFINITIONS
BACKUP

Reporting category Definition

Operating costs client

service

Number of serviced client

accounts

AuC/AuM within client

service All data categories and reporting
guidelines to be defined in cooperation
with client according to
accounting/controlling structure

Source: McKinsey 57
DATA COLLECTION – MIS REPORTING UNITS

Not included
Main region 1 Main region 2 Rest of World
in MIS

•… •… •… •…
•… •… •… •…
•… •… •… •…
•… •…
•…
•…
•…
•…
•…

All MIS reporting units to be identified

in cooperation with client according to
accounting/controlling structure

Source: McKinsey 58
DATA COLLECTION – RESPONSIBILITIES

Secondary Primary data

Aggregation data sources Scope sources Reporting units
• Financial data Main region 1 • … •…
Person 1 Person 2 •… •…
•… •…

• Financial data RoW •… •…

Person 3 •… •…
•… •…

For data collection process,

primary and secondary data sources
as well as responsibles for
aggregation to be identified

Source: McKinsey 59
DATA COLLECTION – EVALUATION OF DATA

Data-feed process Consistency check

MIS 1 • All available data (controlling

structure) to be provided by
Corporate Corporate Controlling
1 • Sanity check of all KPIs
Controlling

2 • Missing data (non-controlling

structure) to be provided by
BU Controlling Controlling of business units
2 DB
• Sanity check of subset of KPIs

3 • Remaining data to be provided

Other data by other sources (e.g., HR)
providers 3 • No consistency check applied

Source: McKinsey 60
DATABASE BUILD-UP – DATA VOLUME

Import around 800 data sheets

Financial data: YTD

Financial data: Budget

Dimensions Datapoints
Reporting Units 80
Scenarios 3
Years 2
Performance data Periods 40
Business lines 10
Business lines 100
Currencies 10
Total ~ 200 million
Services data
data points

Source: McKinsey 61
DATABASE BUILD-UP – IT ARCHITECTURE

Data collection Data processing Data analysis

Automated

E-mail/ FTP
Flat files
Monthly
Primary Structure report
data owner files
Intranet Web-
application Database OLAP*
server cube
Manual

Interactive
Data analysis
files tool
E-mail
Excel files

* Online analytical processing

Source: McKinsey 62
REPORT PRODUCTION

End product Key activities Requirements

MIS Report • Calculation of KPIs • Meet agreed upon

deadlines of data
• Application of sanity check collection process
imperative

• Elaboration of executive • Assign responsibility for

summary creation of executive
summary

• Addition of interpretations • Gather qualitative

and conclusion information from
reported units

• Production of presentation • Enable reporting units

responsibles to provide
explanation for executive
summary

Source: McKinsey 63
TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

64
PROCESS OVERVIEW – KEY ACTIVITIES OF MONTHLY
MIS REPORTING
Data collection
Preparation of data collection
• Send out data collection templates
for all data categories
• Provide assistance for emerging
issues
Collection of MIS input data
• Receive data and transmit to database
• Follow up on missing data
Evaluation of delivered data
• Check consistency/correctness of
provided information
• Follow up on inconsistent/incorrect
data
Sign-off by reporting unit responsibles
• Send out e-mail to get data confirmed
• Receive confirmation e-mail
Source: McKinsey
Report production
Calculation of KPIs
• Calculate KPIs
• Apply sanity check
Elaboration of executive summaries
• Gather qualitative information
to complement quantitative KPIs
• Draw conclusions and add inter-
pretations
Creation of appendix and disclaimer
• Evaluate quality of MIS data
• Document quality assessment
Production of report
• Fill in executive summaries in
reporting template
• Produce management presentation
and handouts
65
SUBMISSION OF MIS REPORT – TYPICAL TIME SCHEDULE

Reporting scope Submission date

• April/YTD April
• May/YTD May
• June/YTD June
• July/YTD July End of the
• August/YTD August following month

• September/YTD September
• October/YTD October
• November/YTD November

Source: McKinsey 66
DATA COLLECTION – TIMELINES FOR DISCUSSION

Days
Working days
Key activities 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 needed

• Preparation of data
collection
– Send out data 4 days
collection templates
– Provide assistance 11 days

• Collection of MIS input

data
– Receive financial data 3 days
– Receive other data 1 day
– Follow up missing data 3 days

• Evaluation of delivered
data
– Check consistency/ 2 days
correctness of provided
information
– Follow up inconsistent/ 2 days
incorrect data
– Transmit to database 1day

• Sign-off data by repor-

ting client responsibles 1 day
in case of multiple
deliverables/changes to Data collec-
delivery tion to be comple-
ted by day 22

Source: McKinsey 67
REPORT PRODUCTION – TIMELINES FOR DISCUSSION

Days
Working days
Key activities 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 needed

• Calculation of KPIs
– Calculate KPIs 1 day
– Apply sanity check 2 days

• Elaboration of executive
summary
– Gather qualitative 4 days
information
– Draw conclusions/add 2 days
interpretations

• Creation of appendix
and disclaimer
– Evaluate quality of MIS 5 days
data
– Document quality 3 days
assessment

• Production of report
– Fill-in interpretation 1 day
– Produce management 1 day
presentation
• Delivery of MIS report to
Chief Controller
• Delivery of MIS report to
management

Source: McKinsey 68
TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

Source: McKinsey 69
DATA COLLECTION – INPUT DATA CATEGORIES
Performance
Financial data Services data
data

• Closing third-party assets • Number of outperforming funds • Operating costs client service
• Fee revenues • Number of tracked funds • Number of serviced client accounts
– Management fee • Total number of funds • AuC/AuM within client service
– Performance fees • AuM of outperforming funds
– Loading/entrance/exit fee revenues. • AuM of tracked funds
– Other provision and fee revs. (net) • Total AuM of funds
– Sales commission expenses • Number of first quartile ranked funds
• Sales commis. exp. - inhouse (retail)
• Sales commis. exp. - third party • Number of ranked funds (retail)
• Net interest income • Number of funds below x EUR million
– Interest income (retail)
– Interest expense • Number of funds below x EUR million
• Miscellaneous revenues (institutional)
– Trading revenues
– Other revenues
• Administration expenses
– Staff costs w/o bonus
– Bonus
– IT expenses
– G&A expenses/ other expenses
• Marketing expenses
• Depreciation
• Operating income

• Opening AuM
• Asset inflow
• Asset outflow
• Market appreciation
• Closing AuM
• Staff total (headcount)

• Total mgmt. fee from new inflows (retail)

• Total mgmt. fee from new inflows
(institutional)
Source: McKinsey 70
MIS REPORTING UNITS – OVERVIEW

Region 1

MIS report Region 2

Rest of World
Total

Not included in
MIS report

Source: McKinsey 71
MIS REPORTING UNITS – DETAILS (1/2)
Reporting units Legal entity

Region 1

Region 2

Source: McKinsey 72
MIS REPORTING UNITS – DETAILS (2/2)
Reporting units Legal entity

Rest of the world

Source: McKinsey 73
MIS REPORTING UNITS – LEGAL ENTITIES NOT INCLUDED IN
MIS REPORT
Legal equity

Not included in MIS report

Source: McKinsey 74
DATA COLLECTION – RESPONSIBILITIES

Aggregation Secondary data source

Performance
Financial data Services data
data

Person 2

Person 3

Person 1

Person 4

Person 5

Source: McKinsey 75
FINANCIAL DATA – COLLECTION PROCESS
Secondary
Data aggre- Database
Primary data sources data
gation feed-in
sources

Working day 15 16 17 18

Person 2

Person 1 Person 6

Person 3

Source: McKinsey 76
FINANCIAL DATA – ROLES AND RESPONSIBILITIES

Description

Overall • Enforcement of data delivery

Person 1 process • Sign-off of reporting guidelines and template
responsibility • Data sanity check (final)
• Trouble shooting/assistance during data collection
process

Financial data • Data collection from primary sources of region 1

Person 2 collection • Data sanity check

Financial data • Data collection from primary sources of region 2

Person 3 collection • Data sanity check

Database • Input of data into database

Person 6 feed-in • Technical support of data collection
(e.g., template production)

Source: McKinsey 77
FINANCIAL DATA – CONTACT DETAILS

Name Reporting unit E-mail Phone

… … … …

Source: McKinsey 78
INPUT/OUTPUT DATA DEFINITIONS – FINANCIALS DATA (1/2)
Raw data categories Units Definition*

• Operating income EUR mn • Net revenues - Operating expenses

• Net revenues EUR mn • Fee revenues + Net interest income + Miscellaneous

revenues

• Feerevenues EUR mn • Management fee + Advisory fee + Performance fee +

Loading fee + Entrance fee + Exit fee + Other provision and
fee revenues - Commissions

• Operating expenses EUR mn • Administration expenses + Distribution expenses (excluding

commissions) + Depreciation
Financials

• Administration EUR mn • Total staff expenses + IT expenses + G&A expenses

expenses

• Total staff expenses EUR mn • Staff expenses without bonus + Bonus and profit sharing

• IT expenses EUR mn • IT maintenance expenses, IT leasing expenses, IT current

expenditure, data services, telephone costs; without IT
depreciation

• Marketing expenses EUR mn • All costs for marketing, advertisement and sales (except
personnel costs)

• Operating margin % • Operating earnings

Net revenues

Source: McKinsey 79
INPUT/OUTPUT DATA DEFINITIONS – FINANCIALS DATA (2/2)
Reporting categories Units Definition

• AuM EUR bn • Cumulated AuM of all portfolios at end of reporting period

• Portion of AuM of all portfolios at end of reporting period
• Thereof 3rd party EUR bn from third party
• Inflows • Cumulated inflow to all funds during reporting period
Revenue/cost drivers

EUR bn
• Outflows EUR bn • Cumulated outflow from all funds during reporting period
• Absolute period EUR bn • Cumulated absolute performance per portfolio (market
performance appreciation plus out-/underperformance); market impact or
market change

• Management fee per bp • Cumulated management fee x 12

AuM (annualized) Average AuM No. of months

• Headcount
• Marketing expenses
Peformance drivers
FTE • Number of FTE at end of period (not weighted over time,
i.e., employee starting in May, working 50% counts as 0.5
FTE in December)

bp • Retail marketing expenses

per inflows (retail) Retail inflows

• Average management fee bp • Total gross management fee of net inflows (retail)
per net inflows (retail) Net inflows (retail)

• Average management fee bp • Total gross management fee of net inflows (institutional)
per net inflows (institutional) Net inflows (institutional)

Source: McKinsey 80
PERFORMANCE DATA – COLLECTION PROCESS

Data
Secondary Database
Primary data sources aggregation/
data sources feed-in
quality check
Time
schedule 15 16 17 18
(Working
day)

Person 7

Person 10 Person 1 Person 6

Person 8

Person 9

Source: McKinsey 81
PERFORMANCE DATA – CONTACT DETAILS
Reporting
Name unit E-mail Phone
… … … …

Source: McKinsey 82
PERFORMANCE DATA – ROLES AND RESPONSIBILITIES

Description

Overall • Enforcement of data delivery

Person 1 process • Sign-off of reporting guidelines and template
responsibility • Trouble shooting

Performance • Data collection from primary sources through

Person 10 data collection • Assistance ("helpline") during data collection process
• Updating of reporting guidelines and template
• Data sanity check/assessment of data quality
• Recoding of templates

Database • Input of data into database

Person 6 feed-in • Technical support of data collection
(e.g., template production)

Source: McKinsey 83
PERFORMANCE DATA COLLECTION TEMPLATE
BACKUP

Source: McKinsey 84
INPUT/OUTPUT DATA DEFINITIONS – PERFORMANCE DATA (1/2)
Reporting categories
1. Total AuM of retail funds
2. Total AuM of retail funds with
benchmark
3. Total AuM of outperforming retail
funds
4. Share of outperforming funds by
AuM
5. Number of retail funds
6. Number of retail funds with
I. Retail
benchmark
7. Number of outperforming retail funds
8. Share of outperforming retail funds
by number
9. Number of ranked retail funds
10. Number of first quartile ranked
retail funds
11. Peer group comparison
12. Number of retail funds below
EUR x million
Source: McKinsey
Definition
• Total assets under management of retail funds
• Total assets under management of retail funds measured against an
external benchmark
• Total assets under management of retail funds outperforming their
relevant benchmark for period
• “Total AuM of outperforming retail funds”
“Total AuM of retail funds with benchmark”
• Number of retail funds
• Number of retail funds* measured against an external benchmark
• Number of retail funds outperforming their relevant benchmark for period
• “Number of outperforming retail funds”
“Number of retail funds with benchmark”
• Number of retail funds ranked versus relevant peer group
• Number of retail funds ranked in the first quartile within relevant peer group
• “Number of first quartile ranked retail funds”
“Number of ranked retail funds”
• Number of retail funds (older than x months) with total assets under
management below x EUR mn at end of period
85
INPUT/OUTPUT DATA DEFINITIONS – PERFORMANCE DATA (2/2)
Reporting categories
13. Total AuM of institutional mandates
14. Total AuM of institutional mandates
with benchmark
15. Total AuM of outperforming
institutional mandates
16. Share of outperforming inst.
II. Institutional
mandates by AuM
17. Number of institutional mandates
18. Number of institutional mandates
with benchmark
19. Number of outperforming
institutional mandates
20. Share of outperforming mandates
by number
21. Number of inst. mandates below
EUR x million
Source: McKinsey
Definition
• Total assets under management of institutional mandates/accounts and
institutional funds
• Total assets under management of institutional mandates/accounts and
institutional funds measured against an external benchmark
• Total assets under management of institutional mandates/accounts and
institutional funds outperforming their relevant benchmark for period
• “Total AuM of outperforming institutional mandates”
“Total AuM of institutional mandates with benchmark”
• Number of institutional mandates/accounts and institutional funds
• Number of institutional mandates/accounts and institutional funds measured
against an external benchmark
• Number of institutional mandates/accounts and institutional funds*
outperforming their relevant benchmark for period
• “Number of outperforming institutional mandates”
“Number of institutional mandates with benchmark”
• Number of institutional mandates (older than x months) with total assets
under management below x EUR mn at end of period
86
MIS PERFORMANCE DATA – DATA COLLECTION
GUIDELINES (1/2)
Guidelines

• Allocate funds/mandates to MIS reporting units according to management

Overall responsibility
• If management responsibility is divided between more than one reporting unit, allocate
funds/mandates to reporting unit with largest AuM stake
• Report composites by single mandates as soon as possible
• If data for reporting deadline are not yet available, report most recent available data
with period indication (remark field in template)
• Do not report assets under custody, i.e. assets where only administration services
(e.g., fund accounting) but no advice services are provided
• AuM reporting unit is always EUR1.000

Source: McKinsey 87
MIS PERFORMANCE DATA – DATA COLLECTION
GUIDELINES (2/2)
Guidelines
• Outperformance of retail funds to be measured net of fees
Outperformance • Outperformance of institutional mandates to be measured gross of fees
• For funds with benchmark and outperformance information (by number/AuM), include
only funds/mandates with
– Existing external benchmark (not as index-linked products)
– Benchmark not waived and suspended for whole reporting period
• Composites: If a report by single mandates is not possible and the composite is
outperforming, assume outperformance for all included mandates
• If benchmark has changed during reporting period, apply linked benchmark, if
possible. If application of linked benchmark is not possible, apply new benchmark for
entire period

• Relate ranked information (retail only) to comparison within a peer group (use of
Peer group Micropal peer groups recommended)
comparison

Source: McKinsey 88
SERVICES DATA – COLLECTION PROCESS

Primary Secondary Data Database

data sources data sources aggregation feed-in

Time 15 16 17 18
schedule
(working
day)

Person 3 Person 1 Person 6

Source: McKinsey 89
SERVICES DATA – CONTACT DETAILS

Name Reporting unit E-mail Telephone

… … … …

Source: McKinsey 90
SERVICES DATA – ROLES AND RESPONSIBILITIES

Description

Overall • Enforcement of data delivery

Person 1 process • Updating of reporting template
responsibility • Data sanity check (final)
• Trouble shooting

Services data • Data collection from primary sources

Person 3 collection • Assistance ("helpline") during data collection
process
• Data sanity check/assessment of data quality

Database • Input of data into database

Person 6 feed-in • Technical support of data collection
(e.g., template production)

Source: McKinsey 91
SERVICES DATA COLLECTION TEMPLATE

Source: McKinsey 92
INPUT/OUTPUT DEFINITIONS – SERVICES DATA

Reporting categories Definition

• Operating costs • Total operating costs of client services
client services
• Number of serviced • Number of accounts serviced by client services
Input

client accounts

• AuC/AuM within • Cumulated assets under custody/assets under manage-

client services ment of all accounts serviced client services

• Operating costs per Total operating costs client services

account (retail)
Total number of serviced accounts within client services
Output

• Operating costs per Total operating costs client services

AuC/AuM (retail)
Total AuC/AuM within services within client services

Source: McKinsey 93
TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

94
DATABASE FEED-IN PROCESS

Input Proce- OLAP Output MIS

Template DB
macro dures cube macro report

Description

• Feed-in of delivered data into database

– Financial data
– Performance data
– Services data
• Database contains both actuals as well as budget data
• Regular sanity checks necessary to ensure correct feed-in of excel files into
ORACLE database

Source: McKinsey 95
KPI CALCULATION PROCESS

Input Proce- OLAP Output MIS

Template DB
macro dures cube macro report

Description
• Launch database operations to calculate first KPIs and prepare data for
transfer into OLAP cube
• Start procedures to transfer required data of database into OLAP cube
• Calculate KPIs within OLAP cube

Source: McKinsey 96
REPORT FINALIZATION PROCESS

Input Proce- OLAP Output MIS

Template DB
macro dures cube macro report

Description
• Feed-in of output data into MIS-excel sheets and sanity check
• Composition of executive summaries
• Paste-in of excel sheets into final MIS document
• Development of disclaimer and appendix
• Color print-out and binding of MIS reports

Source: McKinsey 97
REPORT FINALIZATION PROCESS

Feed-in of Paste-in
Develop- Color print-
output data Composition of excel Report
ment of dis- out and
into MIS-excel of executive sheets into
claimer and binding of submission
sheets and summaries final MIS
appendix MIS reports deadline
sanity check document

• Financials, • Executive • Copy into new • Disclaimer with • Decision on

service data, summaries Powerpoint major pitfalls/ distribution list
and perfor- to be drafted document issues of report and therefore
mance data • Feedback to be (considering to be revised number of
(actuals and collected and page breaks) • Appendix with copies needed
budget) to be final revision to detailed • Reports to be
generated by be developed information produced on
database/ • Text to be about data color printer
cube and to pasted into quality to be and to be
be filled into MIS excel file developed binded
excel file
• Plausibility
check of
generated MIS
report

Database/ MS Excel MS Powerpoint

cube

Source: McKinsey 98
SANITY CHECK OF MIS OUTPUT DATA
Sanity check
MIS input data
• Verification of generated
output sheets by
– Looking for large deviations
from budget
– Cross-checking results with
alternative data sources
(e.g., AuM)
MIS Excel sheets – Manual recalculation of
figures and comparing of
results
– Proceeding plausibility
checks with output data
Source: McKinsey
Error handling
• Identifying sources of error,
e.g.
– Errors in database feed-in
process
– Errors in calculation proce-
dures within database/cube
– Delivery of wrong input data
by controlling units
• Elimination of errors by
contacting database team/
controlling units
99
COMPOSITION OF EXECUTIVE SUMMARIES

Analysis of MIS output data Elaboration of executive summaries

...
• Searching and synthesizing
major deviations by Executive
level
– Comparing actual figures
with budget data
– Tracking actual figures
with data of preceding
months ...
Feed-in of
– Proceeding internal and
aligned and
external benchmarking of Regional agreed
actual figures split executive
• Explaining/interpreting summaries
found variations by into MIS
considering Excel sheets
– Market development and
business environment
...
– Internal/organizational
changes/restrictions
Business
– Development of business lines split
performance drivers

Source: McKinsey 100

PASTE-IN OF EXCEL SHEETS INTO FINAL MIS DOCUMENT

Copy/paste process

Repeat for each report page

• Within Excel
– Selection of page content
Excel MIS – "Copy"
sheets • Within Powerpoint
– "Paste special ……"
– Select "Device independent Powerpoint report pages
bitmap"
– Adjust object size and fit
object into provided frame
– Send object to back
– Send frame to back
– Shift object behind header
(if existing)

Source: McKinsey 101

DEVELOPMENT OF DISCLAIMER AND APPENDIX

• Case-by-case description of
Disclaimer major short-comings of data
Integration of aligned
quality/data completeness
and agreed disclaimer/
appendix in powerpoint
• Detailed evaluation of MIS data report
• Detailed description of data Power-
point
Appendix availability report
• Assessment of data quality

Source: McKinsey 102

COLOR PRINT-OUT AND BINDING OF MIS REPORTS

• Print powerpoint file on color

laser printer

Power-
• Add transparency on top
point MIS report
report
• Add (blue) cardboard at the
end

• Spiral bind whole pack

Source: McKinsey 103

TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

104
FOUR KEY ACHIEVEMENTS
Description
• Development of agreed-upon KPIs for management level
Comprehensive • Coverage of global operations, key regions, key entities,
concept and business lines

• Data collection processes defined and set up, covering

Established all reporting units
processes • Contact persons for all reporting units identified
• MIS data warehouse built up

• High-quality first MIS report delivered on-time

Successful first • Report presented and discussed in management meeting
report

Successful • On-time submission of first monthly reports for YTD

introduction February (April 4) and YTD March (April 26)
of monthly
reporting

Source: McKinsey 105

TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

106
OUTLINE OF MAJOR CHALLENGES

Potential risks
• Structural or process changes in
Clear roles and Controlling or other units
respon-sibles
• Mismatch of responsibilities between
MIS and other tasks

• Inconsistent reporting behavior

Reporting across reporting units
guidelines
• Questionable data preventing
meaningful interpretation of KPIs

• Late deliveries put entire MIS

Deadline process in danger
keeping
– MIS reports incomplete
– Data quality not assessed

Source: McKinsey 107

TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

108
FOUR KEY SUCCESS FACTORS
Main activities
• Syndication of business logic, KPIs, and report design with
Extensive syn- CEO, COO, CFO
dication and
information • Interviews with key executives and controllers regarding
MIS concept
• Kick-off meetings with all people involved in the process to
clarify procedures
• Access to IT-skilled employees to build database,
Available templates, and automated interfaces
resources • Significant resources from Corporate Controlling

• Workshops with Controlling to evaluate availability of

information for KPIs and to locate systems for data retrieval
Data availability

• Early definition and communication of timelines

Rigorous pro-
cess manage- • Immediate detection of issues and problem solving
ment • Immediate raising of issues to Chief Controller, CFO, COO,
or CEO

Source: McKinsey 109

TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

110
APPLICATION OF MIS

Description
• MIS reports to be discussed in management meetings
Basis for • Active tool to discuss performance of underlying units
management enabled by provision of backup information
discussions • Active discussions between Controlling and line
management regarding business performance

• Comparison of different units

Benchmarking • Identification of key areas for improvement
of individual
• Tool for target setting regarding business performance
units
of individual units

Source: McKinsey 111

 SPECIAL KPIs NEEDED FOR BENCHMARKING
Proposed KPIs for
MIS KPIs Challenges
benchmarking
• Operating income • Absolute figures 1 Operating income
– Net revenues not meaningful margin
– Operating for bench- Financials
Financials 2 Net revenues margin
expenses marking (e.g.,
• Administration AuM, inflows, 3 Cost/income ratio
• Marketing headcount)
4 Net inflows growth
• Revenue drivers • Introduction of
Revenue/
– AuM relative figures 5 Appreciation growth
cost drivers
– Inflows based on MIS-
– Outflows KPIs 6 AuM per headcount
– Abs. periodical 7 Share of out-
Revenue/ performance performing funds/
cost drivers – Mgt. fee per AuM mandates by AuM
• Cost drivers
8 Peer group
– Headcount comparison
– Number of Business
funds/accounts performance 9 Average manage-
drivers ment fee per new
inflows
Business • Production 10 Number of funds
performance • Distribution below critical size
drivers • Services
11 Operating cost per
account

Source: McKinsey 112

BENCHMARKING KPIs – DESCRIPTION (1/2)
Scale Description
1
bp Operating income
Operating x 10,000
income margin Average AuM

2
Percent Operating expenses
Cost/income x 100
ratio Net revenues

3
bp Net revenues
Net revenues x 10,000
margin Average AuM

4
Percent Inflows – outflows
Net inflows x 100
growth AuM (beginning of year)

5
Percent AuM (end-year) – AuM
Appreciation
(beginning of year) – net inflows
growth x 100
AuM (beginning of year)
6
EUR millions AuM (end-year)
AuM per
headcount Headcount

Source: McKinsey 113

BENCHMARKING KPIs – DESCRIPTION (2/2) AVAILABLE FOR ACTUALS ONLY
Scale Description
7
Share of out- Percent Total AuM of outperforming retail funds/
performing funds/ institutional mandates
mandates by AuM Total AuM of tracked retail funds/institutional
mandates

8
Percent Number of retail funds of relevant peer group;
Peer group
ranked within first quartile
comparison
Number of ranked retail funds
9
bp Average management fee
Average mgt fee
per new inflows New inflows

10
Number Number of funds below critical size
Number of funds
below critical size

11
EUR Operating cost per account
Operating cost
per account

Source: McKinsey 114

LOGIC OF KPI SELECTION

Revenue/ Business
Financials cost drivers performance drivers

7 Share of outperforming
2 4 Net inflows funds/ mandates by AuM
Net revenues growth 8 Peer group comparison
margin 5 Appreciation
9 Average management
growth
1 fee per new inflows
Operating in-
come margin

3 10 Number of funds
Cost/ 6 AuM per below critical size
income ratio headcount
11 Operating cost per
account

Source: McKinsey 115

TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

116
POTENTIAL MIS-EXTENSIONS
Business lines Regions

Total
KPIs 100%
1
Financials

    

Man-
Revenue/cost Scope of
drivers
age-
     broadening
ment
level MIS
3
Business perfor-
mance drivers
    

1
Financials

2
Revenue/cost
Scope of
Se-
cond
drivers deepening
ScopeMIS
of deepening MIS
level

3
Business perfor-
mance drivers

Source: McKinsey 117

TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

Source: McKinsey 118

DATA COLLECTION – SEMI-AUTOMATED SOLUTION

Data collection alternatives

• E-mail with Excel

sheet sent out to
E-mail reporting units with
solution request for on-time
delivery

Web- • Intranet based solution

interface to be implemented to
solution minimize transaction
efforts for larger units

• Fully automated
FTP/ETL Flat Files feed-in from primary
solution data sources into
MIS database

Source: McKinsey 119

TABLE OF CONTENT

• Quick information
• MIS concept
– Motivation of MIS project
– MIS design
– MIS implementation
• Instructions for ongoing monthly MIS reporting
– Overview of production process
– Data collection
– Report production
• Achievements, challenges and success factors
of monthly MIS reporting
– Assessment of key achievements
– Major challenges
– Key success factors
• Potential future development
– Dissemination/application of MIS
– Enhancing content of MIS report
– Upgrade of MIS infrastructure
• Appendix: Sample report

Source: McKinsey 120

Disclaimer

121
DISCLAIMER

• Not all reporting units deliver required split in input data

Missing split of • Allocation of revenues/costs to not following identical
business lines standards

Limited check of
• Primary data sources in general not evaluated (as most data
are collected from secondary data sources)
primary data
sources • Selected check of primary data revealed
– Lack of data consistency
– Lack of detail

Reporting • Accounting/controlling rules for financial data interpreted

standards not fully differently
aligned • Level of performance measurement differs (e.g., composite vs.
portfolios/accounts)

Usage of different • Deadlines not met (limiting planned consistency checks)

templates/lack of • Standardized templates customized from some reporting units
reporting discipline

Source: McKinsey 122

Report

123
GLOBAL LEVEL

Source: McKinsey 124

REGIONAL LEVEL

One report for

every relevant
region

Source: McKinsey 125

LEVEL OF BUSINESS LINES

One report for

every relevant
business line

Source: McKinsey 126

 Appendix

Source: McKinsey 127

QUALITY ASSESSMENT OF KPIs – FINANCIALS
High
Actual Budget Low

Financials

Q4 2001
•… •…
Operating earnings

• Net revenues
Full year 2001
– Fee revenues

•… •…
• Operating expenses
– Administration expenses
• Total staff expenses
• IT expenses

– Marketing expenses
2002

•…

Source: McKinsey 128

QUALITY ASSESSMENT OF KPIs – REVENUE/COST DRIVERS*
High
Actual Budget Low
Revenue/cost drivers

Q4 2001
Revenue drivers •… •…
• AuM
– Thereof 3rd party

Full year 2001

• Inflows
• Outflows •… •…
• Absolute period performance
• Management fee per AuM

Cost drivers
2002

• Headcount •…

* See business performance driver assessment for number of funds/accounts

Source: McKinsey 129
QUALITY ASSESSMENT OF KPIs – BUSINESS PERFORMANCE
DRIVERS (1/2) High
Actual Low
Cost drivers •…
• Number of funds/accounts

Q4 2001
Business performance
drivers
Production
• Share of outperforming
funds/mandates by #
• Share of outperforming
funds/mandates by AuM •…
• Peer group comparison
Full year 2001

(retail)
Distribution
• Number of funds below
critical size (retail)
• Number of funds below
critical size (institutional)

• Marketing expenses per

inflows (retail)
• See quality assessment of financial KPIs

Source: McKinsey 130

QUALITY ASSESSMENT OF KPIs – BUSINESS PERFORMANCE
DRIVERS (2/2) High
Actual Budget Low
Business performance

Full year 2001

drivers
Distribution
• Average management fee •… •…
per new inflows (retail)
• Average management fee
per new inflows (institutional)
•…
Q4 2001
Business performance
drivers
•…
Services

• Operating costs per account

FY 2001

(retail) •…
•…
• Operating costs per
AuC/AuM
2002

•…

Source: McKinsey 131

APPENDIX FOR FURTHER UNITS

For every unit/

region/business
line disclosed in report
add another set of
appendix sheets

Source: McKinsey 132