Bringing the Back Office to the Forefront: Productivity Gains in LGIP Operations

May 14, 2019

   |  

Matt Starr
Share on twitter
Share on linkedin
Share on facebook
Share on email
Examine most any major industry over the last decade and one glaring fact becomes evident: computing and automating improvements have changed the operating structure of just about every industry. All sectors of the economy, from banking and construction to manufacturing and retail, rely heavily on computing on automation to increase productivity and profitability in the face of thinning margins.
 
Consider all that has changed in daily life due to the rapidly accelerating deployment of automation. We talk to computers when we call to refill a prescription which is in turn filled by a different robot. We make major retail purchases online without speaking to a single person and said order is filled by a mechanical robot in a warehouse. Our homes are full of smart devices, making up the Internet of things, from thermostats accessible by phone to voice activated devices that can call our friends or restock our kitchens.
 
Now, retail banking is often accomplished without visiting a branch, and most banks have applications that allow checks to be scanned and processed via a mobile device. The reality is that computing power and automation has brought the United States to the highest levels of productivity in the world which equates to unparalleled convenience for consumers along with increased expectations of instant gratification. Any industry that dares to lag behind is no longer competitive, no longer contemporary, and certainly not on the vanguard of innovation. 
 
At Public Trust Advisors, LLC (Public Trust), we are bringing the benefits of these productivity gains to the local government investment pool (LGIP) world. There is no question that great LGIP back office efficiency is the logical means to allow LGIP programs to enjoy lower operating costs, streamlined processing, and, most importantly, improved shareholder returns. 
The Public Trust LGIP Administration Services platform is designed to harness the power of a unified, highly automated system that affords our clients quick and accurate transaction processing. Our platform eliminates manual data hand-offs by facilitating flow-through, real-time data management of buy-side trades, compliance checks, security reconciliation, client orders, and shareholder reporting. Public Trust LGIP clients enjoy ready access to their share positions with a high-level of security and reporting.

The Power of Improved Processing

The Public Trust LGIP Administration Services Platform allows our experienced fund accounting team to process a high number of transactions without human manipulation of data. On any given day, each fund accountant handles all the processing for a given LGIP including uploading and releasing transactions, fund valuation, and report generation. This means that we are able to process a high number of transactions on an annual basis, as demonstrated by the sample fiscal year chart below.
Using the same fund as an example, the next chart outlines the monthly peak day transactions handled and the actual processing times against our daily processing goals. For Public Trust, we have set our daily processing goals at five hours or less. As the chart illustrates, even as daily transaction volume increases, we are able to stay within our predefined goals. In our minds, efficiency and accuracy go hand-in-hand. We conduct daily reconciliation of the funds under our management, resulting in a higher degree of processing accuracy. 
Additionally, the Public Trust Administrator Platform is scalable meaning that efficiencies gained through our platform create additional capacity, allowing us to readily absorb additional funds without increasing our operating resources. As demonstrated by the chart below, which compares actual transactions for a year versus the maximum number of transactions, we have ample capacity to add a number of high-transaction volume LGIPs without altering our current resource allocation. 
At Public Trust, we use our Administration Services Platform alongside other turn-key LGIP services to simplify and systematize local government investment pools burdened with legacy systems and high operating costs. We believe a number of LGIPs can only shed their under-performance with a significant restricting of the management fees. Given the high fixed costs of many current back-office systems and processes for some LGIPs, a management fee readjustment likely could not occur with their current providers because they simply do not have the right technology in place and/or are paying too much to run their own systems.
 
Public Trust, and many of our clients, has already benefited from improved LGIP back-office technology as it consistently results in productivity gains through greater operational efficiencies. These efficiencies lead to lower costs and, as a result, more investment proceeds returned to the local government investment pool participants. Let Public Trust show you how we can improve the management of your LGIP. For more information or to contact Public Trust, please click here.
 
The information presented should not be used in making any investment decisions and is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any finance and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. All comments and discussion presented are purely based on opinion and assumptions, not fact. These assumptions may or may not be correct based on foreseen or unforeseen events.

Similar Articles

Investing with Care

As a shepherd of your tax payers’ dollars, it is your fiduciary responsibility to keep those funds safe while earning a competitive rate of return. With that in mind, what questions should you be asking about your investments? Do you know what your primary objectives are?

How can we serve you?

Have a question? Send us a message, and someone will be in touch.