The rise of omnibus accounts & managing complexity in fund distribution

Omnibus accounts have become one of the biggest headaches in fund distribution, creating a complex web that masks the true nature of fund ownership and distribution chains. As distribution networks grow more intricate, asset managers are struggling to maintain transparency and control.

"We know that today, unfortunately, it's a real headache for asset managers, and we spend a lot of time on getting the data from the statements in the system," explains Marina Corghenci, Director of Fee and Distribution Channel Management at FE fundinfo. 

The complexity stems from an intricate web of distributors and platforms, layered with IFAs and intermediaries, each adding their own level of custody arrangements. This complexity multiplies with cross-border distributions, where varying reporting standards and formats create additional challenges in maintaining transparency and accuracy. The resulting opacity makes it increasingly difficult for asset managers to maintain clear visibility of their distribution chains and effectively manage their relationships.

Even a firm with sophisticated operations like Edmond de Rothschild acknowledges the challenge. "Omnibus accounts are one of the pain points for everybody, that is for sure," admits Edmond de Rothschild’s Head of Client Services in our recent webinar. She explains how Edmond de Rothschild multiple processes, including comprehensive data management, to improve transparency and visibility for omnibus accounts.

The solution, according to leading firms, lies in creating transparency through AI-powered data standardisation and client book of record management. 

FE fundinfo's system connects to over 30 transfer agents via SFTP, API or AI-based connections, standardising data from multiple sources including distributors, platforms, custodians and IFAs. "With our AI model, it is just a question of drag and drop," says Marina Corghenci.

"Knowing who is part of the distribution chain is an important question for all asset managers," Corghenci emphasises. "With our system, we can support you with complex distribution chains. You can layer down the distribution hierarchies, map those, modify those, and any changes can be easily tracked with our audit trail."

The impact of poor omnibus account management directly affects the bottom line through increased operational risk, potential double payments and regulatory compliance issues. Modern solutions can help asset managers break down these omnibus accounts, understand their true distribution chains and manage their business more effectively. 

Want to learn how to tackle the omnibus account challenge like other leading asset managers? Watch the full on-demand webinar now.