Inception Date Mapping

As an addendum to the Data Field Mapping section, one interesting variable with regards to Data Migrations is mapping out the various Inception Dates your firm might utilize. In thinking through an account’s life cycle, there may be different ‘inception’ dates that could be utilized to identify specific frames during the account opening process. When converting from a Legacy system to a New system, a) the Legacy fields must be identified and defined b) capability of those date functionalities in the New system and c) date information converted/mapped from the Legacy to the New system.

Below is not an all-inclusive list of the various dates a firm might use, but the list consists of the most utilized date fields. Some firms might use all of these fields, or certain fields might serve multiple purposes. It is up to the firm to make the decision how far it wants to categorize its work flow. Most firms will utilize just 1 date to denote the inception of the account, for all purposes (Management Date=Billing Date=Performance Start Date), which simplifies things. However, some firms want and/or need these other classifications, therefore, it is important to know which date serves which function, as it relates to performance.

Initialization/Creation Date

This is the date whereby the ‘shell’ of the account was opened on the system.

Funding Date

This is the date that the account received the assets it would be allowed to trade on.

Initial Trading Date

This would be the date whereby the date of the first trade occurred (managed and unmanaged trade).

Management Date

This would be the date the account officially started being managed to the investment strategy.

Billing Date

This would be the date the account’s assets were first billed a management fee.

Performance Start Date

This would be an override functionality which would allow the firm to choose the date performance starts on the account.

In order for a firm to have a successful conversion, all workflow Dates must be determined. In doing so, these are some of the bottlenecks your firm might encounter:

End of Month=Beginning of Month

Your firm will need to define what dates need to be entered in order to capture a month’s performance. In that instance, if you wanted to get January’s performance return would you choose a) 12/31/2018-1/31/2019 or b) 1/1/2019-1/31/2019 as the date variables to be entered? Some systems utilize 12/31 as the start date to capture the first day of the month, and some utilize the actual 1st day of the month. It is important for your firm to research how the Legacy and New system date variables work and are defined, in order to translate that functionality accordingly.

End of Day vs Beginning of Day

As a secondary issue with regards to the EOM vs BOM, as mentioned above, it is important to define the New and Legacy system’s functionality with regards to reports running as of Beginning or End of Day. By this, your firm must determine that if a user chooses the date variables of 1/1-1/31 does that mean the performance report will capture all of 1/1’s return information (ie BOD) or does it mean that the performance report will start calculating as of 1/1 (ie EOD)? It is important to define both systems’ methods so users can run reports as accurately as possible.

Generic System Reports vs Client Statements

Some systems will utilize a specific date field mentioned above to denote when the performance starts on an account. The system will look to that date field, and start calculating performance as of that date. However, in certain situations, a firm can create an ‘alternate’ date which would be used for Client Statement (or other) purposes, of which, may not be visible and/or identifiable within the system. Client Statements may be generated from an alternate source (Outsourcer, Other System, etc), whereby additional data fields are stored. Within the Client Statement reporting system, there may be an ‘alternate’ date or other available field that is populated to which the performance starts on the account. Therefore, the system-generated since inception performance and the client statement’s since inception performance might be different. As a general rule, it is import to research any other systems that are ‘linked to’ or ‘feed off of’ the main system, and look for any possible data that may be entered/populated outside of the main system.

Managed Account vs Account Performance

Account Performance is when performance starts being calculated the day the first $0.01 hits the account. Managed Account Performance is when performance starts being calculated as of the 1st day the investment strategy is implemented.

In the typical Separately Managed Account world, a firm will track Managed Account performance which means, the firm starts tracking performance the 1st day the investment strategy is implemented. Conversely, SMA accounts will track terminated performance through the last day of management. Meaning, if an account received a termination letter on 10/5/2018, the firm would only calculate/track performance through End of Day on 10/4 (the account’s last full day of management). If your firm only has SMA accounts, this is all pretty straightforward.

With firms that have Wealth Advisory types of accounts, it is not so simple. For Wealth Advisory types of accounts, the firm can track either Account or Managed Account performance, depending on its business structure. Typically, Wealth Advisory types of accounts track Account Performance. Conversely, as with the start date, the termination date and/or last day of performance is calculated through all dividends and trades being settled, and until the account goes to a $0 balance.

The main issue here is that some firms have both account types, and may have defined the start of performance differently, based on the account type, thereby creating different performance methodologies in the system. Therefore, it is a good idea to research this issue during the research phase of your conversion.