Pacific Investment Management Corp. (PIMCO), the fixed-income division of Pacific Advisors, has licensed TenFold Investment Management's Revenue Manager to automate client fee billing and accounting. PIMCO, with about $185 billion in assets under management, decided to discontinue maintaining its proprietary fee billing system, so that it could focus its I.T. efforts for mission-critical analytical applications. The institutional asset managers also found that fee billing structures have become more varied in the past five years-with investor savvy on the uptick-and it required a system that could be changed on the fly without hard-coded changes.
"We started looking for a new billing system back in July of last year," says George Allan, senior vice president at PIMCO. "I can't tell you who else we looked at, but the clear front-runners were our legacy system and TenFold's Revenue Manager. We decided to focus on our core competency-building analytical applications-and outsource billing so we could focus on our business needs, which is obviously maximizing return on investments."
Although Allan declines to specify how much PIMCO is paying for the system, he admits, "I think we could have done it for about the same amount of money with the legacy system."
He did admit that Revenue Manager will be much easier to use, as it allows changes to be made to billing structures almost on the fly, without any need to hard-code the changes. Michele McGovern, president of TenFold Investment Management, explains that Revenue Manager was designed with the large institution in mind, one with many clients and varying fee structures.
"Five years ago, there were more standard ways and fee schedules per product," McGovern explains. "The market has changed, though. There are many new products, and firms needs to be flexible and customized in the way they service their clients."
Pointing to two generic firms that both manage index funds, she says there is little inherent difference in the funds, so the firms must distinguish their products with different fee structures. For the actively managed fund, clients with larger investments expect some graduated billing methods that reward them for a larger investment.
Revenue Manager is capable of interfacing with any portfolio accounting system, McGovern claims, as it comes with a customizable set of APIs. PIMCO will be hooking the system up to its own proprietary investment accounting engine, SMARTS.
PIMCO expects to run Revenue Manager in parallel with its current system during the second quarter billing cycle, which occurs at the beginning of July, and Allan is certain the firm will drop the older system completely in the third quarter.