Understanding the Costs of Portfolio Management Software (PMS) early on is crucial for several reasons. Firstly, different software solutions come with various hidden or unforeseen expenses, such as training, integration, or customisation costs, which can significantly impact the total cost of ownership.
Unfortunately, understanding the pricing structure of Portfolio Management Solutions can be challenging due to the limited online information. Nevertheless, having a ballpark estimate can serve as a valuable initial filter when evaluating potential solutions. For example, if you have $10 billion in Assets under Management (AuM), it’s unlikely that institutional portfolio management software priced at $2 million per annum would align with your needs.
Conversely, a solution priced at $100,000 per annum won’t adequately support the requirements of your investment team and operational processes. Therefore, even though pricing details may be elusive, rough cost estimates can help you quickly gauge whether a particular PMS provider fits your organisation’s size.
Limina is actively working to enable you to reduce overall system costs - learn how here.
Note: in this article, we informally refer to PMS as a term that spans trade order management system capabilities and middle office operational processes – exact capabilities to expect are listed in this post. Such a system is also called Investment Software. A PMS can, unfortunately, mean many things in our industry, which we demystify in a separate article linked in the first sentence of this post.
Having once been investment professionals, we recognise the importance of pricing examples to help you determine whether a prospective solution merits further investigation.
Hence, at Limina, we openly share pricing examples on our website, a practice that none of our competitors have adopted (as of the time of writing). Hopefully, they will follow in the spirit of making vendor selection easier for you.
We’re also writing this to help you understand what to expect from various vendors – because we wanted such a guide when we were investment managers. Generally, if vendors quote far outside the intervals indicated here, it’s our experience that they’re not the same type of solution. For more advice on system selection, you can access our complete guide to choosing the best investment management software.
In our experience, when vendors provide quotes that significantly deviate from the ranges outlined below, it suggests that their offerings differ fundamentally, and you’re probably not looking at comparable solutions.
The examples we’ll explore in this article are not best-of-breed investment management solutions such as standalone risk or performance measurement systems. Instead, we focus on broader solutions that cover most or all of the investment management process, including front-to-back systems.
$200,000-$800,000 USD per annum
The following table is based on publicly available information from prominent vendors known for their robust front-to-middle office solutions.
| Front Office | Middle Office | Other |
| Portfolio modelling | Trade affirmation/allocation confirmation | Security master* |
| Trade capture/routing (order management software) | OTC Derivatives life cycle management | Benchmark handling |
| Algorithm programs | Corporate actions | 3rd party data integration |
| Trade analytics | Portfolio reconciliation* | Data validation/integrity checks* |
| Trade compliance/limits monitoring | Securities lending* | |
| P&L reporting | Performance analytics and composites* | |
| Advanced risk analytics* | Collateral management* |
* May not be available from all vendors, or it may be integrated from a specialised provider, e.g. modern APIs
$1,000,000 - $4,000,000 USD per annum
The table below lists the capabilities to expect from a complete front-to-back platform. It’s based on an excellent Aite-Novarica summary written by Paul Sinthunont. We have also cross-referenced the table with vendor websites.
| Front Office | Middle Office | Back Office | Other |
| Portfolio modelling | Trade affirmation/allocation confirmation | Portfolio/fund accounting | Security master |
| Trade capture/routing (order management software) | OTC Derivatives life cycle management | Tax accounting | Benchmark handling |
| Algorithm programs | Corporate actions | Partnership accounting | 3rd party data integration |
| Trade analytics | Portfolio reconciliation | Investor fees | Data validation/integrity checks |
| Trade compliance/limits monitoring | Securities lending | Internal reporting | |
| P&L reporting | Performance analytics and composites | Client reporting | |
| Advanced risk analytics | Collateral management | Regulatory reporting | |
| Client relationship management* | Administration | ||
| Valuation modelling* | Client billing* | ||
| Research management* | General ledger (accounting software)* |
* Might not be available from all vendors, or maybe integrated from a specialised provider, e.g. modern APIs
$30,000 - $400,000 USD per annum
The functional areas covered are roughly the same as the front-to-back platform table above. Hence, the natural question becomes:
Off-the-shelf solutions are typically designed to cater to smaller managers, such as hedge funds with 1-3 funds and relatively straightforward operations. In contrast, complete front-to-back platforms generally are tailored to serve buy side asset managers with hundreds (or even thousands) of mutual funds and mandates.
The suitability of a system isn’t solely determined by its functional components but also by its ability to handle intricate workflows and manage substantial volumes of trades, data, compliance regulations, and the ensuing data management complexities that arise.
This article focuses solely on the licensing or subscription fees associated with a Portfolio Management System. However, there are typically several other expenses related to the installation and operation of such a system. These may encompass:
If you’re interested in finding out more about Limina’s pricing, you can view examples of our pricing on our pricing page. Surprisingly enough, Limina can actually help you make more money as well - learn how in our article about Operational Alpha.