Profitability Methodology & Modelling

Background & What Alpha Did:
A global asset manager was experiencing challenges accurately forecasting and allocating costs due to its nascent profitability capability, high fund volumes and a complex organisational structure. Cost allocation decisions were being made by the Finance team in silos, without a systematic approach to allocate costs at a fund level and effectively derive fund profitability. As a result, the client remained unable to clearly identify and address a ‘long-tail’ of unprofitable funds that were causing a drag on overall cost-to-income ratio (CIR).

Working closely with the client, Alpha defined a set of core objectives for a future profitability capability and subsequently produced a step-by-step approach to building an activity-based profitability model. The enhanced model enabled the client to identify scalability gaps across the business, assess the profitability of both existing funds and future fund launches, and proactively identify and address unprofitable funds before they incurred additional costs.

Client Outcomes:

• Profitability Methodology
• Cost Optimisation
• Strategic Alignment