There are inconsistencies in how asset managers monitor distribution networks, with survey data revealing a heavy reliance on manual processes and a lack of alignment on key performance indicators across Europe, according to a study.
Clearstream Fund Services has published a pan-European study showing that while most fund managers conduct ongoing monitoring of their distributors, the methods, frequency and data standards applied vary widely—raising concerns about operational effectiveness and regulatory alignment.
Based on responses from over 450 industry participants across two webinars, 94% of firms reported conducting ongoing monitoring. However, just 7% use fully automated systems, with 76% relying on a hybrid of manual and automated tools. This underscores the slow pace of digitisation across the fund distribution ecosystem.
Key performance indicators (KPI) collection is broadly seen as essential, with 95% of respondents acknowledging its importance for effective oversight. Yet, the majority of firms collect KPIs quarterly (39%), followed by monthly (18%) and annually (18%). A further 17% admitted to collecting KPI data only on an ad hoc basis.
Authored by Luca Bruni, Clearstream Fund Services in cooperation with Forvis Mazer, Lindberg Consulting and Aberdeen Investments, the whitepaper also revealed that once data is collected, 79% of firms take action by analysing the information and using it for internal reporting. However, 13% limit their response to analysis only, and 8% simply store the data without further action.
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When asked which KPIs are most important to monitor, 21% pointed to suspicious transactions, followed by deviations from positive target markets (18%) and investor complaints (18%). Less attention was given to sanctions-related metrics or regulatory investigations, suggesting gaps in monitoring potential high-risk areas.
The whitepaper found that only 72% of firms scale their due diligence based on the risk profile of their intermediaries. The remaining 28% apply the same oversight regardless of risk, increasing their exposure to potential compliance failures.
The findings reflect ongoing challenges in applying consistent monitoring practices across jurisdictions governed by EU-wide regulations such as MiFID II and local frameworks like Luxembourg’s CSSF Circular 18/698. In many cases, obligations are not matched by clear operational guidelines or effective systems.
Efforts to define a standardised KPI set have been mixed, according to the researchers. A 2022 initiative led by GFA/Acolin attempted to develop a KPI template but proved too exhaustive for practical use. A separate proposal by the Findel Group recommending three core KPIs was viewed by many managers as insufficient.
To address this, Clearstream has introduced five KPIs on its UME platform—covering areas including suspicious transactions, investor complaints and distribution in prohibited countries. While this step supports transparency, the firm noted that broader adoption and alignment across platforms and asset managers are still needed.
The whitepaper positioned technology—particularly automation, AI and data integration—as a key enabler of scalable monitoring.
“We need to be more efficient when managing our own data, such as screenings, customer relationship management teams for change management, compliance teams for complaints reporting, TA for suspicious transactions and sales activities outside target markets,” commented Camilla Lindberg, Lindberg Consulting.
Gianfranco Mei, Forvis Mazar, added: “Ongoing monitoring activities should be a key component of the business strategic plan. Management should provide the company’s governing bodies with all necessary information to carry out business activities effectively. It is also important to track how these monitoring activities are evolving with the increasing use of AI, which facilitates the collection, coordination and consolidation of information, and allows for the generation of ad-hoc reports benefiting all stakeholders in the company. For this purpose, using a dedicated AI platform could be highly beneficial to ensure proper ongoing monitoring, capable of digesting high volumes of information with minimal operational risk.”
