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Convergence Launches the Fund Expense Practices Analyzer Service

Convergence, a provider of database, custom research and advisory services to the alternative asset manager industry, announced the launch of its Fund Expense Practices Analyzer service. According to the company, the product is based on expense disclosures sourced from over 10,000 registered investment advisors that are normalized, categorized and grouped by manager type, primary investment strategy and size. The product provides empirical data that gives Advisors and Investors a view on common and uncommon expense disclosures and their use by advisors and peers. The expense disclosure database is updated with every new brochure and Customers will receive updates annually, or more frequently based on the service level purchased.

“The release of the Fund Expense Analyzer is quite timely in light of CALPERS announcement to reduce the Plan’s stake in Hedge and Fund of Fund Advisors, said John Phinney, Convergence’s Co-Managing Partner. In a recent CALPERS press release, Ted Eliopoulos, interim Chief Investment Officer at CalPERS stated, “One of our fundamental investment principles is that cost matters,” noting that hedge funds are “an expensive investment vehicle, especially at our scale.”

According to Convergence’s George Evans, “Our data confirms CALPERS view on expenses and shows large differences between the types of expenses disclosed by Advisors of similar sizes and types. For example, while 92 percent of all advisors disclose Fund Accounting and Administration expenses, only 3 percent disclose Risk Management. At the Strategy level, Multi-Strategy advisors disclose 46 unique expense categories, the most of any of the 30 investment strategies tracked by Convergence, resulting in the greatest differential between the median and maximum expense category count within a strategy.”

“Investors using the tool should be able to engage their managers in a more complete conversation about the management fees they pay and the expenses they may expect to incur, relative to what other advisors may be charging,” notes Phinney.


About Convergence

Convergence provides analytical data, benchmarking, custom research and advisory services to the Alternative Asset Management industry. The firm’s data is unique because it is enriched by subject matter experts and provides best practices based on carefully selected peers. Convergence focuses on a manager’s infrastructure including fund and management company accounting, investment operations, risk management, marketing materials, investor relations, tax, compliance, technology and service providers. Clients include asset managers, administrators, audit firms, financial technology firms, investment management consultants, prime brokers, custodians, investors, compliance firms, recruiting firms, colleges and universities and individual research. The Convergence approach creates value for clients by helping them research, understand infrastructure expenses, identify opportunities to increase market share, ensure practices are consistent with best in class peers, select service providers that best support strategic business goals, enhance investor due diligence efforts, perform difficult custom research and provide ongoing education. For more information on Convergence please visit

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LPs Bear Growing List of Expenses (Hedge Fund Alert)

The results of Convergence’s study on the wide array fund management expenses that are passed on to investors are in. In this week’s Hedge Fund Alert,  Convergence Co-Managing Partner John Phinney discusses the results of this study along with the impending launch of the Convergence Fund Expense Practices Analyzer service. The FEPA providers advisors and investors with a view on common and uncommon expense disclosures and their use by advisors and peers.

View the article and visit Hedge Fund Alert here.

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Expense-Allocation Policies Examined (Hedge Fund Alert)

From the August 13, 2014 Hedge Fund Alert:

A research firm focused on the operations side of the hedge fund business is examining an issue of increasing importance both to regulators and investors: how funds allocate expenses to limited partners. The New York firm, called Convergence, has nearly completed its study and expects to release the results next month. The early take-away: There appears to be little consensus among managers about best practices when it comes to apportioning responsibility for the many expenses associated with running a hedge fund. Rather, Convergence is finding a wide divergence of policies and practices.

“Every fund has documents and investors presumably read them, but they are reading them in a vacuum,” said co-founder John Phinney.

Convergence develops databases covering a range of operational functions to help managers benchmark their practices against industry norms. For its study on expense-allocation policies, the firm is scouring SEC filings and managers’ websites, as well as tapping proprietary sources. The goal is to discern to what extent funds allocate various expenses to limited partners — and, conversely, which expense items are covered by the general partner. While it is standard practice, for example, for investors to pay their share of trading commissions, accounting charges and other expenses directly related to the management of a fund, it’s less clear whether charges for technology, legal advice and staff travel should be borne by the partnership or the management company. The SEC has signaled it intends to focus on expense-allocation policies and practices as part of its “presence exam” program, which it launched in 2012 with the aim of inspecting a broad swath of private-fund operators that were required to register as investment advisors under the Dodd-Frank Act.


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Convergence Releases New Product Suite, New Website

Redding, CT – July 14, 2014 – Convergence, an information and advisory services provider to Alternative Asset Managers, Service Providers and Investors, announces its 2014 product update. Convergence is the first firm to capture, normalize and enrich one hundred percent of all Registered Investment Advisors’ Form ADV, Brochure and Supplemental Schedule information filed with the SEC. This core data is updated daily and supplemented with public domain intelligence relevant to the RIA.

“Our early experience with clients helped us shape the future direction of the firm,” co-managing partner John Phinney stated. “Leveraging our significant experience in the Alternative Asset Management industry, the Convergence team brings an insider’s perspective to Managers, Service Providers, Higher Education and Individuals focused on the Alternative Asset Management Industry.”

Convergence’s database contains the most comprehensive set of infrastructure data available in the market. The firm captures 100% of RIA regulatory filings and supplements daily through internet based news, creating unique information-based observations for 14,000 Registered Investment Advisors, 6,900 Private Fund Advisors, 6,200 unique Manager families and  40,000+  funds along with 145,000+ key C-Suite contacts and 1,000+ unique service providers.

The Convergence product suite consists of Institutional Analytical Tools and Individual Analytical tools delivered via a web-enabled portal or direct download file interfacing with in-house and CRM systems. The firm’s analytical products include The Manager Profile, Key C-Suite Executives, Manager Benchmarking, Market Share Analyzer, Client Benchmarking Analysis, Business Development Targeting, Time Series Analysis, Material Event Analysis, Fund Expense Practices Analysis, Regulatory History Analysis, Talent Acquisition Manager and Manager Profile – Individual. The data enables clients to objectively research, compare and extract enriched data points to a fully defined peer group.

Convergence recently updated its website to reflect the firm’s enhanced product capabilities for Asset Managers, Administrators, Audit Firms, Financial Technology Firms, Recruiters, Investment Management Consultants, Investors, Banks, Colleges and Universities and Individual subscribers. “Convergence’s mission to provide an independent view of data to shape an optimal infrastructure model for Managers, Service Providers and Investors remains our focus,” stated Convergence co-managing partner, George Evans. “Re-launching the website reflects Convergence’s continual enhancement of its products to meet the needs of our clients. The new website helps clients understand how they can better utilize Convergence data, advisory and research services to achieve revenue, product and expense goals.”

About Convergence, LLC

Convergence, LLC, provides data products, analytical tools, and advisory and research services to Alternative Asset Industry Managers, Service Providers and Investors. The firm is the only data provider that captures and enriches one hundred percent of a Manager’s ADV file information with proprietary technology that also uses publicly available information to create content relevant to its clients’ business needs. Utilizing the Convergence database, Managers, Service Providers and Investors can solve critical infrastructure needs, focusing on revenue, product and growth. Research and Advisory provides for market analyses, segmentation and best practices. For more information on Convergence, please visit

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Symposium on the Management of Systemic Risk in Finance

Convergence Co-Managing Partner John Phinney participated in a panel discussion along with panelists from Prudential Financial, Vanguard, AIG and Morgan Stanley as part of the Symposium on the Management of Systemic Risk in Finance at Columbia University on June 26th, 2014. John discussed how Operating Risk within the alternative asset management industry is changing as more alternative asset managers offer products and services traditionally offered by banks.

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Operations Pros Promise to Cut Clients’ Costs (HedgeFund Alert)

Two former Apollo Global Management executives and a one-time GlobeOp professional have launched a consulting firm that aims to help hedge fund managers cut costs. Gene Donnelly, John Phinney and George Evans quietly set up Convergence in April, but didn’t officially open the Fairfield, Conn., operation for business until this month. They’re pitching their services both to fund operators and administrators, with an emphasis on offering operations-focused data and advice.

For example, Convergence has compiled a “benchmarking” database on the levels of staffing and infrastructure that hedge fund managers maintain in relation to their sizes and strategies, using information from public documents and interviews with the operators. The database contains 9,600 SEC-registered investment advisors, with an emphasis on the biggest 475 based on regulatory assets. Staffing data can be broken down according to the duties of the employees.

Clients can purchase the data and related analytical tools, or can engage the firm as an advisor, to compare their operations to those of similar firms and look for ways to become more efficient. Convergence also plans to supply staffers to perform related work that many managers regard as clerical tasks. The effort is aimed at capitalizing on a desire among hedge fund managers to reduce their operational expenses, in part by taking over tasks that administrators aren’t always equipped to handle and often are handed off to high-paid employees.

For example, a firm that wants to move into a new asset class might assign a staffer on its trading desk to research the area and implement the needed infrastructure. According to a study that Citigroup’s prime-brokerage unit released in December, fund operators spend $14.1 billion per year, or the equivalent of 0.65% of total industry assets, on marketing, investor relations, risk management, compliance, technology and business management. What’s more, economies of scale dictate that those costs are proportionally higher for smaller shops. Donnelly was chief financial officer of Apollo Global Management from July 2010 to August 2012, while Phinney held the same title at Apollo Fund Group from March 2008 to March 2013. Evans most recently headed business development at recruiting shop DAK Intelligent Search and DAK affiliate Gladstone. Before that, he held the same title at GlobeOp, Bisys and J.P. Morgan.

Visit the HedgeFund Alert website to view this article.