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Case Study: Financial Services Company

Financial Services
Company Type:
Comprehensive Financial Services
Company Size:
Job Functions:
Finance, CIO
Custom cost allocation model, custom revenue allocation

Challenge: How to organize, standardize, stage and deliver comprehensive high-quality financial, cost, and operational information so that it can be cost-effectively leveraged to plan, budget, measure, control, and drive company financial performance.

A Leader in Financial Services

Our client is a leading global financial company offering businesses, individuals and institutional clients a wide range of products and services. With $9 billion in annual revenues, and $285 billion in assets under management, the company’s products and services includes retirement solutions, life and health insurance, wellness programs, and investment and banking products – offered through their diverse family of financial services companies and a national network of financial professionals.

Driving Financial Performance

As one of the nation’s leading 401(k) providers and a total retirement solutions innovator, the company’s Retirement and Investor Services (RIS) business unit offers a wide range of workplace retirement plans and programs for organizations of many types and sizes.  In order to focus well on the needs of different-sized organizations, RIS segmented its business into three units according to the size of the organizations it serves. 

Each unit is headed by a market segment Vice President and General Manager (VP/GM) with profit-and-loss responsibility. Although these units make extensive use of shared services in product development, sales, marketing, distribution, operations, IT, accounting, and finance, there was little visibility into shared service usage across each unit.  Further, RIS lacked an integrated source of comprehensive financial and operational information.  As a result of these factors, RIS financial managers and the market segment VP/GMs spend significant time and energy reconciling financial and operational data, and were partially handcuffed in their ability to:

  • obtain an accurate picture of the profitability of each business unit, which made it difficult for the CFO to home in on profit shortfalls and/or explain them to investors
  • obtain information about expenses associated with the shared services, which made it difficult to employ activity-based costing and management techniques to optimize expenses in relation to targeted and actual revenues
  • automatically determine financial and operational variances
  • fully leverage balanced scorecards and dashboards for managing performance; and
  • leverage sophisticated financial modeling and predictive analytics tools.

More broadly, RIS faced the challenge of utilizing high-quality financial, cost, and operational information to cost-effectively manage, and drive RIS financial performance. 

The Financial Management Vision – Driving Financial Performance

The company selected DecisionPath for our BI thought leadership and our ability to help clients achieve a holistic financial perspective through better access to information.  Using the BI Pathway Method, DecisionPath partnered with the company’s CIO and its BI Director to engage with financial management executives to identify key requirements for better financial and operational information and analytics.  Top priority was given to developing and deploying a sophisticated cost allocation model to assign shared services costs to RIS’s three market segments.  Next DecisionPath and the company worked together to develop and deploy a revenue allocation model. 

Better Processes, Better Results

Together, the revenue and cost allocation models enable RIS to generate market segment P&L statements, which have:

  • focused VP/GM attention on managing shared services expenses and thereby improving operating profits
  • provided high-quality information that has been cost-effectively leveraged to plan, budget, measure, control, and drive RIS financial performance

More broadly, RIS has improved the internal efficiency of its financial management processes, allowing its financial analysts to spend more time devising profit improvement strategies and less time obtaining the basic numbers.

Created by Matrix Group International, Inc. ®