Insourcing vs Outsourcing ABOR: How to Make the Right Call for Ops Leaders

By Senior Consultant, John Rolo

For asset and wealth managers, your ABOR (Accounting Book Of Records) is core infrastructure supporting everything from accurate NAVs to compliant, timely client reporting. But it’s no longer just a back-office concern. Today, ABOR decisions are tightly linked to data strategy, regulatory obligations (including ESG disclosures), and how firms deliver information to clients.

Whether to run ABOR in-house or outsource it is a critical decision – one that affects control, cost structure, risk exposure, and scalability and operational efficiency. While today’s sophisticated provider services have shifted the “build vs buy” equation, the right path still depends on your firm’s structure, strategy, and priorities. 

In this article, I’ll explore the strategic trade-offs between insourcing and outsourcing ABOR – and how to choose the right model for your firm.  

Why Insource ABOR? 

 For firms prioritising control, confidentiality, and customisation, insourcing can be compelling. However this control demands a commitment to infrastructure, people, and ongoing risk ownership. 

Here’s what insourcing can offer and what it demands in return: 

Benefits of Insourcing ABOR  

Control & Accountability: Full control over NAV oversight, data management, and fund administration means no reliance on outside vendors or their schedules. Direct access to systems and teams allows quicker regulatory responses and closer collaboration with front-office teams for real-time checking of positions, P&L, and risk exposures, especially in multi-asset or derivatives-heavy strategies. 

Confidentiality & Expertise Retention: Sensitive client and trading data stays within your infrastructure. Over time, firms build institutional memory and deep process knowledge, enabling tighter alignment with the investment book and greater agility in responding to regulatory or client demands.  

Financial Considerations: Upfront investment typically ranges in the millions but is offset by long-term cost stability and elimination of vendor pricing surprises. Breakeven is often achieved in 3–5 years, or even sooner for larger firms, provided the outsourced model is fully retired and the new system is completely adopted. The model flexes around your internal processes, enabling tailoring to regulatory-specific requirements like European UCITS that off-the-shelf platforms may not support effectively.

Key Considerations for Insourcing 

Upfront Commitment: You should expect a high initial spend on technology, staffing, and implementation, plus full responsibility for system upgrades, disaster recovery, and security. 

In my experience, clients insourcing ABOR often underestimate internal resource requirements for data integration, governance, and reconciliations. High staff turnover creates knowledge gaps mid-project, while compressed testing cycles delay go-live timelines. Firms frequently rely on expensive external consultants to stabilise operations, negating previous savings. 

Talent & Scalability Requirements: Ongoing investment in skilled professionals can be a real challenge due to the competitive hiring and retention landscape – particularly in specialist areas. Expansion means scaling systems, infrastructure, and teams while managing operational risk and regulatory change. Insourced models require proactive governance (including proper documentation, training and succession planning) to avoid key-person risk and knowledge silos. 

The bottom line: For some firms, insourcing offers the right level of control and alignment. But without strong internal governance, deep expertise, and ongoing investment, it can create more operational risk than it removes. It’s only the right model when your business is equipped to carry the load.  

Why Outsource ABOR? 

 Outsourcing shifts responsibility to a third-party provider, reducing internal overhead, unlocking specialist expertise and enabling growth. The model has matured significantly, with leading providers offering high-quality, end-to-end solutions. 

Benefits of Outsourcing ABOR:

 Cost Efficiency & Scalability: This approach transforms fixed costs into variable spend, scaling with your business. Eliminates need for internal technology investment or specialist headcount while benefiting from provider integration with leading custodians and fund administrators.  

Third-party ABOR providers often integrate well with leading custodians and fund administrators, creating efficient data flows and reducing the need for reconciliation across disparate systems, with some providers even providing NAV oversight modules and exception-based workflows. 

Access to Expertise & Tools: External providers bring proven experience, refined processes, and robust platforms. Specialist teams that are difficult (and costly) to build internally become immediately available, with insights gained across multiple clients and jurisdictions. 

Speed & Strategic Focus: Firms expand faster into new products, regions, or client segments by shifting operational burden away from internal teams. This frees up resources to focus on investment performance and client experience while maintaining service quality and regulatory compliance.  

This model is particularly effective during mergers, system replacements, or rapid funds launches where internal bandwidth or expertise are stretched thin.  

Key Considerations for Outsourcing 

Oversight Still Matters: You don’t lose accountability – internal teams must monitor, challenge, and validate provider work as ultimate fiduciary responsibility remains with the asset manager. Shifting from doing to overseeing requires specific skillsets and governance models. Problems arise when policies are inadequately implemented and adhered to. 

Robust NAV validation frameworks remain crucial, including shadow NAVs, exception-based reconciliations, and governance dashboards. 

Fit for Purpose: Provider processes are standardised, which means adapting to their model rather than yours. Contracts need futureproofing across scope, pricing, and flexibility, while vendors must have scalable capabilities that align with your strategic objectives. 

Vendor Dependency: Reliance on external providers exposes you to their priorities, capacity constraints, and change schedules. Change management becomes more complex as you align release cycles, testing windows, and incident response frameworks with theirs. 

Watch for warning signs of a deteriorating vendor relationship: slower response times, more operational errors, reduced transparency, poor communication about changes, and vendors shifting attention toward bigger clients. 

The bottom line: Outsourcing works best when your firm values agility, is growing quickly, or wants to redirect resources to higher-value areas like investment management and client servicing. The real risk doesn’t come from outsourcing itself but from operating without the right controls in place e.g. deprioritising your business in favour of larger clients. Particularly applicable in smaller markets like South Africa, LATAM. 

Choosing the Right Model 

This isn’t just a cost decision but a choice about how your business operates, grows, and controls risk long-term. The right model depends on your current setup, strategic goals, and internal maturity. 

Insourcing tends to suit firms that: 

• Require direct control over ABOR processes, systems, and data 

• Have internal systems that need tight integration with ABOR, such as IBOR, PMS, or risk platforms 

• Prefer to retain sensitive client or trading data in-house due to confidentiality or regulatory concerns 

• Operate in jurisdictions or under mandates that make outsourcing less viable (e.g. specific fiduciary or regulatory requirements) 

• Have the internal resources and appetite to take on the ongoing responsibility of managing ABOR in-house 

• Run proprietary or liability-driven strategies that don’t align well with standardised service models 

• Want to maintain operational knowledge within their own teams, supported by internal documentation and governance 

Outsourcing tends to suit firms that: 

• Want to reduce fixed costs and shift to a more flexible, variable cost model 

• Need to access specialist expertise quickly 

• Are modernising or replacing legacy systems, and outsourcing ABOR aligns with broader transformation goals 

• Want to focus internal effort on growth, client servicing, and investment performance 

• Are expanding into new markets or product lines and need operational flexibility to support that expansion 

• Lack internal expertise or infrastructure to scale efficiently 

• Prefer the stability and reliability of working with experienced providers using proven platforms 

Most firms fall somewhere in the middle, which means the decision isn’t just whether to outsource, but what to outsource and how to retain control. Either model can deliver, but only when they’re shaped around your actual day-to-day realities, not just a boardroom vision. 

There’s no perfect model, but there is one that fits your business better than the rest. Whether you’re building in-house, outsourcing entirely, or navigating the grey space in between, the real challenge is making it all work under real-world pressure: stretched teams, evolving regulation, shifting client demands. 

We’ve helped firms at every stage of that journey; from those scaling fast to those fine-tuning mature models. If you’re ready to rethink how ABOR really works for your business, get in touch.