Client Reporting: The Keys to Success

client-reporting-header.jpgThere’s almost a dichotomy between the asset management industry and the rest of the world. Today we all expect to have up-to-date information at our fingertips at all times via an array of gadgets, which arguably is not necessary in asset management. Asset management is about the long term; it’s about managing money for years rather than months, days or even hours and minutes - and it’s about having someone else make the decisions for the asset owner. This is perhaps one of the main reasons why the move to digital has been slower in asset management than in other industries.

Wealth management also differs from institutional portfolios; an individual may have unexpected reasons for needing to access their money so might therefore require an up-to-date valuation and an easy mechanism with which to instruct the sale of assets in order to realise capital. Institutional clients such as pension funds will have their obligations mapped out over many years and are therefore far less likely to need to convert assets quickly. This is borne out in conversations with trustees, who often feel that they get too much information about short-term market movements when they are looking for a long-term picture.

Client reporting solutions exist to assist all types and sizes of asset manager; and are available via a number of models. These include:

  • the asset manager integrating the client reporting solution into their own systems and running it themselves;
  • Software as a Service (SaaS), where the system is hosted by a service provider but operated by the asset manager;
  • outsourced as part of a larger middle office operations arrangement;
  • outsourced independent of accounting, where the asset manager delivers data to the service provider who transforms and distribute the data via a variety of media

All asset managers need to provide information to end clients, their agents, and regulatory bodies, amongst other destinations. They face the same issues of data from multiple sources needing to be brought together in an efficient manner and rendered into a variety of formats and delivery mechanisms, all at minimal cost and with minimum effort. Easy-to-use tools are also required to customise reports as new products are launched, regulations change, new clients are won, the company rebrands and so on.

The demand, therefore, for new reporting platforms is present within any asset manager that does not yet have highly efficient data management allied with a flexible, automated client reporting tool. Client reporting projects themselves can be relatively swift to complete (provided that the source data exists). Typically, however, data issues cause problems with client reporting and the ‘client reporting’ project is actually a combined data management and client reporting undertaking, where the data element will typically account for 75% of the total project resource and cost. One of the most common justifications for a new client reporting system is that the data is wrong, and that’s a data problem not a reporting problem!

Although national legislation may control where data is physically stored, regulators will rarely stipulate whether a function can or should be outsourced or not. It is key to bear in mind that regardless of platform chosen, it is up to the asset manager to ensure that they are compliant with all relevant rules and regulations; outsourcing is no defense if things go wrong.

A good client reporting platform will have access to: high quality ‘scrubbed’ data from multiple sources on each of the portfolios or funds under management; automated workflow and controls; and flexible report formatting and distribution. This is itself a valuable asset to the fund management company which can be used for a variety of purposes beyond client reporting including regulatory disclosures of consolidated holdings, and to support the sales process by providing easy access to AUM in various markets across the whole business.