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Client Reporting and Distribution - An Electronic Revolution

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An Electronic Revolution

Dr. John Francis "Jack" Welch, Jr., the former Chairman of General Electric once famously said “It (the internet) is like the flu – it just spreads like crazy”. Few would deny the acuteness of this observation, and it seems that even the traditionally paper-based activity of Asset Managers sending client reports is now succumbing to the attractive capabilities and efficiencies of the internet. Increasingly, there is demand for electronic reporting, and as the demand has increased, so vendors of client reporting systems have responded to the demand by providing electronic distribution facilities within their solutions. So what are the challenges facing Asset Managers in the changing landscape of client reporting distribution?

Traditionally, Client Reports have been paper based. These have to be printed, bound, inserted into envelopes and placed into the postal system only to be subjected to the latest industrial action of the postal workers unions. However, for some time, a small number of Asset Managers have been using the internet for some of their simple reporting needs (e.g. Fund Factsheets), and some more forward-thinking managers, (or those complying with specific client demands), have been distributing electronically, either by email, or by making reports available on secure web portals for clients to log in and “pull”. So the question is, if this represents a growing trend, is paper-based reporting doomed to extinction?

In some respects, paper reports are great. The thud of a thick report once a quarter on the doormat might be the comfortable option, ageing private wealth clients may not have internet access, and many clients will like to have a nicely printed and bound physical report in their hands.

However, there are a number of reasons why paper reports are no longer the best option for an Asset Manager. These include:

  • Costs (paper, printing, collating, binding, and postage), which for any Asset Manager sending 10,000 reports quarterly can add up to a significant sum. (These costs can be inflated even further if colour printing is required even on just a few of the report pages.)
  • Timeliness. From the point at which the electronic file is ready, the mechanism of printing, binding, posting and waiting for it to be received by the client will add an average of 2 days to the ultimate delivery of the report into the client’s hands.
  • Human error. There is always the chance that someone will put the wrong report in the wrong envelope, meaning that the Relationship Manager receives an awkward phone call from a client who has somebody else’s report, and knows that someone else has his.
  • Non-electronic data. Another problem with paper copies is that because the data is printed, the client cannot upload it for interrogation or manipulation unless they are prepared to input it again themselves.
  • Postal Services. Of course, whilst we’d like to think that the postal service is reliable, there are delays, lost post, and even security issues.
  • Printing & Distribution Management. Any Asset Manager choosing to distribute paper reports is unlikely to count “printing, binding and posting” amongst their core competencies. This presents them with two options. 1 – Set up an in-house print facility, or 2 – Find a specialist printer/distribution provider with whom to partner. Neither is a cheap option, but it is difficult to justify an in-house print facility if you want the best print quality and the specialist services that a dedicated distribution partner can provide. You must also face up to the fact that an in-house operational print services area will effectively only be busy for 2 weeks each quarter. In most cases, using a printing and distribution specialist is the best option. This comes with its own complications, not the least of which is the requirement to have visibility of reports through the work-flow once the electronic files have been delivered to the printing/distribution partner.

Many of these problems cease to exist if you go down the electronic distribution route. There are generally two options when considering electronic distribution. You can either send reports via email, or publish reports to a secure web portal for the client to attach to and download. But which is the better option?

Both will assist you in addressing some of the issues highlighted above (costs, timeliness, scope for human error, postal disruption, print management etc.). But additionally there will be other benefits, some of which include:

  • Preferred option for many clients
  • “Environmentally Friendly”
  • Potential to publish reports with data files which could be interrogated and manipulated by the client (although this will not be easy to achieve if sending files in PDF format)

So what are the factors that differentiate emailing and a secure web portal?

A major concern will obviously be security. Email is fast and reliable but, like postal services, it is not secure. Sending or receiving sensitive data via email can be wide open to intrusion, and obviously client reports may contain significant sensitive information. However, encryption software is available to make emailing secure for both sender and receiver, and it is quite simple to administer encryption to both parties. There will be costs associated in rolling out the encryption to all parties. Asset Managers choosing the email route should seriously consider strong encryption software as part of their solution. They may of course choose to send emailed reports without encryption, but should not do so until clients have been made aware of the associated risks, and they have received authority to send files without encryption.

A web portal will also obviously require security, and this can be handled by the Asset Manager. No installation is required at the client-end, as all security is handled at the point of accessing the portal. Any client attempting to access reports will be prompted for logon IDs, passwords etc., and will be able to download reports, datafiles, or whatever is made available to them. This option will carry a cost of maintenance (client permissions, security maintenance and password support) etc., as well as the initial cost of setting up the user interface and associated hardware to support it.

Most large Asset Management firms are choosing the secure web portal as their preferred electronic distribution method, and most vendors of Client Reporting solutions now offer secure web portal as a function of their solution. This seems to be the preferred trend, and will doubtless continue in the future. There are a number of obvious reasons for this and a secure portal represents:-

  • A branding/marketing opportunity
  • A very useful component in the complete client services offering
  • A single place for the client to retrieve new and historic reports, as well as any further information that can be provided (e.g. data files)

A secure web portal takes the distribution of client reports to a new level, but it is just one component of an altogether bigger issue. Client Services as a function within the Asset Management industry is becoming increasingly more important. Many managers now see it as a differentiator in its own right in the winning and retaining of business. Going forward, a well-managed secure web portal is likely to add significant value to your client services offering. It will not replace the traditional Asset Manager to client interactions (e.g. face to face meetings with clients), but will augment them. For example, in the wake of the financial crisis, some clients have begun to ask for more frequent updates on their transactions and positions data. There is no reason why a well disciplined organisation should not be able to publish daily closing positions and transactional records onto the portal, for clients to access and interrogate. The possibilities for a portal in the client servicing arena go way beyond just the provision of client reports, and the inclusion of a web portal within the client reporting solution opens up a simple route into an improved client services offering. In particular, institutional clients may have specific file templates or formats that they require regularly, and the portal represents an excellent delivery mechanism for these. The potential is really very exciting, and the landscape of client data provision and client servicing is likely to change significantly in the next few years as a result.

In fact the next stage of client reporting evolution is already taking shape. Earlier I mentioned that there were generally 2 options, (email and secure web portal), but there is a new “bleeding edge” third option which is already in demand, and which deserves to be mentioned. Why not give clients secure remote access directly to the Client Reporting system, and allow them to build, format, run, and pull down their own reports? This may seem a little radical, but demand is there, particularly from intermediaries and large institutional clients. Asset Managers considering this option will have to think carefully over whether they are ready for such a step, but viewed simply, it means that they no longer have to worry about customising reports for their clients, as their clients can do it themselves. Obviously, data integrity, system training, system permissioning and security, and other issues will have to be addressed, and vendors in the client reporting space may have work to do to bring systems up to scratch, but as a solution, it makes a lot of sense.

But let’s not get too carried away here. Even with all the new technology, the demise of the paper report is still a long way off, or as Mark Twain put it, “The report of my death was an exaggeration.” Some clients will still want their paper reports, and in some situations, they will absolutely remain appropriate. In truth, the preferred way to distribute client reports will remain a mixture of the old and the new. However, any Asset Manager who ignores the electronic distribution option, does so at their peril. Whether for Client Reports, or the “value added” electronic information that the client requires, the secure web portal is a part of the future of Asset Management Client Services.

Vendors do not build additional modules into their solutions without good reason, but the fact is that most vendors now offer a secure web portal as part of their client reporting offering. ISC therefore spoke to 3 vendors of client reporting systems to understand more about their vision for distribution capabilities...

Vermilion

ISC: You have created a secure web portal distribution facility as part of your Client Reporting solution. What were the reasons behind your decision to build this?

Yes, Vermilion has developed a web portal; one of the key reasons was to give clients both a choice of delivery and a centralised storage place for all their reports. Our system gives the managers the ability to offer additional services including mid-month performance information/ breakdowns, white papers and/ or appropriate information relevant to their client’s interests.

ISC: What level of utilisation has been made of the secure web portal facility in your product by your clients?

The level of utilisation is highly dependent on the type of client a manager has. A number of clients are happy to log on and gain access to their reports and information; however others are not so keen. In our experience, there is no real rule of thumb regarding this topic.

ISC: What do you see as the key benefits to your clients of the secure web portal?

The true benefit will be in giving clients access to their reports, with the ability configure content.

ISC: And what are the key issues your clients face when choosing to use it?

There aren’t too many issues with using a portal; the biggest challenge is in training clients in order for them to realise optimal benefits. For this reason, we believe that the level of return on investment will differ on an account basis.

ISC: Where do you see Client Reporting distribution going in the future?

A pivotal part of any of our implementation projects is working together with the client to deliver what they want to see in their bespoke solution. Vermilion believes that this is the best way to remain up to date with industry developments, and the demands that these bring with them. Major current and impending developments include stitching together reports to deliver as a single client pack and external report ingestion (including from legacy systems) and re-styling. In our experience, we believe that there will always be a place for the current distribution types (print, email, web HTML and portal) – at least this is what historic and current industry developments suggest at this time.

ISC: Are there any other areas in which you can see clients using the secure web portal over and above the provision of client reports?

Yes, there are a number of areas, such as up to date analytics and risk reporting, and using the portal as a platform to deliver relevant news and video feeds to clients.

Kurtosys

ISC: You have created a secure web portal distribution facility as part of your Client Reporting solution. What were the reasons behind your decision to build this?

Asset Managers typically have dedicated teams that focus on distribution of information to third parties within their businesses, although this sometimes is part of an overall business process such as client reporting. However, document and content distribution is often unstructured and problematic lacking sufficient management information and automation resulting in poor utilisation of marketing and business information.

ISC: What level of utilisation has been made of the secure web portal facility in your product by your clients?

Currently, the Kurtosys customers who have chosen to deploy our secure portal technology have implemented the following, either:

  • a simple report delivery 'library for their clients to login and retrieve and download their PDF or XLS document output

or;

  • an online reporting customer portal for their clients to generate ad-hoc queries to analyse portfolio asset allocation; valuations statements and transaction history.

ISC: What do you see as the key benefits to your clients of the secure web portal?

  • Increase website traffic and engage users through personalized content, knowledge-centers and document libraries;
  • Track sales leads by encouraging user registration and subscriptions to newsletters and product updates;
  • Improve customer retention with personalized message and support centers;
  • Reduce the costs of client servicing by distributing documents and user-specific information on an electronic platform;
  • Automate content management by connecting to external or internal data repositories;
  • Reduce compliance risk with role-based quality assurance mechanisms.

ISC: And what are the key issues your clients face when choosing to use it?

Integration remains the main challenge for our customers when deploying a secure portal. Specifically with:

  • workflow applications;
  • CRM applications for client data;
  • website management;
  • content/ document management;
  • with platform applications & Dashboards:
    • RFP/RFI;
    • Marketing Documents;
    • Client Reporting;
    • Consultant Database;
    • Data Portal

ISC: Where do you see Client Reporting distribution going in the future?

With the asset manager’s clients demanding greater efficiencies and transparency over the reporting of investments, secure portals will need to be capable of supporting wider functionality:

  • personalized content and messages;
  • document libraries and archives;
  • reporting, including valuation and transaction statements;
  • news, press releases and email newsletters;
  • knowledge centres and discussion forums;
  • managing content for specific users or accounts;
  • accepting data and document feeds for straight-through publishing;
  • self-registration for prospects;
  • management of user de tails and watch-lists;
  • creation and subscription of email lists.

ISC: Are there any other areas in which you can see clients using the secure web portal over and above the provision of client reports?

Refer to earlier response

Cadis

ISC: You have created a secure web portal distribution facility as part of your Client Reporting solution. What were the reasons behind your decision to build this?

Cadis Reporting leverages on the Access Anywhere needs of our clients, the application has the ability to allow its users (both internal and external) to build and view reports from any location in a secure and efficient manner. Its 100% html output also negates Corporate Security issues because it does not require a client installation or require executable components to be downloaded to a client machine.

ISC: What level of utilisation has been made of the secure web portal facility in your product by your clients?

Quite Extensive, our clients use the secure portal to expose the reports to external clients and users, in addition the secure data portal means that Cadis Reporting clients can offer up the data that drives the report to their end clients which extends their own offering greatly while minimising any need for further I.T. Resources. The utilization of this functionality is accessed through extensive security controls.

ISC: What do you see as the key benefits to your clients of the secure web portal?

The ability to access the reports, components such as charts and tables etc and the raw data from any disparate location which means that end clients can leverage the under-lying data and the graphical representation of the data. These clients can also be external consumers where this distribution of functionality is an added value service and reduces the IT burden on the investment manager.

ISC: And what are the key issues your clients face when choosing to use it?

Distribution of data and functionality always comes with security concerns around user access and comingled data. Cadis Reporting has extensive user and user group security and access controls to overcome these primary concerns. Of course a detailed audit control resides over every business and technical activity.

ISC: Where do you see Client Reporting distribution going in the future?

Our view is that client reporting and the demands for client reporting will be such that people will expect a real-time report to be served up in a timely fashion in a customised format inclusive of slicing and dicing and user defined graphical output. This request should be free from I.T. or skilled intervention.

ISC: Are there any other areas in which you can see clients using the secure web portal over and above the provision of client reports?

At Cadis reporting we feel that Reporting on demand in a customized, highly graphical format is today’s client wants and tomorrows needs. The portal can provide access to any organizations data sets and external connectors including API, Web services, DLL etc. This means that Cadis reporting is a secure, timely conduit to any organizations publishing needs

Cadis Reporting Flow Diagram

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