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Client Reporting Trends for 2011

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Evolution in Action

One of the key principles of Darwin’s theory of evolution, is that evolution itself is not a constant process. In fact, evolution only occurs where the need arises, and is actually punctuated by long periods of stasis (where a particular species doesn’t evolve at all), followed by short and rapid evolutionary spurts forced upon a species by environmental change. If a species doesn’t need to evolve because its environment doesn’t demand it, then it will remain as is. If the environment changes too rapidly for a species to evolve, it will die out. But if a species can evolve to suit its new environment, then those individuals within that species best adapted to the changing environment will evolve and survive, and once fully adapted, will be somewhat different to their ancestors.

So what has all this got to do with Client Reporting? Well, it’s confession time. As of 1st Feb 2011, I will have been toiling away in the City of London in the Asset Management industry for exactly 30 years. Back when I started, one of my first tasks as a fresh-faced youth, was to collate report packages for large segregated clients on a periodic basis. It was an extremely manual process, and one which (surprisingly) hadn’t actually changed that much by the start of the millennium. I’d changed jobs several times in the intervening years, but coming back to client reporting 20 years later, I was somewhat shocked to find that the report contents hadn’t changed very much, they were still stuffed into brown envelopes, and were still sent out at roughly the same times after month-end. Very little had “evolved” in client reporting in those 20 years! By contrast, the last 10 years (during which I have been somewhat immersed in client reporting), have seen huge changes, and if anything, the pace has gathered in the last 3 years, and we are now firmly in the middle of an evolutionary spurt. So what are the elements that are changing, how is the environment changing, and how can you ensure your own evolution and survival? Here are 10 of the key things that I believe are noteworthy.

“Client Reporting or Client Communications?”

The first and most all-encompassing thing to point out, is that we are no longer just dealing with Client Reporting. The world is now talking about “Client Communications”. Client Reports still exist as part of Client Communications, but the way the industry interacts with clients has moved away from just periodic reports. Many Asset Managers are now providing data files like daily holdings positions, via web, email, and even portable device technology, and have granted the ability for clients to contact Asset Managers or request reports on-line. We live in a data centric world, where the internet has revolutionised our ability to interact and retrieve information. Huge numbers of people now use internet banking, and so what could be more natural than for the clients of Asset Managers to start to demand more data, via these new electronic distribution channels? Any Asset Manager who seriously wants to provide a viable Client Services operation, is going to have to invest significantly in these distribution channels in the next few years. There will still be a place for stuffing paper reports into brown envelopes, and electronic reporting will not stop the need for paper, but it is a value added proposition, which most clients will not want to go without for very much longer. So stop thinking in terms of just Client Reporting, and start thinking in terms of everything that goes into Client Communications, and prepare you organisation for the evolutionary change that this will bring.

Shorter Project Implementations

Client Reporting projects (forget the extra bits that go with Client Communications for just a moment), have traditionally always been large and (sometimes) unwieldy beasts. In the past, it has been known for firms to decide to build their own internal client reporting solutions, and that used to be a perfectly valid scenario, if you go back a few years. But if you are about to start a project now, it is madness. The market boasts a number of well-designed, quick, efficient systems that are easy to integrate or plug in to your existing systems and data infrastructure. They are written using the latest technology, have features that the older systems simply cannot match, and move the report maintenance away from your IT department, and into the hands of your users. In short, you no longer need to write your own system, so that saves you at least 3 years build effort straight away. Not only that, but so flexible can these new systems be, that stories of implementations taking 3 months from signature on contract to deployed solution are not unheard of (even for complex or high-volume Asset Managers).

Now this is just the vendor implementation phase, and it does not mean that your entire client reporting project will take just 3 months. You will still have to do your feasibility study, cost benefit analysis, package selection, integration, process re-engineering, etc. You will probably start with simple reports to begin with, and build complexity in at a later stage (after the vendor has left you alone with your new system), so the entire project will still take a while, but the opportunity to implement faster than you could have dreamed of before is there now.

Electronic Distribution Strategies (Email, Web Portal, etc.)

As previously mentioned, the data centric world we live in has given us new distribution channels for our Asset Management data. There is no doubt that some clients are extremely hungry for this, but there is some doubt and disagreement over the volume of take-up that Asset Managers really would see. I recently attended a conference at which my “round-table group” discussed this very issue. Some Asset Managers reported huge demand from their clients, and even that failure to provide such channels could jeopardise their winning or retaining business, whilst others reported that they had surveyed their clients and there was simply no demand. Upon exploring this quandary further, it seemed that there was something of a geographical split. Of the 10 or so Asset Managers represented, all UK Managers reported significant client demand, whilst all mainland Europe Managers reported limited or no interest from their clients. Such was the limited size of the demographic group that gave rise to this result, that I’d prefer not to say that there is huge demand in the UK and none in Europe, but I did find it interesting.

However, whatever conclusion you draw, I’m not sure that geography is actually relevant. The fact is that there is some demand out there. That demand will grow. What is good for a few clients now will become the norm for a lot more clients in the future. The fact is that there is a good number of Asset Managers distributing reports and data to their clients electronically. This will stimulate further demand from clients. Those managers who have embraced this demand may not get immediate pay-off, but as more and more clients wake up to the possibilities and advantages of electronic reporting, the more those Asset Managers will benefit. They will have a jump on those firms who have neglected to enhance their electronic reporting capabilities, and will realise the benefits that electronic reporting can bring (reduced print, paper and postage costs, speedier delivery (no postal system, etc.)

Consider too the ability of the web-portal to provide a back-catalogue of all a client’s previous reports, data files, invoices, factsheets, etc. How useful to be able to find a report from 3 years ago without having to root around in cabinets or go back to archive!

It would be a brave Asset Manager who would face the oncoming tide of internet capability and sit, King Cnut-like, steadfastly refusing to embrace it, as it advances around his ankles, his waist, and perhaps ultimately, over his head.

Asking for Client Feedback and Acting Upon it

Have you ever noticed how obvious some things seem when someone else puts something back to you in simple terms? I listened to a Trustee telling me that Asset Managers never focus on the right things in their reports and presentations. He argued that they spend so long focusing on the things that they think the Trustees will want to hear or read about, that the things that really matter get lost. Managers use flowery language, jargon, and confusing statistics to try to get their get their message across (or hide the poor performance) to the point that Trustees are more confused than informed, and have as much chance of making the right decisions as a one-legged man in an arse kicking competition. Having listened to this Trustee complaining about the messages they were getting from their Asset Managers (and I accentuate the plural here as it is an endemic issue), I asked the Trustee if he’d told the Managers about this, and if so, how had they responded. He informed me that he hadn’t actually told the Managers of his dis-satisfaction at all, but now that we were talking about it, it did seem the obvious thing to do.

This puzzled me. Why would you not immediately leap to that conclusion and start making demands of the Asset Manager? Do Trustees have a problem articulating exactly what it is they want? Do they not have (as Lieutenant Columbo might put it), the means, motive, or opportunity? What I do know, is that the Trustee in question will be raising it the very next chance he gets. I can’t wait to hear how it turns out, and particularly how the Asset Manager responds.

On the flip-side of this, I have now started talking to Asset Managers about what questions they ask about the reports and data that they provide to their clients. It is probably no surprise to say that most don’t ask their clients what they want at all. Most assume that a quiet client is a happy client. Some of those that do ask for feedback ask via questionnaires, with simple yes or no answers, or the “strongly agree” to “strongly disagree” format. These tend to be pretty impersonal and support statistics only. And we all know that there is no difference between statistics, lies, and damned lies. Also, these methods of gaining feedback do not give the opportunity for constructive client criticism. I’ve even come across Asset Managers who only ask for feedback from selected clients. (Selected clients that is who are likely to tell you exactly what you want to hear).

I am struggling to understand why it is that Asset Managers never meet the problem head on by asking for in-depth feedback from their clients in an open format. What are they afraid of? I accept that it could open up several large cans of worms, but is that such a bad thing when what you are trying to do is enhance the client experience? Better the can be open and addressed than fester in the corner only to explode in your face one day.

Perhaps there is a fear that the feedback will generate so much comment, and so many diverse deliverables, that they could never all be accommodated. Maybe so, but it is a fact that you can’t please all of the people all of the time, and if you do find that feedback reveals that 90 out of 100 clients are all asking for the same thing, doesn’t it make sense that you provide it? If nothing else, asking for client feedback in an open and constructive way cannot lose you any face, or damage your business model. Even if only one of your clients really wants something that you’re not providing, wouldn’t you rather know about it than not?

As you can probably gather, this isn’t actually much of a trend as not that many people are asking for feedback in an appropriate manner. However, I believe that it is unavoidable, and that those Asset Managers who do ask the right questions, and deliver the right responses, will benefit in the long term.


Customisation is already a well established trend in client reporting. Traditionally, it was the larger institutional and ultra high net wealth private clients who were able to demand and get customised reports, but this has filtered down through to smaller clients as time has passed, and will ultimately become the norm. Famously, the Ford Transit was offered with so many optional configurations and extras, that it would be possible to have over a million different combinations before you had two Ford Transits that were the same. This may be a little more extreme than any Asset Manager will experience for different configurations of client reports, but the time will come when Institutional Managers with 500 clients will have 500 differently tailored reports. The days of hundreds of clients receiving the same basic format and content in standard reports are numbered, (if not already gone).

Not only is the demand for customisation increasing across clients, but the sophistication of the customisation requirements themselves is increasing. Thankfully, the newer client reporting solutions out there can cope pretty well with the vast majority of customisation needs, (although there are bound to be a few which are so unconventional that they can’t be easily fulfilled). The overriding message from clients around customisation, is that failure to be able to provide a report to a client with format and content according to their exacting requirements, could result in failure to retain the business. Not only that, but clients will only wait so long for the promised customisation, and if you cannot quickly respond to their requirements, you may see them waving goodbye.


Data is the one issue that has always been a thorn in the side of implementing new client reports. The majority of problems with client communications as a whole boil down to data. But the wind of change is blowing. It does seem that more Asset Management firms have woken up to the fact that a strong Data Management policy with appropriate governance and robust procedures, where data is seen as an integral and valuable commodity within the firm, is a key contributor to the future success of the organisation. It is an enabler that will benefit the entire organisation , and, (not least of all), Client Communications.

At the recent Client Reporting conference held at London’s Mandarin Oriental hotel last November, an entire morning was devoted to Data Management and the benefits of a strong data quality initiative for client communications. It is a subject that everyone is talking about, and everybody wants to know more about. It is not just those with an interest in Client Communications that are talking about it either. It is every operational department within an Asset Management business, (which is just the way it should be). Too long have Client Communications people cited data as the major issue that they always face at every turn. Who knows? If the focus on Data Management continues to elicit such industry-wide interest as it is currently, maybe in 5 years time when I am planning yet another Client Communications project, I won’t have to build in a 50% contingency for the data problems that I fear I may encounter?

Faster Reporting

When Lehmans floundered and markets crashed in September 2008, I was working on a Client Reporting project which was going through the post-implementation refinement phase. All of a sudden, the number of phone calls that Fund Managers received from their clients went through the roof. Everyone wanted to know how the crash had affected the value of their funds, and were their portfolios at risk of plummeting further? Most wanted accelerated timescales on their end of quarter reports. Many additionally wanted more information about the inherent risk within their investments. The firm concerned made a concerted effort to meet these accelerated timescales, and succeeded through a combination of their new technology, blood, sweat, and tears. That established a benchmark.

Clients now wanted the accelerated timescales to be the norm. Waiting 20 working days for the report to arrive through the post, in their inbox, or on the web-portal was no longer acceptable. They received it in 15 days last quarter, so why should this quarter be any different? The crash changed the client communications landscape in several ways, with speedier reporting, transparency, and risk analysis being at the top of the client’s shopping lists. In terms of speedier reporting, the targets are getting tighter. This means that Asset Managers are looking at their people, processes, technology and data, and squeezing in the appropriate places to make reporting happen more quickly. All of these areas are a factor.

People – there are some reports where manual processes like Fund Manager commentaries cannot be automated. Any manual processes need to be managed better for accelerated timescales to work.

Processes – upstream processes and controls need to be tightened. Remember that a client report is the end-product of a multi-threaded and convoluted operational process, and that any time savings and quality you can inject upstream, should allow for efficiencies down-stream into Client Report production

Technology – Asset Managers should be looking to replace old legacy systems with new agile technology solutions, even if this is just bolting a new vendor Client Reporting system on to the end of the existing internal systems.

Data – as previously discussed, this is an area for focus, and is receiving attention.

Who knows where accelerated timescales in client reporting will lead us to? Just how quickly can reports be produced? Whatever the answer, I suspect that we will continue to see demand for even faster reporting from clients for the foreseeable future.

Embracing the user-focused new technologies

Throughout this article, I have made numerous references to the new client communications systems that are available from vendors. I’m not sure that I need to elaborate too much beyond what I’ve already said, other than to say if you are an Asset Manager, and you are looking at improving your client communications strategy, or even just your client reports, you have to see the products that are out there now. If you last looked 5 years ago and weren’t impressed, you need to look again. The vendor landscape has changed beyond all recognition in this area in almost every aspect. Be assured that whatever you organisation looks like, whatever the volumes, the report complexity, or any other variable you can throw into the pot, there is a system that can improve your client communications out there waiting for you to find it. Not all systems will suit all Asset Managers, so select carefully. You won’t regret it.

Auxiliary Reporting and Data Files via Web Portals

Let’s move away from client reports for a minute. What else do clients want, and what else can you get out of your client communications portal, which adds value to your proposition?

There are too many to list, but broadly speaking, the demands are now there for daily positions files, transactions files, cash account files, performance statistics across different periods, meeting papers, ad-hoc report requests, invoices, etc. Add in the ability (if so desired) to store every document (report or otherwise) sent to that client somewhere on their portal access, and it makes the case for being a powerful communications channel.

Client Communications as a Retention Tool

I believe that a good client communications strategy, as part of a strong client services offering, with fast, customised client reports equals a valuable retention tool.

In the past, Asset Managers have retained mandates on the strength of their ability to generate strong returns. Performance dips were tolerated if occasional, but if the returns were generally top quartile, the client was unlikely to move away. This is still the case, but in longer periods when the performance record is not so strong, poor client communications and reporting, makes the clients decision to leave just that bit easier. Don’t give them that chance. Make your client services so strong that the client is reluctant to move elsewhere to an inferior service, even if there is the promise of better investment returns.

I’m not convinced that having the best client reporting and communications in the industry will win you business, but it will certainly help you to retain it, more than it ever has before.


Client Reporting is changing in many ways. In what it constitutes, the way it is delivered, the demands of the clients, the ways of interacting and delivering, the dependencies, and how it is perceived all combine to shape the brave new world that is increasingly known as Client Communications. Where is it going is difficult to say. Predict the environment in which it will have to thrive, and perhaps you will be able to say what it will look like in years to come. One things that I am convinced of, is that Asset Managers need to adapt, and that those who recognise and embrace the changes will have the greatest chance of being part of the dominant species.

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