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No article is ever going to be able to give you a comprehensive approach to your Client Reporting project, but here are a few of the key issues to bear in mind if you are starting, or have started on such a venture

So you’re a successful asset management company. Your performance is good, relationship management with clients is strong, and your administration is efficient, but something is letting you down. Your client reports are poor. Consultants and clients alike are complaining. Perhaps they are not very clear, carry little relevant information, are too lengthy for your average client, or are costly to produce and take too long to get out of the door. As an asset management company of repute, you want to offer the whole package, so what are you going to do to bring client reporting up to scratch with the rest of your operation? It’s time to undertake that Client Reporting project.

Where to Start?

But before you embark on a program of change like this you need to ask yourself a few searching questions about what you really want to achieve from such a project. You have to be realistic about how much time and money you want to spend, and what the benefits to you will be when it is all finally delivered. Much of this boils down to the number of clients you have, what type of clients they are, and what they want from the client report. There are so many variables, that there is no one solution to fit all the different scenarios.

Asset management companies themselves come in all shapes and sizes. For example, some are there to service one large tied-in institutional client, some are boutiques offering more specialist services and servicing small numbers of high-wealth individuals, others are huge institutions in their own right with thousands of clients of all different types. In short, everyone is different.

The types of clients themselves can also vary considerably. They could be retail, institutional, private, unitised, segregated, active, passive, equity, fixed income, exotic mandate clients, growth, income, balanced clients, etc. The list just goes on and on.

It is probably most important to understand what clients want from the report you provide to them, yet this is one of the most difficult things to ascertain, as there is no single right answer. This is primarily because (just like asset management companies) no two clients are the same. Even though you may have two clients whose size, objectives and mandates are virtually identical, one client may love your report whilst the other might complain about every aspect of it.

Customisation or Automation?

There are two factors that will influence your Client Reporting project: customisation and automation. You will need to choose which is most important to you. If you wish to provide every single client you have with a report that they are going to love, then you will have to lean heavily towards customisation, providing each client with a report tailored specifically to them. If however you want to be as efficient as possible, but accept that some clients may not fall hopelessly in love with your report, then you will lean towards automation. If you choose this second option, the trick is to do it is such a way that you maximise the appearance of customisation, even though the report is largely automated.

If you are reading this article and thinking “customisation”, then your Client Reporting project path is not such a difficult one. Customisation means very little data integration across systems, very flexible report pages tailored individually to what each client requires, individual commentaries based on each client’s reporting period, and some form of sexy desk-top publishing solution to make it all look very pretty. There is nothing wrong with customisation, and it is absolutely right to go down the customisation route if that is what your clients demand, and it fits with your business model. Even if you go down the customisation route, there may be elements of the “automation” solution that you will want to incorporate, and it is possible to end up with a happy mixture of both.

If you are reading this article and thinking “automation”, you need to prepare for a major project. You will need to look at the system you wish to use to produce the Client Reports (whether it is something you buy off the shelf or something that you develop in-house). You will need to look at integrating this with your other data systems, and pulling that data through in a meaningful and useful manner. You will need to ensure that your data has integrity from the point of input, through any manipulation, and ultimately in its publication. You will need to ensure that you have sufficient hardware to support your new client reporting system (particularly under stress at peak times) and that it is optimally configured to support your report production. You will need to look at restructuring your business teams to best support the introduction of a new system and new report production methodology. You will also need to factor in any other potential benefits which could be realised from such a project (e.g. electronic reports via secure website, ad hoc reports for meeting papers etc.)

At this point, I should make it clear that the rest of this article deals primarily with those asset managers who are going down the route of automation, although they may still wish to add a tinge of customisation to their ultimate solution.

Data

In any Client Reporting project, data is king. Underestimate it at your peril! If your data is not correct, you face an uphill battle immediately. Do not wait until your client reporting system is ready to be rolled out only to find that you can’t send the reports out because the data is inaccurate. Typical pitfalls include:

  • Client Static Data – client information (addresses, number of copies, frequency of reporting, etc.)
  • Security Static Data - security information (asset class classifications, sector classifications, regional classifications, etc.)
  • Transactional Data – trades, income accruals, corporate actions, cash transactions, etc.
  • Performance Data – absolute performance, relative performance, historic performance, attribution across asset classes and at various levels, etc.

If your data is not right, client reports will manifest themselves into the classic “tail wagging the dog” scenario. You will find yourself in mid report production time, desperately looking for solutions to data-related problems, which should have been sorted out long before your project even thought of going live. Your Client Reporting project may well spawn other mini-projects within other areas of the business, to sort the data out. You will be waiting for other areas within the asset management company to put the issue right in their system, before extracting that data back through into the client reports, and if these data issues affect multiple clients instead of single ones, the process could be very painful.

Even if you think your data is pretty clean, you should allow for time within your client reporting project for analysis of it, and time in putting it right. Often, this will not be something that can be done directly within the Client Reporting project team, and it will actually be the responsibility of other business areas further down the food (or data)-chain. This will often also require operational changes down-stream, and an appreciation that now, any data error must be dealt with properly at source, as it is no longer confined to a single internal system, but will manifest itself in all its hideous glory in a client report that will go straight to a client. It is a good idea to include as many automated data checks as you can within your client reports, although some thing can only ever be spotted by “eye-balling” reports before they go out of the door.

Bear in mind that if you do have to go through a data quality exercise, that you will realise benefits in other parts of your business, as everybody benefits from improved quality of data. Budget separately for a Data Quality initiative, as rolling such costs into the Client Reporting project is not really the right place for it, and it will inflate the costs of your Client Reporting initiative unfairly.

Data - Format - Distribution Step Diagram

System Choice

Your choice of Client Reporting system is never a simple decision. An in-house build will deliver what you want, but it will take a long time to develop, and you may spend a lot of time and money replicating ideas from other off-the-shelf systems, which are already built into those other solutions. Choosing something “off-the-shelf” by definition will have limitations which may not fit in with your ultimate report plans, and you may find yourself pushing the vendor to develop extra functionality specifically for you. Whatever you decide, you will face integration issues as you try to populate your client reports with all the data (often from disparate systems) required for report production. If you already have a strong data architecture, and are running through a central data hub, this can help. There are a number of key facets that should be considered when looking for the right Client Reporting solution:-

Proven end-to-end production capability. From the point that data is pulled into the system, to the point at which the report is dispatched to the client. Does it all hang together?

Flexibility at every production failure point to stop, fix the problem, and recycle your report. The real strength of a system comes from dealing not with the 90% of reports that flow through first-time everytime, but in dealing with the small percentage that have problems, and need some kind of remedial work to correct them without impacting everything around them

A good top down view of the workflow. If you are running 10,000 reports through the system you need to see which ones are causing you problems, especially when you are looking for the few “rotten apples”. Where is the hold-up? Who should be taking action? Make sure that your system can do this for you, and that pinchpoints or people in the workflow are highly visible to all, at top-level view, and right down to the lowest level of granularity.

A user-friendly interface. Make it simple for users to review reports, add commentary, verify data, and push reports through. If your system is functionally poor in these areas or is difficult to navigate, people will not want to use it. Remember that your user base will include Fund Managers, Relationship Managers etc. who will not take kindly to a badly designed front - end.

A report output that can support your corporate message. Whether you build in house or use an off-the-shelf system, ensure that the reports themselves can be made to look like something you want to send. They should be capable of supporting your corporate brand and delivering your corporate messages.

Simple integration interface methodology. One for the techies here, but make sure that the system you choose can pull in data from, or distribute data to other systems in a simple and efficient manner.

Ease of maintenance. Choose a system that doesn’t need an army of people behind it to maintain settings, fields, rules, data, etc. Remember that even though you are going down the automation route, every system will be capable of a certain amount of customisation, and it is primarily this customisation that will require people to maintain it.

Ability to cope with production volumes. Remember that by its very nature, client reporting is a cyclical process. There are monthly cycles, quarterly cycles, etc., and at these peak times the system will be subjected to huge pressures. Your system may be required to run 10,000 reports in 5 working days, and all the time, 500 users will expect to be in the system, doing what they need to do, in a timely and efficient manner. You need a system that can cope with these sorts of demands. It will probably depend on the size and configuration of your hardware more than the application you use, but this is nevertheless an extremely important aspect of a successful client reporting system.

Hardware

As mentioned in the final point above, getting the supporting hardware right for your chosen report production system is extremely important. Bear in mind that you will have to plan not just for normal production environment, but with an architecture that can support a fail-over for primary box failure, and that should also factor in development, test and production support environments. Obviously, you will have to tailor your hardware to the system you decide to run, but remember that it will probably be out of date within 5 years, so budget for replacement within that sort of timescale, and if possible, make your hardware configuration upgradeable, rather than completely disposable.

Operational Review

The implementation of a new Client Reporting system will require operational review, and should be viewed as an opportunity to improve operational efficiency. This may not result in headcount reduction. The new Client Reporting system will bring new challenges, and may require re-deployment of resources into different areas. Traditionally, client reporting production methods have been highly manual and paper intensive. The operational review should focus on speedy and efficient delivery, with improvements being made to maximise the potential of the new Client Reporting system. This should focus on the roles right the way through report production dealing with timescales and deliverables from within:-

  • Investment Administration and Back Office functions
  • Static Data Teams
  • Performance Measurement Teams
  • Client Services Functions
  • Relationship Managers
  • Fund Managers
  • IT (particularly from a Support perspective)
  • New roles (such as Client Reporting Admin teams)

The new system will help to drive some of the procedural changes through. Operational efficiency will continue to evolve after the project has gone live as more refining of process and control is introduced into your reporting procedures, and it should be considered an ongoing facet of the project for at least the first year after implementation.

Implementation

The big question always seems to be “Should we implement ‘Big Bang’ or via a phased implementation?” Should I roll out my new reports to my 10,000 clients all at the same time, or should I roll out a few thousand at a time? This decision is always down to just how aggressive you want to be. Above all, you should have confidence that whichever you choose, the client reports must have integrity when they go out of the door.

One “Big Bang” approach is to parallel-run the old and new methods alongside each other, until you are happy that the new method can be switched on without any detriment to your client service. This way you could potentially roll out all 10,000 clients at the same time with confidence, but the price you will pay will have been the extra resourcing effort each month or quarter-end up until the point that you made the switch-over.

The biggest cardinal rule to observe is that once you have sent a client a new style report, you can never send them the old style again. This is partly because (if you have done your research right) they will prefer the new format, and partly because giving them the old-style again because you cannot produce the new style two quarters in a row doesn’t create a good impression.

The reality is that how you implement is probably a decision best left until the time that you are close to implementation. There is nothing wrong with phasing your clients in over a period of 12 months, provided you keep control over the phasing at all times. Rolling out 500 plain vanilla clients at the start of your roll-out can provide positive advantages in terms of client feedback, and you can then choose to increase the volumes for the next quarter-end as you wish.

There will always be issues particularly where different clients have the same consultants, or are connected through a common set of trustees, or a family group, and these obstacles should be carefully considered before deciding on the phased approach.

Support

Whatever system you decide upon, and however it is implemented. Make sure that there is a strong support infrastructure behind it, both with the vendor (if purchased off-the-shelf), and internally. Your new client reporting system will need a specialist support team in the early stages of its implementation, as it will bring new problems and new challenges with it. This can be incorporated within your general support arrangements as the system beds in. If you do choose a vendor system, ensure that the system vendor has a strong support team framework, and that is readily available to you. Issue resolution and upgrades will often require face-to-face cooperation, and time-differences or conference calls are not conducive to fixes on a system where every minute at report production time is critical.

Conclusion

Customisation is simpler to implement but is costly ongoing, and is only really suitable for small volumes of reports. Automation makes economic sense for large volumes, and if you are clever about it, you can retain some of the sense of Customisation. If you are going down the Automation route, a client reporting project is a huge undertaking. It will take a long time, it will cost a lot of money, and it will be a painful exercise. If you accept that up front, and adjust your thinking accordingly, then you have made a step in the right direction. Make sure that your Cost-Benefit Analysis looks at the long-term (say the next 10 years), and do not focus on 1, 2 or even 3 year pay-backs. Get you data in order: it is a pre-requisite to quality automated client reporting. Clients will lose faith with you quickly if there are any errors in the data. Customise the report format as much as possible, but if you are a large Asset Management Company, striving for a 10 out of 10 rating for the look and feel of the report from every client is an unreasonable target. Aim for an average of 8 out of 10. This will be more achievable, will cost you a lot less, and your clients will still be happy.

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