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TSAM 2012 Client Reporting and Communications - Themes from the Chair

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1. Introduction

The TSAM Client Reporting and Communications stream was chaired by Simon Harris, Partner at ISC. Simon also hosted the day two workshop on Client Reporting workflow. This article expands on the key themes discussed and the differentiators that now make client reporting an important factor when clients are selecting their Investment Managers.

2. What do clients really want from their reports?

Has this question really been asked or answered? Client reports have evolved from the accounting and valuation centric view that Investment Managers use internally to manage operations, but clients are increasingly asking for an investment centric view. The investment centric view aligns itself more closely to the products invested in by the client and the strategies used in the front office.

It is also apparent that the content demanded by clients varies across the globe. Reporting in the US is more heavily factsheet based and delivered over the web, whereas UK and European reporting is more paper-based. The Far East is seen as a combination of web-based and paper-based delivery. Feedback from Investment Managers suggests that the content demanded by clients in the UK and Europe is more complex and this complexity may help explain the reduced delivery over the web, although it is probably due to a number of other factors too.

The additional complexity required by clients’ demands that data needs to be consolidated (i.e. in multi-manager environments) and that the same data may have to be sliced and diced in more than one way. The presentation at TSAM by Graham Kellen of Man Investments described a web portal over a platform hosted by Netik. The “self- serving” nature of the platform allows the client to choose what they want from a dashboard, access tables of data and drill through this data.

3. Reduced production timescales

It has been commonplace for Investment Managers to have responded to client demands and reduced the production time for client reports from 25 business days post period end to 15 or less business days. It was clear from the day 2 workshops at TSAM that there is renewed demand to gain efficiency and reduce this timeline and associated cost even further. As upstream services become more reliable, consistent and automated there is an increased confidence in the integrity of the data being passed to the Client Reporting function. Errors are spotted earlier and corrected before the data reaches the reports. This increase in data confidence and efforts to shrink the individual components of the client reporting process is enabling shorter production runs.

4. Should the data project complete before the client reporting project starts?

It is an inevitability of investment management operations that timely, accurate and complete data is required by every part of the process that supports the lifecycle of a transaction. Client reporting, although towards the end of this lifecycle, is no different. Just like death and taxes there is a certainty that every Investment Manager has a data project (large or small) in flight. Data is a continuous journey of improvement and change with no final destination, but the message from TSAM supports our belief at ISC that at some point there must be a leap of faith. Waiting for utopian data before starting a client reporting project is virtuous but ultimately pointless. That said, Investment Managers strive endlessly for data excellence in the reports presented to clients, so the overriding theme should be to secure a similar level of data excellence received by the client reporting team from upstream systems and processes.

5. Make Client Reporting a centre of excellence

Client reporting is a differentiator. It is now part of the Client Service function and as such its team members should be a primary touch point with the client. There is a requirement that as the client reporting team understand each component part of the data within a report, that this team should be client –facing. The team should be a centre of excellence through which a client can question items in their report, receive more granular information and request change. Client Reporting is an intrinsic piece of the Client Service offering, and more than ever before, clients are finding that the service they get from their managers is a key differentiator. Not only do good client reporting and service help protect Asset Manager’s revenues, by making the client’s decision to move elsewhere more difficult, but it can now be seen as a positive revenue generator with many clients excluding managers whose reporting capabilities are deemed insufficient.

6. Conclusions

Whilst these were just some of the themes explored at TSAM Client Reporting, some of the perennial favourites such as the argument for paper vs electronic reporting continue to rage on. The conclusions tend to be the same as before (i.e. there is a place for both). It was clear that as far as client demands are concerned, 1 size definitely does not fit all. The diversity of clients and their reporting requirements reminds us of the quote by T.H Huxley (the famous Darwinian disciple), who upon being cornered by a group of anti-evolutionists, and asked what he thought about God replied “he has an inordinate fondness for beetles” (of whom there are almost a million different varieties). There is no such thing as a typical client. Some clients are pushing boundaries, whilst others persist with quill pens and parchment. But be warned… times will change! Rather worryingly, most delegates were focusing in on today’s requirements, and not tomorrow’s. The trick is to anticipate what will be required in 2 to 3 year’s time, and prepare for it now.

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