Steve Young, guest blogger and UK managing partner at investment management consultancy Citisoft, reflects on a recent Vermilion client conference.
I recently had the pleasure of chairing the EMEA Client Conference for Vermilion. Over 100 client reporting, operations and client services personnel were in attendance from a diverse group of wealth management, asset management and alternative investment businesses.
As part of the proceedings, we hosted an online polling session using some industry-related questions. These sessions are always interesting for the participants, listening to the views of their peers. Often they do generate some unexpected results.
One question that caught my eye was: ‘What percentage of your reports do you think are read by your clients?’ This really does get to the heart of client reporting and deals with an issue that many asset management firms might prefer to avoid. An awful lot of time and money goes into client reports, but in my experience, no one wants to be the one to ask the difficult question: ‘Is anyone actually reading them?’ At an event like this, where the responses are anonymous and there is little reason to be other than completely frank, the findings are generally reliable.
The result was surprising. A third of the audience felt that only between 25% and 50% of their reports were being read by clients. Even more worrying, a further sixth of respondents thought that less then 25% of their reports are actually being perused.
Of course, the natural follow up question would have been to ask: ‘Why is it that such a high proportion of your reports are not being read?’ It got me thinking: is it the technology that is to blame, or the asset managers, or the clients – or perhaps a combination of these factors? In my experience it varies by organisation, but my biggest concern is whether the asset managers have the culture and confidence to guide their clients towards a better approach.
I often hear that clients are increasingly demanding more sophisticated reporting and analytics. They understand what they are asking for and what the data actually tells them about their own portfolio. This point is replicated in the area of regulatory change as more and more reporting and data is requested.
Transparency is an overused word at the moment and the wider financial services industry is constantly being told that it needs to be more transparent. It’s not just a case of preparing as much data as possible and making this available to the client so that nothing is hidden, as clients are saying that ‘less is more’ and that they only want to see the relevant data. And perhaps this is where the asset managers are going wrong; too much information is being thrown at clients and as a consequence, a lower proportion of it is being consumed.
In the institutional and UHNW worlds it is common to deliver a bespoke service experience with client requests for customised reports being accommodated ‘as part of the service’. Too few organisations have strong reporting governance to ensure that the reports are the most appropriate, insightful and re-use standard components to deliver premium efficiency, timeliness and accuracy.
Regardless of client size and numbers, a key requirement of a client reporting system or service is not the ability to produce a specific range of reports, but is instead the ability to control and manage report production in an optimum model. The system must also allow client services to be created in a short space of time, with minimal IT effort. Above all else, the primary objectives of any report are to be accurate and useful.
It may, of course, be that the asset managers and their willing vendors are actually delivering all that their clients are asking for; the clients just don’t have the time to read all the reports. My suspicion, though, is that the clients are being fed too much irrelevant material in the name of ‘transparency’.