Over the years we have witnessed a remarkable number of cases where client reporting by investment managers has lapsed into mundane, periodical techno-babble rather than the exciting and informative communications they should be. In the worst cases, reports have simply been sent out riddled with errors. Reporting is not a science. Clients just expect an explanation of what the manager is doing with their money – to grow and protect it – and how well their investment strategy is working, what the manager foresees for their investment, and how well they are doing compared to others. Reporting is not just about data aggregation either – it is about finding the balance between interpretation, relevant commentary and data provision.
Many managers struggle because of archaic systems, and in some cases, it simply appears too hard. Clients expect and value timely and accurate reports, but they are intolerant of errors. Clients have a low tolerance to reports that include irrelevant commentary on their investments regardless of how brilliant and insightful it may be – they value succinct, relevant and informative commentary. To make things tougher, your clients receive reports about their investments from multiple sources: investment managers, asset consultant and often their custodian. It is not unusual for clients to use one report as a check reference against the others. Investit’s research shows that more than 80 per cent of the time, there are inconsistencies between reports received from these different sources. More disturbingly for investment managers, clients may never see their full reports because they receive an aggregated report from their asset consultant. If there are errors, or reports are poorly compiled, surely it prompts an investor to ask: if they can’t get the reporting right, how can they be trusted to manage my money?
On the positive side, though investment management is a scale business, intelligently customising client reporting can make it feel bespoke – it just takes focus to engineer a simple customisation platform for your reporting. Implement good reporting, make your impression count Good reporting isn’t just about reformatting the look and feel of your report. It’s about making sure your clients clearly understand your information framework. Simply put, understanding what needs to be explained to the client and how often this needs to be explained is the key to getting this right. This information framework provides the basis for establishing a system that works. All client reports have three fundamental components: data which are the unprocessed facts such as stock or unit prices; holdings and performance returns; information which is the interpretation of raw data; and an explanation of how and why the investments have performed the way they have.