Client Affairs

Wealth Managers Must Raise Client Reporting Game

Tom Burroughes and Jackie Bennion 25 February 2019

Wealth Managers Must Raise Client Reporting Game

In this feature, the editorial team talk to firms in a number of countries about what's happening with client reporting, and where it must improve, and what are the benefits and limits of technology.

(Updates with new material.)

Wealth management firms are not always easy to tell apart and with back- and middle-office functions outsourced and commoditised, a happy client experience is crucial in winning new custom and retaining it. That’s why client reporting counts for so much.

A recent research report conducted by this publication asked readers, in August last year, the question “Do you see enhanced reporting capabilities as a key way for wealth managers to attract and retain clients?” Of those who clicked on the poll, 72 per cent said yes; 14 per cent said clients “are likely to demand better capabilities going forward” and 14 per cent answered “no”, and agreed with the statement that “the industry is already meeting client demand well.” 

Client reporting may be a big differentiator but there’s dissatisfaction about how well wealth managers shape up. James Day, managing director of Peritus Investment Consultancy, quoted in that report, said: “The quality of client reporting is generally mediocre, with only a few stars in the field. Of the hundreds of institutions that we work with, I can only think of ten who have invested capably in their reporting and communication process.” 

With markets becoming more volatile and some of the easy equity gains of past years more elusive, clients need quick and simple information. New technological channels and desire for 24/7 on-the-go access also mean that clients aren’t impressed by infrequent emails or chunky PDF files stocked with regulatory health warnings, eye-straining charts and jargon. 

“Ask yourself how many people are looking forward to their reports and sit down and think that it is fun to read,” Nicholas Hochstadter, chief executive of Performance Watcher by IBO, a business based in Morges, near Geneva, told this publication. 

“If you look at a lot of private bank reports, they aren’t often very simple….but reports should get direct to the point. The report should show why what you’re doing is relevant to clients,” Hochstadter, who has an extensive banking background, said. 

Hochstadter’s business is built around the idea of building an objective, un-conflicted database of evidence showing trustees, wealth managers and others how well portfolios perform. (This publication interviewed him back in February 2016.)

Urs Bolt, a former senior Credit Suisse wealth manager and now running his own firm,, is enthused about what technology can bring to the client reporting party. (Bolt is also a judge for the WealthBriefing Swiss Awards programme.)

“I agree that any client-facing process can make the difference in a competitive and transparent market. In wealth management, client reporting is certainly one of the most important areas. A clear and easy to understand reporting of performance and risk figures is how the client can gain further confidence,” Bolt, who is based in Switzerland, said. 

A headache for firms is that some of the material they issue to clients is mandated by regulators, and that is not always the same as what customers might want, and might also eat up budgetary resources.

“The regulation tsunami in the last decade since the financial crisis, such as MiFID II, increased AML/KYC and other documentation requirements, led to a massive increase of compliance staff. Unfortunately it didn’t increase client satisfaction and many client processes including portfolio reports became thicker instead of thinner. Also, the disclaimers and other mandatory information rather decreased the usability. This has to change and technology is one of the areas helping out here,” Bolt said.

A common misconception among wealth managers is that their clients are slow to embrace technology. “Even among the more traditional wealth management demographic, real-time access to client portfolio analysis and information is becoming the expectation rather than the exception,” Andrew Watson, Head of Regulatory Change at JHC, a technology firm, said. 

The banks

Given the importance of this topic, this publication contacted a raft of banks and wealth management houses about the issue. With a few exceptions, none were willing to comment on the issue. 

One senior private banker who did comment was Etienne D’Arenberg, the head of the UK market and a limited partner at Mirabaud, the Swiss private banking group marking its 200th birthday this year. He is also a member of this news service’s editorial advisory board.

“Every manager must present [clients] with a statement and these are fairly simple and always done to present information quickly,” he told this publication from the Mirabaud Europe Ltd branch offices in the Victoria area of central London. 

“The key is simplicity and transparency,” D’Arenberg said. 

“We are very happy to publish the total expense ratio,” he said, talking about how Mirabaud sets out the total cost of running portfolios for clients.

“Normally account statements are photographs of a given moment but such regular reports need to show how money in a portfolio has been managed, in a specific way and if fiscal or other restrictions have been followed,” he said. 

Many clients are also happy to take a longer-term view on how their money is being managed, even if they get a snapshot of their accounts and its performance. “You can quickly see if it worth using an active manager,” he said, adding: “Reporting allows you to show that there’s a process involved.”

Tech perspectives
Unsurprisingly, some of the more forthcoming respondents to this news service’s questions were tech firms producing the systems behind client reporting and hope, no doubt, to win business. 

“Relying on legacy, overly complex analytics and reporting is the primary way we see firms failing to get reporting right. Rather than focus on bells and whistles, most firms would benefit from technology to ensure data and inputs that drive reports are accurate and obtained in a timely manner,” Seth Brotman, chief executive of US-based Canoe Software, said.

“Great reporting is the act of taking data and creating knowledge. Technology is a powerful tool to systematically ensure data is accurate, efficiently collected, and synthesized/visualized to drive decisions,” he said. 

Another firm operating in such a space is Mirador, as previously interviewed here. That organisation argues that wealth managers do not customise client data sufficiently – it is too much “off-the-shelf”.

“Too often firms fail to provide clients with insightful reporting that presents a client’s assets in a way in which meaningful decisions can be made. Instead of customising reporting to meet the client’s particular situation, they present very generic and ‘canned’ views of their portfolio. While standard views such as performance vs benchmark and assets by asset type are interesting KPIs, today’s tools enable managers to present a much more personalised presentation,” Joseph Larizza, managing partner, said. 

Educating ESG
Ben Constable Maxwell, head of impact investing at M&G Investments, part of the Prudential Group, said these are early days in the advisory space for ESG and impact investing and education plays a huge role in reporting back to clients.

"In the listed equity space, which is the most suitable for advisors, the oldest fund in this area is probably three years old, and there are only a handful of positive impact equities funds, so education is very much a part of this and it requires a different sort of dialogue and a deeper approach with customers,” he told this publication.

This includes not just explaining criteria behind ESG but how to label a fund as an impact investment fund, how you press companies to disclose impact strategies and how they intend to deliver them. The very concept of impact investing is that it can be tangibly measured.  

Constable Maxwell said that the starting line is developing understanding and awareness that changes the whole tenor of the conversation with advisors and the subsequent conversations they have with clients.

To aid this effort, M&G is developing an investor micro site and an app to encourage conversations and interaction. The language must be different from just performance reporting and benchmarking, he said.

The conversation is motivational.
The group launched a new investment impact fund a few months ago and said it has seen record numbers of clients register for webcasts that explain the framework behind ESG and positive investing. 
“Education is crucial to uptake,” said M&G’s advisor Véronique Chapplow, but it hasn’t helped that “we have introduced the concept of impact when some people haven’t mastered the ESG part yet. That is the challenge we are facing, mixing ESG and impact – explaining what is the difference,” she said. 

Artificial or real
The rise of artificial intelligence and channels such as chatbots creates some opportunities but also a few challenges for handling clients and their expectations. (A chatbot is a computer program designed to simulate conversation with human users, especially over the internet.) OCBC, the parent of Bank of Singapore, BNY Mellon and Credit Suisse have developed these channels.  

Hochstadter said managers must be careful about how and when to use these communication channels. A problem can arise, he said, when a client thinks they are talking to a real person via the internet and finds out that they are in fact communicating with an algorithm. Managing expectations and the client experience around AI-driven channels is a delicate balancing act.

Canoe’s Brotman sounded a word of caution about such devices: “Chatbots and faceless/anonymous communication will be helpful on the margin, but is not an area that drives client comfort and long-term relationships.”

“Client/firm interaction has been and will be more positively impacted by video and digitally-enabled communications which foster a more personal and direct relationship between client and account executive,” he said. 

JHC’s Watson said AI-driven reporting channels have real potential if  used correctly. “Where we are seeing AI really add value is via processes such as portfolio monitoring, as opposed to making key investment decisions; for example, by monitoring a portfolio against set risk, performance and benchmarking parameters, automatic notification of when these are breached and adjusting the portfolio investment strategy accordingly,” he said. 

So what of the future, such as where the industry will be in five years’ time? Mark Wickersham, vice president of family wealth at US-based Datafaction, agrees with Hochstadter that businesses should try and enthuse clients when they report, not bore or alarm them. “If you take the Amazon approach to product development and focus on the things that will not change you know that clients want their information to be timely, available when they want it, and on the device they want it on, and in an easy-to-use and interactive manner.”

“The client experience (including reporting) needs to become a lot more frictionless and firms need to find a way to delight their clients, he added.

Sandaire, the multi-family office headquartered in the UK, was effusive about its reporting to clients. 

“To stay ahead of the curve when it comes to client experience, we offer consolidated reporting of all assets and liabilities. We take into account the ‘bigger picture’ of the entirety of a clients’ wealth regardless of how many partners they have, understanding that in most cases, it will not sit in one location,” Sandaire, the multi-family office, said. 

“Another way in which we endeavour to stay ahead of the curve to improve the experience for our clients is the Wigmore Association. As a founding member, we share research, co-investment opportunities and direct investments with a number of multi-family office partners around the world. This offers our clients access to an exclusive set of trusted, valuable and expert resources and we are delighted to introduce them to anyone in our network when there are connections that we feel may be of benefit in the future,” it said. 

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