WM Market Reports
Client Reporting: Or is it Client Communications?
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This news organization is proud to unveil new research about the central importance of client reporting as it relates to how well - or not - clients' portfolios are faring.
Fewer than a tenth of wealth management professionals are highly
satisfied with their firm’s current performance reporting
capabilities, according to a new research report from
Family Wealth Report (sister news service to
WealthBriefing) and US fintech firm Private Client
Resources being launched today.
While performance reporting has long been a focus of Family
Wealth Report's and WealthBriefing's research efforts,
Client Reporting: Or is it Client Communications? is the
first report tackling the subject in the depth it now so clearly
merits. Amid the meteoric rise of robo-advice, wealth managers
are under increasing pressure to underscore the value of
traditional portfolio management and so recognition is growing
that this area of communications is one of the most powerful
differentiators at firms’ disposal, and a vital way of building
clients’ trust and so boosting wallet share.
The industry’s heightened focus on performance reporting was
certainly borne out by the findings of the global survey on which
the report was based, with seven out of ten respondents citing
this as priority for their firm’s technology spend – and it is
little wonder given the widespread dissatisfaction identified by
the study. Despite the fact that seven in ten wealth managers see
performance reporting as a central pillar of their relationships
with clients, only half are currently satisfied with their firm’s
reporting platform.
Drilling further into the findings, two-fifths of advisors do not
feel their clients are well informed on their overall wealth
picture and able to make well-informed, holistic decisions about
its management – a lack which must be of particular concern at a
time when goals- or needs-based financial planning has really
come to the fore across several markets, such as the US.
Myriad reporting inadequacies
Among the major reporting inadequacies flagged up by the survey
was that a quarter of firms are not reporting across geographies
and currencies, alongside the fact that approaching a third of
institutions are unable to report on “away assets” – something
which is clearly essential to offering comprehensive wealth
management advice and avoiding portfolio management pitfalls such
as over-concentration in asset allocation or the replication of
individual investment holdings.
While reporting shortcomings were reported across the board, it
is noteworthy - and arguably to be expected - that firms with the
highest average asset balances per client tended to be those that
have made the effort and technology investments necessary to
offer consolidated reporting, and to report on both sides of the
client’s balance sheet. Interesting regional biases were also at
play, with firms in the Americas far less likely to be offering
reporting across all geographies (54 per cent) than those in EMEA
(97 per cent).
However, at a time when the traditional wealth management model
is being seriously assailed by digital challengers, what will be
of particular concern is the lack of customizability and
interactivity evident in wealth managers’ present reporting
capabilities. Only around half of the respondent firms are able
to offer qualitative commentary personalized to each client’s
portfolio, or to alter the timing and visual presentation of
investment performance data. Customizability in reporting is far
from customary currently, it would seem.
While there are clearly wealth managers pushing themselves to
offer the enhanced reporting capabilities clients will
increasingly expect, the results of this study show just how
great the gap between expectation and reality actually is - for
HNW individuals and their advisors alike. As research by this
news organization from last year showed, three-quarters of
relationship managers would see inadequate technology provision
as a reason to leave their employer (or not to join a new one)
and, with performance reporting being such an important
touchpoint in client relationships, it follows that sub-par
capabilities will become an increasingly important recruitment
and retention issue for institutions going forward.
Client Reporting: Or is it Client Communications? is a
36-page report featuring 22 data points illuminated by commentary
from 11 senior industry executives, and is free to download for
members of this news service's network. Discover where your firm
stands against its peers on the performance reporting front by
filling out the form below for your copy; as ever, we welcome
feedback on this report, and suggestions for areas of future
investigation.