Complacency Over Client Reporting Cannot Continue - Senior Wealth Executives

Wendy Spires

12 November 2018

Improving client reporting may have sunk towards the bottom of wealth managers’ to-do lists for fairly understandable reasons, yet continued neglect is starting to look like a very dangerous strategy indeed – that was the message from industry luminaries gathered to launch this publication’s latest research paper, Client Reporting – Regulatory Burden or Client Engagement Tool?

Setting the scene was Chris Brown, wealth management and private banking sector head at , much of the industry has become stuck at the stage of keeping pace with the regulatory requirements for reporting; grappling with changes like MiFID II’s ex-ante and ex-post cost disclosures, alongside the need to notify clients if their portfolio falls by 10 per cent, will have made many firms – particularly smaller ones – forget more substantive reporting enhancements for the time being.

He said: “Understandably, we get obsessed with the regulatory requirements that condition reports and getting them right within the rules. To do that you’ve got to get all the data to feed in from your platform to generate a compliant client report, which is challenging enough. Then to upgrade it - to refine it, finesse it, contextualise it and make it digital - is a massive step further forward.

“Reporting is a regulatory requirement in a lot of houses; to go to the next stage and meet the client demand is a big budget strain and a lot simply haven’t got the resources to do it.

There’s a very long tail in the private client industry and at the end of that tail – and in the middle too – spending the money required to get reporting right is really difficult.”

Spurs towards transformation
Yet however difficult it may be to muster the budget (and corporate energy) to embark upon yet another change programme, wealth managers must move with the times, our panel argued. Other sectors have set a bar for slick customer experiences that the wealth management industry must also reach in order to continue burnishing its aspirational, client-centric credentials. It must also vigorously fend off the fintech threat as millennial money comes to the fore.

More prosaically and yet even more importantly, Brown pointed out, are the need for increasing cost transparency and the ever-greater focus on value for money coming from both the regulator and clients. “We need to be thinking about what reporting would look like if Apple did it; digitalising is not just turning a paper pack into a PDF,” he said. “But even more than that, good reporting comes back to the demonstration of value – showing clients clearly what is being done for their investments and what they are ultimately getting from this service.”

As our expert panel observed, as yet there is no official model for what “good” reporting looks like from the regulator. It will be down to individual institutions to decide how willing they are to revolutionise - and digitalise - their approach to reporting to give modern clients what they want and need. But while the industry is only just beginning to wrestle with what ideal reporting should be, what it should not be is becoming abundantly clear – and that is a tick-box exercise that does little or nothing to engage HNW investors in how their money is being managed. As institutions vie to differentiate their offerings in an increasingly competitive market, unintelligible, uninteresting doorstoppers of paper are out and reports that really evince the USPs of wealth management are in.

Client reporting is a hugely broad area covering compliance, client experience, cost-efficiency and more, and we would urge interested readers towards the research on which this panel discussion was based. Client Reporting – Regulatory Burden or Client Engagement Tool? draws together insights from C-suite executives, consultants, technology experts and HNWIs themselves to provide a comprehensive analysis of where this most important element of communications strategy is heading.

To view the report and download a copy, go to this link to the report, and complete your details at the field below.