Viewpoint: A systematic approach to client reporting

Dan Stout

26 August 2008

Offering a new framework for transforming data into competitive advantage. Dan Stout is a managing director of Meradia Group, a Philadelphia-based consultancy to the investment-service industry.

Increased regulatory scrutiny, heightened client sophistication and expectations make client reporting a critical area of focus for investment managers. But, though most firms recognize the importance of reporting as a competitive distinction, few have been able to develop clear and repeatable processes for evaluating investment results and delivering consistent compelling reporting to clients.

Mindset

So what do firms have to do to get more out of their reporting functions?

In simple terms they have to be more strategic and more consistent. They have to take a systematic approach to identifying and evaluating their core weaknesses and ultimately they have to implement action plans to improve the end result.

This means evolving from an issues-based mindset to a solutions-based mentality. More important, it means using a standard framework for identifying, simplifying and solving a seemingly limitless number of reporting issues.

Talking points

It's clear that such a framework must be based on components that are common and critical to every reporting initiative. And though there's still no broad consensus on what those components are, a handful stands at the forefront. These include:

Data and content -- This comes down to understanding and troubleshooting issues resulting from the underlying data quality. This is critical because the data is plentiful, anything from portfolio accounting information to performance measurement information to relative comparison information.

User functionality and analytics -- A lack of functionality and analytical capabilities of reporting tools is an ongoing issue for many organizations. But firms must identify those deficiencies before they can fix them. Benchmarking, attribution, risk analysis, performance measurement and analysis are just a few areas where increased functionality and awareness are needed.

Client-facing output -- They say perception is reality. The image you convey to clients with every report is critical to how you are perceived. Firms must take a closer look at the quality of their output, considering everything from look, feel and branding to customization and timeliness.

Systems and integration -- Here firms have to ask themselves whether a platform has the necessary functionality and integration to maximize the quality of reporting while minimizing effort required to produce such reports. If it doesn't, it's time to go back to the drawing board and look at the integration between functions such as data aggregation, portfolio accounting, performance-measurement and report-packaging tools.

Workflow and business process management -- Team structure is just as important as technology organization. That's why reporting teams must be structured in a way that maximizes efficacy and effectiveness throughout the reporting process. Business processes should also be put in place to ensure utmost quality in their reports.

Again, it's not absolutely critical that these components be at the top of every firm's list. What's important is the adoption of a systematic approach to client reporting. Attacking reporting initiatives within a framework should lead to enhanced profitability, scalability and repeatability.

And I'm pretty sure that's an amenable outcome to every firm. -FWR

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