Clients expect better communications and reporting

It is becom­ing increas­ing­ly clear that there is a sig­nif­i­cant dis­con­nect between the require­ments and expec­ta­tions of the client and the cur­rent com­mu­ni­ca­tion and report­ing pro­vi­sions made by most wealth man­age­ment organ­i­sa­tions.

This is a prob­lem for many exist­ing wealth man­agers because, if it is not addressed, they face dis­rup­tive com­pe­ti­tion from providers who will employ the tech­nol­o­gy that is expect­ed and already used in oth­er aspects of their clients’ lives.

The wealth man­age­ment sec­tor is chang­ing; there is greater demand for trans­paren­cy, and an ever-chang­ing reg­u­la­to­ry land­scape, cou­pled with on-going polit­i­cal and eco­nom­ic uncer­tain­ty. Lat­est fig­ures, report­ed by the British Bankers’ Asso­ci­a­tion from Wealth of Oppor­tu­ni­ties II, show the sec­tor is grow­ing, with UK clients’ assets under man­age­ment last year at £226 bil­lion, up from £97 bil­lion in 2011.

With­in wealth man­age­ment, the com­mu­ni­ca­tions and report­ing function’s respon­si­bil­i­ty has changed too. It is not only used to report activ­i­ty, posi­tions, quar­ter­ly or annu­al per­for­mance. Across the enter­prise, it is also used to deliv­er data of increas­ing com­plex­i­ty, rich­ness and vol­ume to any stake­hold­er who is inter­est­ed in the man­ag­er-client rela­tion­ship.

If we won or retained one client with a fund size of £22 mil­lion at the stan­dard fee scale, this would pay out­right for the sys­tem run­ning costs for that year
- Craig Watts, direc­tor, Smith & Williamson

As such, com­mu­ni­ca­tions and report­ing tech­nol­o­gy are a vital part of a wealth manager’s toolk­it, jostling for posi­tion with trad­ing, research, analy­sis soft­ware and asso­ci­at­ed feeds, data util­i­ties, account­ing, and rec­on­cil­i­a­tion plat­forms and oth­er require­ments nec­es­sary to oper­ate a suc­cess­ful wealth man­age­ment organ­i­sa­tion.

Com­mu­ni­ca­tion and report­ing, in a peri­od of change and dis­rup­tion, has evolved along­side oth­er aspects of the sec­tor. Cur­rent­ly, it is a func­tion that is owned by “the busi­ness” that designs and dis­trib­utes infor­ma­tion accord­ing to the requests or man­date received. In the near future, it is like­ly that we will see a shift towards organ­i­sa­tions pro­vid­ing a gate­way to data, and the clients them­selves decid­ing what they want to see and when they want to see it. To illus­trate this evo­lu­tion­ary change, we can study the pro­vi­sion of report­ing over the last 50 years or so:

Pre-1970s: STAGE 1 (Man­u­al)

Client reports and state­ments are hand­writ­ten, and are like­ly to be dis­cussed in per­son, face to face with the client in review meet­ings.

1970s/1980s: STAGE 2 (Cen­tralised tech­nol­o­gy, main­frames)

Client report­ing is pro­duced man­u­al­ly. It is like­ly that the con­tent is cre­at­ed by invest­ment spe­cial­ists and typed by cler­i­cal staff before being dis­trib­uted to clients. Dis­tri­b­u­tion is usu­al­ly via mail and accom­pa­nied by face-to-face dis­cus­sion with those per­son­al­ly respon­si­ble for the busi­ness-client rela­tion­ship.

1990s: STAGE 3 (Dis­trib­uted tech­nol­o­gy, client servers)

Com­put­ers are used to pro­duce reports, using a com­bi­na­tion of ear­ly word pro­cess­ing, desk­top pub­lish­ing and spread­sheet soft­ware. Dis­tri­b­u­tion is large­ly via mail and accom­pa­nied by face-to-face dis­cus­sion with client advis­ers, rela­tion­ship man­agers or port­fo­lio man­agers.

2000s: STAGE 4 (Emer­gence of the inter­net)

Report­ing soft­ware is used, intro­duc­ing stan­dard­i­s­a­tion and effi­cien­cy into the report­ing process. Report­ing is owned by the IT func­tion, and report design, pro­duc­tion and dis­tri­b­u­tion facil­i­tat­ed by them, with input from rel­e­vant stake­hold­ers. Dis­tri­b­u­tion is increas­ing­ly elec­tron­ic.

2010s: STAGE 5 (Mobile)

Report­ing is mov­ing out of IT and is now owned by “the busi­ness” as report­ing soft­ware has evolved to allow ease of design and pro­duc­tion. Dis­tri­b­u­tion is pri­mar­i­ly elec­tron­ic. Busi­ness users are able to build reports quick­ly and effi­cient­ly to meet con­sumer demand.

2020s: STAGE 6 (Ubiq­ui­tous com­put­ing)

Once Stage 5 has become the new nor­mal, it seems log­i­cal that the next step in its evo­lu­tion would be to pass the design of the report to the con­sumer, which isn’t nec­es­sar­i­ly always the client. Report­ing soft­ware will be the mech­a­nism for infor­ma­tion dis­tri­b­u­tion and the con­sumer will have – and want – the abil­i­ty to cus­tomise their data for their own pur­pos­es. In doing so, report­ing itself changes. Most con­sumers will not be build­ing com­plex reports to match their own designed peri­od­ic­i­ty. Instead, organ­i­sa­tions will pro­vide access to data and con­sumers will pick the data or cal­cu­la­tion of data that they want to see. Tra­di­tion­al, reg­u­lar report­ing thus becomes obso­lete and the “always-on” and “always-avail­able” mod­el is imple­ment­ed. As such, report­ing and com­mu­ni­ca­tion tech­nol­o­gy becomes a means to pro­vide data as well as its cal­cu­la­tion, inter­pre­ta­tion and dis­play.

Inter­est­ing­ly, even those organ­i­sa­tions that have reached Stage 5 are not facil­i­tat­ing com­mu­ni­ca­tion through the chan­nels cur­rent­ly avail­able and com­mon­place in oth­er aspects of a client’s life. Advis­ers aren’t gen­er­al­ly avail­able via live video or online chat and do not typ­i­cal­ly loi­ter on social media, with all of the acces­si­bil­i­ty that comes with this.

This may be due to infor­ma­tion secu­ri­ty con­cerns, con­fi­dence with mod­ern com­mu­ni­ca­tion media and per­ceived dif­fi­cul­ties in con­nect­ing such tech­nol­o­gy to exist­ing plat­forms. Addi­tion­al­ly, there are those in the indus­try who pre­fer to offer ser­vices via more tra­di­tion­al chan­nels. It is these organ­i­sa­tions in par­tic­u­lar who are like­ly to strug­gle to remain com­pet­i­tive in the next decade.

Increas­ing­ly the suc­cess­ful firms will be the ones that utilise smart tech­nol­o­gy to improve the cus­tomer expe­ri­ence
— Steve Young, man­ag­ing part­ner, Citi­soft

If an organ­i­sa­tion is will­ing to adopt new work­ing prac­tices, the tech­nol­o­gy is avail­able and it can be con­nect­ed to exist­ing plat­forms seam­less­ly. Qual­i­ty client com­mu­ni­ca­tion and report­ing can be a val­ue dri­ver and prospec­tive clients are like­ly to be drawn to mar­ket lead­ers in this space.

As advanced com­mu­ni­ca­tion and report­ing tech­nol­o­gy becomes com­mon­place, and enter­prise-wide data is avail­able to all stake­hold­ers, and con­nect­ed and inter­faced where required, a wealth man­ag­er needs to estab­lish or retain their dif­fer­en­tia­tors to posi­tion them­selves in the sec­tor.

It makes sense, there­fore, to allow a tech­nol­o­gy part­ner to pro­vide the mech­a­nism of oper­a­tions, so the organ­i­sa­tion can con­cen­trate on the dis­tinc­tive ele­ments of their busi­ness, such as research, per­for­mance and client ser­vice. Doing so enables ener­gy, time and bud­get to be expend­ed on those areas where exper­tise is in abun­dance. Tak­ing this deci­sion dis­plays and high­lights crit­i­cal strate­gic thought, putting your clients’ inter­ests above your own.

Sim­Corp Coric is a best-in-class enter­prise client com­mu­ni­ca­tions and report­ing solu­tion used by 80 pri­vate wealth and insti­tu­tion­al asset man­age­ment firms glob­al­ly to auto­mate their end-to-end report­ing process­es and enhance client ser­vice. Sim­Corp Coric is ful­ly owned by Sim­Corp, a lead­ing provider of inte­grat­ed invest­ment man­age­ment solu­tions for the glob­al finan­cial ser­vices indus­try, list­ed on NASDAQ Copen­hagen.

For more infor­ma­tion please vis­it www.simcorpcoric.com