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Client Reporting Is Key, But Still Lacking Resources

Client reporting is critical to customer satisfaction and retention. But automation and other resources in the area still are lacking.

Client reporting perhaps once was underestimated by asset managers as just another brick in the wall. But firms recently have realized that it absolutely is critical to their success. "Client reports are either the first or second most common reason why people leave a firm," contends Robert Ellis, senior analyst at Boston-based Celent.

"Up to two or three years ago, client reporting was underestimated -- not now. The quality of client reports is the single most important thing," Ellis continues. "If I get a report from one firm, and a friend of mine tells me the report he just got from another firm is better, I will leave the first firm."

So how did the asset managers surveyed by Cutter Associates on client reporting perform?

Overall, firms that generate a higher volume of reports and enjoy a larger geographic footprint and number of accounts performed better than their peers -- although a firm's total assets under management was not a significant factor. More important, however, Cutter found that all firms suffered from a lack of resources that could be dedicated to client reporting.

While participating firms dedicate an average of seven to 10 employees to client reporting, the top-performing firms employ 13 to 18 staff members dedicated to the area. The most varied results in the survey came on the workflow front: for the most part, firms either had a robust and automated workflow environment, or the workflow environment was very unstructured and manually intensive, Cutter says.

Cutter surveyed nine asset managers: AIG Global Investment Group, Bank of America, Fidelity, Loomis Sayles, MetLife, Principal, UBS, Western Asset Management and World Bank. Questions covered organization and workflow, technology and data collection, report generation, and report contents and distribution.

On the technology side, three firms in the Cutter study received a perfect score because they employ a single instance of one platform that meets all of their report-generation requirements. Those platforms, Cutter stresses, include separation of data sourcing and report generation. Only two firms use an automated solution for report design, customization, data collection, and report approval and distribution.

The Data Challenge

In fact, for most firms that took part in the survey, data collection is a blend of automated and manual feeds. Less than half of the firms responded that they have automated processes across all products and asset types. And only a quarter of the firms said they have consistent and controlled storage of commentary with alert capabilities. Overall, few firms said their systems support alerts for failed processes or missed deadlines at all, either by E-mail or in another form.

Cutter associate Jackie Alvarez points out that data movement and aggregation are an ongoing challenge for firms. "There wasn't a single member who could solve the problem efficiently," she says. About half of the study's participants classified their firms' data quality as "understandable and reliable." Surprisingly, only one-third said their data represented a "clean, straight-forward single version of the truth."

"Technology and reporting is only as good as the underlying data," says Alvarez. "A lot of firms are looking for tools that simply format nicely, or a tool that allows clients to go to different systems and pull data together in a fluid, intuitive way. That's the area where clients are having the biggest difficulty. And it will continue to get more challenging, partly due to the growth of alternative investments."

Meanwhile, nearly half the firms reported that they use an enterprise solution that is a combination of a proprietary solution and a vendor-supplied solution for client reporting. Most said they use Business Objects' (San Jose, Calif/Paris) Crystal in combination with proprietary solutions and FMC Pages (now known as SS&C Pages following FMC's acquisition by Windsor, Conn.-based SS&C Solutions) for commentary and custom external reporting. They also continue to use Microsoft Excel for internal customization. Significantly, however, about 80 percent of the firms that participated in the survey said their platforms do not meet all of their periodic and ad hoc reporting needs.

Still, overall, two thirds of firms responded that they were either "satisfied" or "very satisfied" with their current technology platform, while the remaining third indicated that they were "very unsatisfied." Over half of the respondent firms said they had no plans to change their systems or tools, while almost 40 percent indicated that some change was planned within the next year or two.

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio

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