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.