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The Importance Of Giving Clients Full Information

Paul Watthey, Advent Software EMEA, Director of Marketing, 16 September 2009


An essential component of a manager’s offering will be its ability to effectively and frequently communicate with clients, a function that becomes especially important during periods of market volatility.

For Switzerland’s independent asset managers – used to working with a core client base of private high net worth individuals and, increasingly, family offices – the provision of high touch, bespoke services is a way of life.

As a result, an essential component of a manager’s offering will be its ability to effectively and frequently communicate with clients, a function that becomes especially important during periods of market volatility.

For one, clearly communicating to clients how their assets are allocated and the returns their portfolio is achieving demonstrates that the manager is doing its job, and is earning its fees. But more than that, by giving clients comprehensive but digestible information on their financial position, they will be better equipped to work with the manager in formulating a financial roadmap and ensuring both parties agree on the direction they are going.

To this end, the clients concerned – whether individuals, families or institutions – will want up-to-date records of their total assets, with a breakdown of the holdings, transactions conducted and returns achieved by asset type, as well as the ability to monitor income and expenditures.

For the asset management firm that raises the prospect of gathering details on a complex array of financial and physical assets, some of which may be handled by a range of managers.

Making demands

Effective client communication then places certain demands on the asset manager. For one it will need to obtain an aggregate view of the client’s holdings and positions, wherever they happen to be, so that it has complete and accurate account information at hand. It must also subject the portfolios to rigorous performance analytics.

Armed with this information, the firm needs to create detailed but intelligible reports to send to clients. What is more, because it may be serving multiple generations and members of a family – with their different financial status and literacy, and technological sophistication – the firm should be able to customise those reports according to each client’s specific needs and preferences where required.

Likewise, the asset manager will want to test the portfolios against different scenarios, such as changes in interest rates or market movements, and assess the impact of alterations to their investment strategy on the financial goals of their clients. That information can again be reported back to the client to enable both parties to regularly appraise their current position and future course.

And in addition to client reports, the firm should be able to generate reports for relevant interested parties where applicable. For example, where an asset manager is working with family offices the family’s tax accountants and lawyers will need to be informed about the position of the accounts as well.

Client communication though is not just about periodic investment performance feedback in the shape of monthly, quarterly and annual reports. Great service also means ensuring there is a personal touch, having alerts set up as reminders to contact someone when previously agreed, being responsive to any ad hoc demands, and proactive in discussing investment opportunities or challenges on the horizon.

But achieving this level of service is impossible unless a firm has a sophisticated technology framework in place.

Technology framework

That includes having tight integration between a firm’s portfolio management/accounting system and its reporting engine to ensure an automatic feed of data from one to the other.

It also means having a robust and flexible reporting engine able to handle all asset types – including the gamut of securities instruments, as well as any physical items such as houses, yachts and artwork – and that can be configured to quickly and easily generate standard or individualised reports according to clients’ demands.

In addition, these capabilities should be linked to a customer relationship management system so they can provide reports and other information of interest to clients when they want it and in a personalised way.

With this type of infrastructure, the reporting process can be completed much faster at period end, since it won’t require employees to compile and input data from multiple sources, run and print the individual reports, collate the packages and send them to the relevant people.

Automation also guards against inaccuracies creeping in from manual intervention, is more cost efficient, and frees up significant operational time, allowing staff to focus on other higher value activities. And this more effective use of resources is critical for independent asset managers, not least since the majority (62%) of those in Switzerland operate with less than 10 people, as a study by research firm NOVEO Conseil for BNP Paribas Private Banking revealed .

What is more, because staff are not then tied up on mundane administrative tasks, employees are likely to be more productive, more motivated and more likely to remain with the firm.

Crucially, client satisfaction will be higher with this faster, more accurate and more customised reporting process too.

In short, a cutting edge technology infrastructure means the organisation can concentrate on maximising investment performance and customer-facing activities, while having the scalability to grow its business in a cost-constrained way, and all the while providing the exemplary client service that must be the hallmark of today’s independent asset manager.

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