Is this what your client reports say to investors?
A unique set of forces, currently shaping the next generation of wealth management, have catapulted client reporting into pole position. It has arguably never been as important as it is today to produce client reports that inform, excite and wow investors. After all, “other than the relationship manager, investment reporting is often the only ‘relevant’ touch point with clients”.
With so few opportunities to interact with investors, it really does pay to get it right. So, what are the drivers bearing down on the wealth management sector and what do they mean for the importance and evolution of client reporting.
Here are our thoughts on why client reporting deserves to come top of your agenda.
Market pressures
Five forces will shape the next generation of wealth management:
Margin squeeze
Market volatility, fee pressures and an ongoing shift towards ETF and passive investment means that margins are tighter than ever before. Whilst revenues have bounced back surprisingly well since the financial crisis, rising costs and continued volatility mean that overall profits have been flat for many wealth managers.
What does this mean for client reporting?
Expenses have become the primary lever for businesses looking to improve operating profits. Market volatility, unfortunately, looks here to stay – in the short term, at least – so concentrating on shaving costs and reducing the total cost of ownership when it comes to IT infrastructure suddenly looks very attractive.
Since client reporting draws on so many disparate business areas and requires such volumes of data manipulation and presentation, it is an obvious target for increasing efficiency.
Technological advances
Ten years ago, talk of “mobile tablets connecting with platforms that floated in the cloud” would have sounded more like a drug-fuelled hallucination than reality.
Now, however, the majority of investors have access to the mobile web. As a result, interactivity, real-time communications and genuinely outstanding user experience have become hygiene factors you ignore at your peril.
What does this mean for client reporting?
Day-by-day, hour-by-hour, clients will demand more intuitive reporting and more interactive tools. Partnering with scalable cloud based solution with tried and tested mobile capability therefore looks like an increasingly sensible option.
Regulation
Regulation is a market pressure barely in need of an introduction.
Whether it is capital adequacy and Basel II, the Dodd-Frank Act or RDR, wealth managers are feeling the squeeze from all directions when it comes to regulation and compliance. The compliance burden has grown significantly post financial crisis and managing the burden has become the number one operational priority.
What does this mean for client reporting?
Agile reporting abilities can help guarantee swift regulatory compliance but, perhaps just as importantly, they can help control the growing costs associated with regulation and compliance. Exploring reporting partnerships that outsource – or ‘right-source’ – key business workflows now looks attractive not only because of the benefits to be had in terms of speed and accuracy, but because it often reduces operational expenditure as well.
Emerging Markets
As East meets West, wealth seems to be gradually drifting East. BRIC economies, dominated, of course, by China, are creating high net worth individuals at a terrific rate, whilst emerging markets are themselves an increasingly dominant asset class.
What does this mean for client reporting?
Global wealth means global infrastructure requirements. Client reports now need to be translated into multiple languages and sent seamlessly around the world. To manage data of international proportions, you need a global expert in client reporting.
An ongoing need to restore investor confidence
In many ways, investor sentiment has proved remarkably resilient in the wake of the global economic turmoil that has dominated the headlines since 2008.
It’s clear that there is light at the end of the tunnel in terms of client trust and investors now seem ready to re-embrace wealth managers and the services they provide.
This renewed sense of trust, however, doesn’t come without a cost.
What does this mean for client reporting?
“Cleaning up banking” has been a much favoured phrase for global media moguls. In the wealth management sector, the “clean-up” has involved a shift towards increased transparency, better analysis tools and better data management that can facilitate a better understanding of risk.
None of the above is possible without advanced data analytics and a multi-channel approach.
About Hazel McHugh
Before becoming a freelance writer and digital marketeer, Hazel was Group Marketing Manager at Santander.