Operations & Outsourcing

Client Reporting Challenges in Asset Management – A Client Service Differentiator, or an Inconvenient Necessity?

Tom Goldwater, Chyavan Rees, Alex Sabato

In July 2022 Alpha published an article highlighting that the ‘the time is now’ for firms to act and address their Client Reporting operating model, driven by changing behaviours of clients in the wake of the pandemic. This has remained a hot topic over the past 12 months, and Alpha’s continued engagement with Asset Managers, Asset Servicers, Client Reporting vendors and Asset Owners has allowed us to form a 360-degree perspective on priority areas requiring optimisation for Client Reporting.

Client Insights: An Asset Owner’s Perspective on Client Reporting

“The quality of an Asset Manager’s Client Reporting will not dictate who we select to manage the money, but it influences how the manager is perceived”
Chief Operating Officer, UK based Asset Owner

Based on findings from a recent outreach to Asset Owners, there is clear sentiment that Client Reporting is seen as a hygiene factor – that being, a BAU service clients expect to receive rather than something they look to as a differentiator. However, with such expectations, poor or absent reporting often leads to dissatisfaction – simply put, it’s something clients expect Managers to get right! The common themes identified by Asset Owners when discussing Client Reporting include:

So what? The reality is, reporting remains a key interaction with end-clients yet, as Asset Owners attest, it’s significantly more likely to cause frustration than it is to delight! Therefore, the immediate priority for Asset Managers should be to ensure they ‘get the basics right’; that being the timely, complete and accurate provision of reporting, supported by an efficient and cost effective operating model. Asset Managers should reflect on whether the reporting capability they develop is cost effective considering the output is perceived as little more than a hygiene factor by their clients.

A Vendor Perspective: Increasing Opportunities for Managed Services

“We focus on providing our clients with a scalable Client Reporting solution”
Product Manager, Global Client Reporting Vendor

The sentiment from Client Reporting vendors is clear: enable scalability. Vendors have focused on expanding product capabilities, in addition to mergers and partnerships with other technology vendors that enables Asset Managers to achieve operational efficiencies across the Client Reporting value chain. As part of this, there has been an increasing number of Asset Managers now enquiring about reporting as a managed service, simplifying the production process and avoiding the need to build technical capabilities in-house, instead favouring the expertise of professional services or an outsourcing provider.

So what? To be a leader in this space, Managers must assess their Client Reporting operating model to consider where they can simplify, standardise and maximise the benefits from vendor capabilities, embedded alongside in-house expertise.

What is the recommended approach for Asset Managers?

Client Reporting remains an important capability but the evidence confirms that it can quickly become a drain on time and resources, not to mention a source of frustration for end-clients. Therefore, so long as reporting remains a hygiene factor, Managers should favour accuracy, operational efficiency and scalability, and look into differentiating Client Service elsewhere.

Where do you Start?

Asset Managers must first assess their operating model and identify the preventative factors in ‘getting the basics right’. This isn’t easy, with issues ranging from the provision and governance of data, through to the handling of increasingly complex and labour intensive reporting requirements. Indeed, a mindset change is often required amongst internal teams; sales teams need to be in lockstep with Client Reporting teams to ensure what Asset Managers promise their clients is both effective and achievable to ‘get the basics right’. An assessment of these preventative factors first will help firms to identify where to create efficiencies in the operating model, and where to maximise vendor capabilities vs utilising in-house expertise.

How can Alpha Help?

If any of the points in this article feel familiar and you’d like to discuss further, we would be delighted to hear from you. Alpha has run multiple capability assessments in this space, helping Asset Managers to define reporting strategies, assess and design operating models and provide vendor analysis, selection and implementation expertise. Please reach out to us here.

About the Authors

Tom Goldwater
Associate Director

Tom is an Associate Director specialising in Digital and Distribution at Alpha with over eight years' experience working in consulting with financial services clients. He has helped design and implement programmes of work using technology to solve client problems, with a growing focus on transforming Client Reporting, and the distribution space in general.

Chyavan Rees
Senior Manager

Chyavan is a Senior Manager at Alpha who leads the Client Reporting proposition within Alpha's Operations practice. Chyavan has over seven years’ experience consulting within the financial services industry and has extensive knowledge of Client Reporting vendors and operating models. Chyavan has experience working on large-scale transformation programmes including first hand experience delivering operations and technology projects including Client Reporting implementation.

Alex Sabato

Alex is a Manager at Alpha with over six years consulting experience in Asset & Wealth Management and Capital Markets. His experience covers a range of topics from strategy to execution, with a focus on Operations & Outsourcing. During this time, he has worked on and led large outsourcing transformation programmes, middle office transformation, Client Reporting and regulatory change initiatives working with clients across the UK, Europe, and North America.