Operational Efficiency Through Client Reporting - So What?

As news hit the wire that Eaton Vance has become the latest in the rapidly growing list of investment management firms to automate their client reporting process (with SimCorp Coric, of course!), perhaps it’s time to go back to basics and ask: “Why automate client reporting?” Many would answer “for operational efficiency”, but in reality …

February 5, 2015 | SimCorp

As news hit the wire that Eaton Vance has become the latest in the rapidly growing list of investment management firms to automate their client reporting process (with SimCorp Coric, of course!), perhaps it’s time to go back to basics and ask: “Why automate client reporting?”

Many would answer “for operational efficiency”, but in reality operational efficiency – in its own right – is rarely the primary focus for top 100 investment management C-suiters. What really keeps them awake at night is the quality of client servicing, because happy and loyal clients generate revenue growth and profitability, which in turn keeps staff in jobs and the company awarding dividends and bonuses. (They also lose sleep over regulation, too, but that’s a topic for another day!)

Institutional investors tell me that the average length of an institutional client relationship is around three years, and they are not the only provider managing their clients’ assets. Three years is a woefully short time for fund managers to prove their worth and ensure retention. Straight off the starting blocks, the client’s experience must ooze responsive service, trustful relationships and beneficial results. Increasingly, institutional investors are looking for more self-service options, in addition to spending more time engaging directly with their relationship manager. This is tricky for providers to achieve in the time-poor world we all operate in.

In the private wealth sector the average length of a client relationship is closer to ten years, however high net worth clients can have as many as five providers working in parallel, so the scope for switching assets from one to another is very high. Clients’ opinions can vitally impact a wealth manager’s ability to retain and grow the client basis. Positive referrals are extremely powerful; negative client reviews can be very damaging. According to Catherine Tillotson, Managing Partner at Scorpio Partnership, “if clients have the opportunity, the right kind of friends and services they are happy with, they will refer business.” Wealth managers can certainly create opportunities for clients to spew the virtues of their relationship, but their ability to influence a clients’ choice of friends is virtually nil. For me, therefore, the crucial element of this phrase is “if clients have services they are happy with” because that’s where all investment managers – wealth and institutional – have an opportunity to shine.

It all boils down to quality of service, which can be measured in many ways. Timely access to information, transparency, accuracy and personalization are all essential, but the amount of care and attention a relationship manager can lavish on his or her clients – in good times and bad – is a critical, defining reference point.

So, returning to my question, “why automate client reporting?”

What many of the world’s leading investment management firms have come to realize is that client reporting automation is about reducing costs, and it is about mitigating risk, but the jewel in the crown is the extent to which relationship managers’ time can be re-directed to more client-facing work through operational efficiency. It is this perspective of operational efficiency as a client servicing enabler, achieved through client reporting automation, which will ultimately result in client loyalty, business growth and profitability.
 

By Nicola Cowburn, VP Global Marketing, SimCorp

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