Adding Value to the Client Relationship

Active Investment Managers win new business through their higher than average performance, retain it despite the vicissitudes of the market but lose it through poor administration. The most frequent manifestation of poor administration is in the quality and timeliness of their Client Reporting.

There are many claims on the Investment Managers' investment in time and materials. In effective Client Reporting an Investment Manager demonstrates the quality of its underlying systems and procedures and - of paramount importance - the quality and timeliness of all used data. This implies appropriate controls over Transaction data (purchases, sales, deposits, hedging trades, etc.), true Client data (the mandate, benchmarks, guidelines, contractual terms, etc.), and Market data, (prices, earnings and income declarations, corporate actions, etc.).

The Data and Process Models necessary to support these needs are fundamental to effective Client Reporting and their importance cannot be overstated. Failure to implement the necessary Data and Process Architectures can lead to any or all of:

• Missing or incorrect data (a Data Quality Management issue)
• Late acquisition of necessary transaction data (a Straight-Through-Processing issue)
• Poorly or inappropriately organised data (a Data Design, Classification and Presentation issue)
• Poor integration of different sources of data (a Process Design issue)
• Rigid or inflexible reporting formats (a Product Design issue)
• Late delivery of regular reports (a Process Design issue)
• Lack of on-line Client access to relevant data (a Security Design and Process Design issue).

Investment Management firms providing local market management to a domestic Client with little or no overseas element will find these issues challenge enough. Addressing these issues when the Client could be located anywhere in the world and has granted a truly global mandate requires a deep understanding of both the technological and business process involved, the organisation structures necessary and a true commitment to delivery of the highest standard.

Increasing Flexibility in Client Reporting

London's Investment Management community manages a wide variety of Client types with truly global investment interests, and each Client may well have specific and possibly unique Classification requirements. An ERISA Fund may require their London managed investments to be classified according to the MSCI EAFE classification, while a European Pension Fund may require classification to the DJ/STOXX Industrial classification. Yet another Client may require their Geographic breakdown of Equities to be classified according to local structures.

These disparate requirements emphasise the need for the appropriate Data and Process Model structures supported by industry best practice in acquiring and managing all necessary data.

Information Content in Client Reporting

Different Client types (UK Pension Funds, ERISA Funds, High Net Worth Individuals, Charities, etc., or even the Regulatory Authorities themselves) will have differing reporting requirements. Their reporting requirements can be extensive and elaborate. Effective, economical delivery of such Report Books will become a prime differentiator of Investment Managers, with the prize going to those that maximise capability while containing cost. The continuing prevalence of legacy systems and the rigidity of even the more modern package solutions militates against realisation of this ambition. Product suppliers are poorly equipped to provide solutions, which come from well-founded understanding of the Investment Manager's relationship with its Clients.

Delivery Methods

With the increasing power of telecommunications most widely manifested in Web technology, the opportunity exists for improved delivery of Client Report Books. No longer need the Investment Management firm turn itself into a print shop for quarterly report production. It will become increasingly common for the Report Books to be assembled and delivered electronically either through push (we send - electronically) or pull (you solicit - electronically) delivery. This clearly moves Client Reporting into the domain of e-business! Examples of the approach already exist.

The Way Forward

Our Consultants have, for many years, built the Data and Process Models that address these issues and have been responsible for designing and implementing some of the most effective Client Reporting solutions in the City of London. Our clients for Client Reporting services have included leading Global Asset Managers and National Regulatory Authorities.

We are able to replicate these models for you, develop plans for the acquisition and integration of new products, and install and implement new and improved client services.