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Analyst Viewpoints

Designing a client communications operating model

A client communications operating model is a complex entity and its design is therefore a major undertaking for any investment management firm.

In this short blog it is impossible to cover the subject in any great detail, therefore I will endeavor to at least summarize the main areas for further investigation.

Within the recent past, an operating model was often defined as ‘people, process and technology’. This definition needs refreshing with many additional elements, not least of which are ‘data’ and ‘relationships’.

The critical role of data

Data forms a key component of any operating model and is seen as being critical to every process within every firm. The client communications function should be a receiver of the core data, which is manufactured and validated elsewhere, rather than client communications being the owner and manufacturer of the data.

Client communications lies at the end of the investment management process. If the only area of the business where the data is correct is in client communications, then there are serious problems upstream. Core data for reporting should be consumed from elsewhere within the investment management firm and it should be high quality data, available in a timely manner.

Outsource where you cannot add value

The other element that is crucial to operating models these days is relationships or suppliers. Outsourcing is a vital component within any firm. It is increasingly also a major part of a client communications operating model, where internal functions need to be considered in terms of whether they add value or create a compelling differentiation, or should simply be outsourced to a third party on a shared cost, utility basis.

Shared requirements, often influenced by regulation, can be given to a third party supplier at a shared cost. For example, the translations for KID reports could fit into a fairly standard template for an outsourcer; whereas the higher touch communication pieces are an important part of an investment management firm’s arsenal that would normally be kept in-house. Firms need to look at their client value chain and see where they can effectively outsource and where they need to invest, add and demonstrate value.

Steve Young

Technology vendors are key

Relationships with technology providers are also significant within client communications and it could be argued that technology in this area is (and should be) amongst the fastest moving within the fintech industry. Client communications is at the forefront of the digital revolution and therefore these vendors must be able to deliver the insight, vision and speed of change that makes the investment manager competitive.

A digital strategy involves delivering information in multiple formats, across different platforms. Such a strategy must encompass an enhanced client experience and also provide ‘machine-to-machine’ integration - a world away from PDF and email, the formats that predominate today. Technology suppliers are therefore an integral part of any digital communications operating model.

In summary, client communications operating models are becoming more complex, with interrelationships gaining in importance.