Client communications and reporting in a changing business environment

Meeting increasing client demands

Read this article and learn about:

  • Client demands for more bespoke communications and reporting services
  • The need for a strong and agile technology platform
  • More interaction and empowerment
Steve Young, Managing Partner, Citisoft
Steve Young, Managing Partner, Citisoft

The business environment for asset managers is likely to change considerably in the foreseeable future. Clients are becoming more demanding, while the digital age is creating the opportunity to transform business models, introducing greater interaction and empowerment. We are already seeing more sophisticated data and content requests and this is likely to intensify over time. Thus, it is likely that clients will increasingly demand more bespoke services and in a timelier manner. Investment managers must be prepared to meet these demands in an equally timely manner.

At present, the key business area for dealing with the information demands of the clients is client communications/ client reporting. These units were originally created to organize, validate, and distribute the regular monthly hard copy reports. Over time, this process has evolved to become a largely electronic delivery, but that apart, much of the focus is largely unchanged. While the data that is sourced is demanded to be accurate and consistent, reports are still predominantly produced for historical data.

Demands for real-time data and self-service

Although it is unlikely that the traditional client communications/client reporting services will disappear, the growing demand is to supplement this information with a timelier, digital offering. As in other sectors within financial services, clients expect to be able to review key data in a real-time, or at worst near-time, experience and be able to raise bespoke queries concerning their portfolios, as and when required. This ad-hoc provision will also need to be largely self-serviced.

Delivering this modern client communications function to clients requires a different approach regarding the people, processes, and the technology that underpins it. Focus is now moving from provision of information to end-clients to communication, client interactions, and client experience. All of this will create new opportunities to change the entire client experience and build new, more dynamic and technically-driven client interactions. 

Adapting current operating models to new demands

From an IT and Operations perspective, evolving client demand is putting a strain on current operating models. Maintaining the status quo is not an option; those that do so are at risk of losing business. Creating a customer-centric business model with enhanced client empowerment is critical for firms, and the time to begin this evolution has arrived.

Succeeding in building and delivering a new business model for the digital age is completely dependent on an investment in technology. Although there will be inevitable changes to culture, processes, and people, none of these will be successful without strong and agile technology to facilitate the shift. To ensure the right investment is made in the most appropriate technology, firms need to create a vision for the future and a roadmap to reach this future state.


Succeeding in building and delivering a new business model for the digital age is completely dependent on an investment in technologySteve Young, Managing Partner, Citisoft


Getting priorities right in challenging times

For many firms, this is a challenging time to make such an investment. The active to passive investment trend continues unabated as investors flock to ETFs and index funds in search of performance and lower fees. Asset managers continue to turn to alternative asset and multi-asset class products to find pockets of alpha in the effort to preserve active investment pools. Industry-wide fee wars have a trickle-down effect on virtually every aspect of the industry. Eroding margins and rising costs favor nimble, diversified firms. All these factors could be considered as justification for postponing or delaying any investment in creating a digital platform. In most instances this would be a significant mistake.

Improving client experience while maintaining fundamental services

Enabling a differentiated client experience will drive success. This will begin with a development of the current client communications services. Firms must be careful, though, not to assume that the new digital age will remove the current requirements, and conversely that a new client experience will be built purely on the current service. The need for the current client reporting service will not disappear any time soon. Regulators, advisors, and clients will still demand accurate and detailed reports.

The current fundamentals of client communications will need to be maintained, whilst delivering new services lines. Timely, accurate, trustworthy data will be critical to all client services. Transparency and a high-quality client experience will need to be protected. Current client communications business lines built around automated, exception-based workflow and using standardized components and template-based report generation to create a myriad output options – PDF, HTML, xls, portals – should already be the standard. Also, this investment will need to be maintained as a foundation for any new propositions.

All additional services that firms develop will be based around data. It will be imperative that the data used across all client interactions is both accurate and consistent. An investment in a more technical, digital client experience will only complement the existing human interaction, not replace it. As the demography of the client progresses, the loyalty to existing brands will also change. Experience in other sectors shows that clients are becoming more loyal to the client experience rather than the existing brand. Whilst the nuances of asset management will retain focus on other brand issues, for example fees and performance, the levels of services and overall client experience will become increasingly influential.


… clients are becoming more loyal to the client experience rather than the existing brand. Steve Young, Managing Partner, Citisoft


Legacy technology, legacy processes, and legacy people impede progress

The asset management industry has historically moved at a glacial pace (as compared to other industries) when it comes to technological innovation. Firms need to rethink legacy behaviors, not simply legacy technology. Legacy technology, legacy processes, and legacy people have all impeded progress. Data and report governance, while noble, still proves elusive at several firms. Modernization of a client communications platform is a complicated exercise and the digital revolution has made slow progress in the client communications realm.

Despite these factors, it is very hard to foresee a sea change in the industry. It would be very simple for people to deny the digital revolution is coming and to shun the investment required to embrace this change. The real challenge is that the modifications needed by most firms to adapt to the new world require a significant investment of time as well as money. This is not a quick fix; it requires a root and branch review of the whole business model.

Taking a tactical and strategic approach to change

Transition will blend projects both tactical and strategic. Firms will need to start small and gain momentum. Building and delivering a culture of regular, incremental changes is the best way forward, rather than the more traditional ‘big bang’ approach that asset managers have taken with respect to transformation. To view the evolution of client communications as a static project would be a mistake; to create a truly empowered client experience, changes will need to be regular and ongoing.


To view the evolution of client communications as a static project would be a mistake; to create a truly empowered client experience, changes will need to be regular and ongoing. Steve Young, Managing Partner, Citisoft


Client communications will regain status as a competitive differentiator

There are many areas of the existing business that are encompassed and retain an interest in owning, or at least being involved in, creating this new business model. Currently, client communications are very often best positioned to drive this new business experience forward. Other business areas, such as marketing or relationship management, do not currently have the same data discipline or level of established operational technology - but this will not be the case for long. Is there a Fintech revolution at hand? It appears so, with a host of new and old entrants showing an appetite for true innovation in this space.

Client communications is perhaps now more important than ever. In the past, many firms used the quality of their client reports as a key competitive weapon. These reports have become ubiquitous over time and distribution via email and PDF has lessened their impact in terms of ‘look and feel’. Thus, many firms no longer attribute such a high competitive value to client communications as before. The emergence of a digital model, with an improved client experience and greater empowerment, once again puts this discipline at the very heart of a competitive landscape, with a clear ability to differentiate against one’s peers.

About the author

Steve Young, Managing Partner, Citisoft

Steve has over 30 years’ experience in the investment management industry. He provides a blend of business understanding combined with an extensive knowledge of the technology and software landscape along with an in depth understanding of the services sector. Prior to joining Citisoft, Steve was one of the team that created Rhyme Systems following a management buy-out from Misys PLC, successfully restructuring the business into a leading software and services company. Prior to Rhyme, Steve held senior positions at Thomson Reuters, Extel Financial and Datastream.