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Client Reporting: How Much Information Is Too Much?

Performance and Risk

By FactSet Insight  |  February 20, 2018

For active managers, the need for modern business models has never been greater. Fees are tightening and asset allocation has become more important. Firms are being mandated to reduce their total cost of ownership for their IT footprint, but at the same time want reassurance that new technologies have been deployed successfully. Asset managers wish to increase their AUM, but must think about their distribution channels and how they can deliver client reports efficiently.

As a result of these multi-faceted pressures, asset managers must become more outward looking, with a focus on connecting to their customers. The obstacle they face is not necessarily including different information, metrics, or charts on a report; the challenge is moving from a static experience to a fluid conversation with their clients.

In pursuit of those better conversations, one key question for asset managers is “how much information is too much?”

Information Overload

Many managers are inclined to include more and more fields of data as a means of distinguishing their services and providing value. In this sense, the reporting industry is following a similar path as it did with frequency, where the move from quarterly to monthly reporting was heralded as a breakthrough in terms of service. As a result, asset managers (and service providers) are occasionally guilty of overwhelming their clients with too much data in areas where they don’t need it and not enough where they do.

At a recent user forum, Vermilion, a FactSet company, asked 100 investment management delegates what percentage of their reports they believed were read by clients. The results were surprising. A third of the audience felt that only between 25% and 50% of their reports were being read by clients. Those results are an indication that institutional asset managers should be more selective about the data they provide to asset owners in the future, with volume becoming less important than relevancy or expediency.

Differentiating between data and information needs to be a key consideration for any of these client touchpoints. However, while needs of each asset owner may be different, asset managers need to find a balance to avoid too many custom requests. There is a point of diminishing returns beyond which the provision of extra data is neither desirable nor viable.

As the space evolves, asset managers will not be the only group to experience growing pains. Functional, technological, and regulatory pressures will create similar challenges for wealth managers, asset servicers and private banks, as well as the front, middle, and back office.

To learn how client reporting teams can help their firms more effectively address these challenges download our white paper: Client Reporting for the Future

As the space evolves, asset managers will not be the only group to experience growing pains

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