Client communications and reporting

Meeting evolving client expectations

Opportunities to win through client experience

By Iain Smith, Marketing Principal, SimCorp Coric

The asset and wealth management industry is in a period of extraordinary change and transition. Between dramatic shifts in regulatory requirements, the rise of passive investing, changing demographics, pressure on fees, and ongoing industry consolidation, the current landscape has been referred to as the “the largest competitive realignment in asset management history”.

Even against the backdrop of such a complex operating environment, the industry is expected to grow. In its 2017 report, “Asset and Wealth Management Revolution: Embracing Exponential Change” PwC anticipates that the global assets under management will almost double in size and reach USD145 trillion by 2025.

Generally, we see that competition is increasing for firms to position themselves for growth and to both win and retain clients. For many firms, turbulent market conditions mean that differentiation through superior investment performance alone is becoming a challenge. Complicating matters further is the fact that social change is affecting brand loyalty, and technology is making switching providers easier. Consequently, the quality of service and experience delivered to clients is becoming increasingly vital to differentiate from peers.

The effect on client communications and reporting

From a client communications and reporting perspective, market conditions and evolving client demand is putting a strain on current operating models. Alongside this, firms have under-invested in technology required to meet client demands and are consequently struggling to scale their client service alongside business growth. Clients expect timeliness and increased levels of transparency in their reporting, which many organizations are trying to meet with manual processes and archaic legacy technology, leaving them unable to meet the demands. According to a 2017 Cutter Associates benchmarking report on client reporting, only 31% of managers can deliver their reports within seven business days, far below the expectations of investors and undoubtedly contributing to poor client experience.

With similar market conditions predicted for 2018, how asset and wealth management firms choose to adapt and respond will determine the winners and losers. A recent PwC survey showed that 65% of asset and wealth management executives acknowledge that technology will re-shape or significantly impact competition. They also realize that organic growth and cost reduction are crucial to coping with regulatory expense and falling margins, and are prioritizing accordingly. In this new operating environment, maintaining the status quo isn’t an option – firms that do not take the necessary actions to evolve will risk client attrition and inability to win new business.

“In this new operating environment, maintaining the status quo isn’t an option – firms that do not take the necessary actions to evolve will risk client attrition and inability to win new business.”

How will investment firms cope in 2018?

In 2018, competitive threats and pressures will continue to exist, but there is also opportunity in abundance. Providing new products and services through modern, low-cost and streamlined channels will undoubtedly be the route to success, and those who take advantage of such opportunity early will likely be those who continue to exist in the decades to come.

Inevitably, this shift will force firms to reassess how they engage with clients, meaning focus will move from the provision of information to clients to more communication, client interactions, and client experience. With clients demanding real-time, online updates on their portfolios’ performance, asset and wealth management firms will increasingly look to deploy digital channels to cope with these market drivers, to reduce cost, and improve the responsiveness and the overall client experience.

The provision of digital channels and tools will see the client servicing function further evolve from the traditional model of client investment reporting and face-to-face meetings to encompass a broader set of communication tools. These will enable investment firms to introduce more touchpoints and channels in the client relationship, and create opportunities for firms to deepen and broaden their relationships with clients.

We envision that portals will become the center of client communication. The flexibility and “anytime, anywhere” access offered by portals means that they will become more of a focal point for the relationship allowing users to access marketing content and information customized for them, thereby providing an enriched client experience.

The deployment of additional digital touchpoints will also present opportunities for client retention and acquisition, while assisting with regulatory obligations. Research conducted in 2017 by Living Group of the digital intelligence of the top 100 asset managers globally, suggests this is currently an underdeveloped area, as only 28% include quality fund and strategy information on their websites. Digital channels allow asset and wealth managers a better understanding of their clients to better tailor product design, marketing and propositions. For example, factsheet data and content will move to the online tools areas of websites and present a low-cost and easily maintainable way of fulfilling regulatory requirements, plus provide an effortless way for investors to access real-time performance data.

Iain Smith

Iain Smith
Marketing Principal, SimCorp Coric

Iain Smith is Marketing Principal for SimCorp’s Client Communications and Reporting suite, SimCorp Coric. Iain is responsible for marketing activities for Europe and North America for SimCorp Coric, and has a keen interest in digital and client experience. Iain joined SimCorp Coric in 2016, having previously been focussed on the SimCorp Dimension product for 9 years in various marketing positions.

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