I’ve been thinking about client reporting a lot recently. I have been thinking about other things too. Scottish independence, the start of my fifth decade, the remarkable sprouting happening from my aural appendages since the start of said fifth decade and diverse other issues have been crawling up my reptilian brainstem at the same time. Who says men can’t multitask?
But client reporting has been something which has been a constant at work. A couple of months ago I talked about Fastrak, which tries to get reporting coherent across platforms. A few folk got in touch afterwards to express frustration with client reporting on platforms, and that got me poking around a bit.
I was poking around anyway, because we’ve been doing a bit of work with an adviser who is turning himself into a discretionary outsourced model portfolio manager. I know. I can think of easier ways to make a living too, but he seems to like it and that’s the main thing.
Anyway, your man was looking for a platform and so we did a bit of work to put some options in front of him for his own clients, before getting going on being listed on other platforms for other advisers to use. Now, if you’re an MPS DFM (Model portfolio service discretionary fund manager and, yes, I hate myself for using that) then you care very much about functionality. Running bulk models is not a zero-effort game and doing it efficiently is the cornerstone of a healthy breakfast as far as DFMs are concerned.
So we dug in around, not just functionality, but deeper boring stuff in terms of operational ability to deal with big rebalances and blah blah blah, and then gave him some views. This wasn’t a traditional due diligence exercise (a subject to which we’ll be returning, as sure as eggs are ovoid breakfast foods); it had a bit more to it.
In due course...
Lots of very lengthy discussions later, we were still struggling, and the reason wasn’t DFM functionality. It was client reporting. This is an advisory practice which has an average client balance of £300k or so, and prides itself on looking swish (marketing term) and wants to portray that to any advisers who adopt its portfolios.
The upshot is that we didn’t pick the platform with the best functionality for him. We picked the one with the best client experience, which is to say reporting. Price was neutral, investment and wrapper range was neutral, all the leaders had good service and a good cultural fit.
What was heartening about that to me was that your man picked the firm which would make life better for his client rather than him. But this was enlightened self-interest (the best kind).After a bit of activity-based costing work, we reckoned that slightly poorer functionality on the actual wealth and portfolio management side might cost him 1 FTE (full-time equivalent) in a year. But putting together really nice client reports would cost him 2-3 FTE per year on relatively modest assumptions, and if he hit scale that would increase while the functionality one would stay constant. So he went with the better reporting.
I won’t say which platform that was, but from an industry perspective the reporting is not all that, let alone a bag of chips. It’s fine, don’t get me wrong. All the basics are present and correct. But there are no clever innovative reports; all you get really is a portfolio breakdown, a valuation, a big transaction statement if you want it, and a performance summary.
The difference is in how it’s presented. A lot of effort has gone into this and it shows. So from a client perspective it’s very good. Not the finished article perhaps, but very good.
But what about those missing reports and clever stuff? Doesn’t the client need to have that? I played journalist for a bit and asked a few advisers what they thought.
The answer, (I’ve finished playing journalist now; it was hard work and didn’t pay very much) was ‘no, not at all.’ In fact, if there was one uniting theme in the chaps we spoke to, it was a desire to simplify reports still further, and make them have more visually impact. The odd pie chart does not an engaged client make.
I’ve written before here and elsewhere about the tendency of our industry to over-manufacture. We build to compete against others; not to the needs of clients and indeed sometimes not to the needs of advisers. Tucked away inside this issue is the old saw about who platforms are for – clients pay more after but, in the main, advisers benefit.
On report
I got a demo recently of Novia’s upgraded Report Zone, which tackles this head on. The Report Zone sits away from the main platform itself and is controlled by Novia itself rather than in collaboration with its platform technology provider, GBST (disclosure: we do some work for GBST).
That’s smart, because it means that tweaks to reports, creation of new reports and so on, doesn’t get folded into all the other development priorities for the platform itself – a change to pension regulations will always push ahead of a new reporting thingy in the queue, like a pensioner with an unjustified sense of entitlement.
Report Zone separates reports out into those for advisers, those for practice management and those for clients. It’s easy to pick out what you’re meant to be doing, and in one very nice feature you can combine a bunch of client reports into one master report.
Again, is it the finished article? No. The reports are clear and well laid out, but as yet they have not brought the pretty. One step at a time.
Many of the adviser-facing reports are designed to integrate with back office systems – again, smart. As Fastrak has proved, it is by no means the case that the platform is the point of data or even asset aggregation for a holistic client review. Novia is recognising this and deserves plaudits for that.
Love at first meet
I wonder how many reporting facilities languish, unloved, on platforms; dreamed up by proposition teams who think they know about advisers but actually just met that one guy at a conference in 2012 who shouted at them about stuff, and they’ve remembered that and now they get to remove that simian from their dorsal area.
Mind you, if we built to genuine business requirements we’d get some funny answers. One platform chief told me that in terms of pension inflows, it was in the region of 98 per cent transfers (we’ll talk about whether platforms are in a Cazalet-style ‘Polly Put The Kettle On’ remake another time) and the rest was the odd lump sum. His point was that they’d spent a bunch of money making sure that contributions, and in particular regular contributions, worked well. He might as well, he opined, not have bothered.
I don’t know where it all goes, but unless we work harder at matching client needs to the stuff we design and build, we’ll never get far.
That process of matching is called ‘marketing’, by the way, and it wants to be your friend. In the meantime, there’s a cheap win for any other businesses – platform, SIPP, lifeco, whoever – who put their backs into really simple but beautifully presented and configurable client reporting. You can have that one for free.
Mark Polson is principal of platform and specialist consultancy the lang cat
