Dec 14, 2021

This year I’ve been sharing insights about client reporting. These insights come from our Cutter Consulting team that has helped firms improve their client reporting for over a decade. In this article, I thought it would be helpful to review a recent project in which we helped a well-established asset manager improve its client reporting.

What’s especially interesting about this client story is that the client already was using a quality client reporting tool, but other challenges were causing issues. For reference, the client has over USD 200 billion in assets and operates principally in the United States.

Client Challenges

The challenges faced by the asset manager can be categorized as organizational, and system- or data-related. The firm faced issues similar to those confronted by many clients that Cutter provides its client reporting consulting expertise, including data reliability, long production cycles, workflow, and too many custom reports.

Organizational Challenges

This client’s culture is accommodating and collaborative, and all voices are considered important and heard. The asset manager also prides itself on its superior white-glove client service, which is a great approach to servicing, but has resulted in many bespoke custom reports.

Even though the firm had standardized templates, custom client reports were created by client service team members who each maintained their own templates in Excel and PowerPoint. As a result, the report layouts lacked consistency. The client service representatives accessed their own data, which resulted in report data that did not always match the data that clients received from other channels.

The firm did whatever it could to accommodate client requests. This culture, while very flexible, did not provide the necessary infrastructure to quickly create quality client reports. As a result, the firm created too many custom reports, and the reports looked dated when compared with peers.

System Challenges

Firms often hire Cutter to evaluate their client reporting functions and offer our recommendations. A common recommendation is to purchase and implement a new modern client reporting tool. In this case, the client already was using a quality tool, but its efforts seemed to stall out there.

System challenges included the following:

  • Use of the tool had not evolved since implementation: Although the client had a quality client reporting tool, it operated pretty much the same as when it was implemented. The asset manager used only a fraction of the tool’s capabilities. Some components were run in the tool and exported to be pasted into Excel and PowerPoint. As a result, the client service team spent a lot of time manually creating reports. Obviously, this manual approach to client reporting is rife with risk.
  • Lack of Super Users: While initially training to use the tool, the firm had not curated knowledge of the software within the team. As team members left the group, the knowledge of the tool dwindled. Components and templates could not be changed, so, although the firm had a powerhouse tool, it’s effectiveness was diminishing because no one could update it. The firm became reliant on the vendor and consultants to make changes.

Data Challenges

Data challenges are probably the most common challenge we assist clients with. Oftentimes, the proper data structures are not in place and the data is not viewed as reliable. This client had a pretty sound data architecture in place; however, it did not have clarity on how data was to be used. Individuals had to figure out on their own what calculations and/or transformations had been made to the data once it left the system of origination.

Data definitions: Without data definitions, the firm lacked clarity on data elements. While some business terms are industry standard and have an accepted definition, that’s not always the case. This lack of clarity caused confusion on the correct use of data.

Our Client Reporting Work

Based on our conversations with the client, the scope of work was outlined to achieve the following:

  1. Business Glossary – Cutter would draft a business glossary and lead the client through multiple workshops with members from the various teams, including client service, IT, data, and client reporting, to develop a common glossary of business terms.
  2. New Components and Templates – Create new parameterized components and templates for each asset class. Versions of each component would be created to provide options based on the level of detail needed by the recipient.

Business Glossary

Although client reporting is very much a data function, the firm’s employees lacked a common “language” for communicating business terms. Some industry standard business terms were not widely understood. What’s more, the client had its own proprietary data language that had not been codified. As a result, employees lacked clarity on how a data element was derived, sourced, or used. To create clarity, Cutter drafted a glossary using the fields below. Through numerous cross-functional workshops, a detailed data dictionary was created that contained over 350 business terms. Upon completion, the glossary was ingested into the data management tool where it became a living document.

Sample of Business Glossary Fields

New Components/Templates

While the business glossary effort was very important, what mattered most to the firm was the client reports that were sent to investors. Cutter’s goal was to work with the asset manager to update and refresh the components and templates. Of course, the new components were built using the new business glossary to ensure the new components had a strong data lineage back to the data sources.

By the end of the project, over 50 components were created for fixed income, equity, and balanced products. Because different clients have different needs, many of the components had both summary and detailed views. Once the components were developed in collaboration with the firm, new templates could be built. Templates were built supporting both wealth and institutional clients’ needs.

Client Reporting Results

The project deliverables that covered the business glossary, new components, and templates provided a huge boost to the firm’s client reporting capabilities. The asset manager felt that the new templates better communicated the firm’s story and, most importantly, the value it provides to the investor. As a result, the firm will be able to streamline client reporting production and greatly reduce the number of custom client reports it creates each period.

The asset manager provided feedback to Cutter that made it clear that it could never have accomplished as much with internal resources. The firm needed the deep expertise and independent insights that Cutter consultants provide. The project illustrates the fact that having a good client reporting tool is necessary but can be insufficient. In addition, a firm requires solid data as well as ongoing efforts to improve and modernize components and templates. Client reporting is not a one-and-done endeavor ─ it’s an ongoing and continuous improvement effort.

Improving Your Client Reporting Templates

Firms need to routinely revisit their templates and update them based on changes to their business and their client investors’ changing expectations. If your firm’s client reports could use a refresh, Cutter Associates now provides a Client Reporting Assessment service that evaluates your client reports and compare against industry best practices. To learn more, or speak with a Cutter consultant, contact us at connect@cutterassociates.com.