Cindy Castellano has over 30 years of experience in the investment management industry. She leads Cutter Associates’ Client-Facing and Wealth practices, advising asset and wealth management firms on their sales and distribution, marketing, product development, consultant relations, client service, and client reporting. Cindy has conducted system searches for CRM, marketing automation, portals, pitchbooks/client presentation, content management, client reporting, client onboarding, and RFP systems. Prior to joining Cutter, Cindy served as Vice President and Head of Operations for a division of Guggenheim Investments, where she led mutual fund accounting and administration; institutional accounting, billing, and client reporting; SMA operations, performance reporting (GIPS); and fixed income performance, attribution, and risk reporting. As Vice President and Head of Equities, Cindy led the firm’s investment team and supervised equity trading activities.
Cindy also spent 10 years as a Senior Portfolio Manager and Research Analyst, managing over USD 500 million in AUM for mutual funds and VITs using social awareness (ESG), large cap growth, and mid-cap growth investment strategies. She developed the investment process, directed research analysts’ day-to-day efforts, and created the firm’s social criteria and proxy voting guidelines. Cindy, a Chartered Financial Analyst, holds a bachelor’s of business administration from Washburn University.
Jul 28, 2021
In a day and age when our personal financial experiences either show previous day data through portals and apps (e.g., brokerage accounts, wealth accounts) or intraday data (e.g., checking accounts, savings accounts), why do the majority of asset managers still only deliver data to institutional clients on a monthly basis? And do those reasons have merit in today’s digital age?
When I was a CIO, I enjoyed my morning’s first cup of coffee with CNBC on the TV in the background. Most days, the anchors and industry experts spent their time talking about the latest market news, and I went about my day as normal. But on some days, they would share something that grabbed my attention. It might have been the latest economic data release or updates on an individual company. These news alerts made me wonder how much impending volatility was on the way and how much exposure my firm had to a company or industry.
Certainly, today’s institutional investors have the very same questions. Yet it takes most institutional investors quite a bit of effort to get the answers. They must dig through old client reports, contact their custodian, or reach out to their relationship manager(s) if they outsource their investment management.
Monthly Data Is Still the Norm
As of 2021, it’s still commonplace for asset managers to report to institutional clients on a monthly basis. In our 2020 Client Reporting Benchmarking Survey, Cutter asked firms to tell us their client reporting frequency. Two-thirds of firms are providing data to clients quarterly, with approximately one-third reporting data monthly.
In a day and age when our personal financial experiences either show previous day data through portals and apps (e.g., brokerage accounts, wealth accounts) or intraday data (e.g., checking accounts, savings accounts), why do the majority of asset managers still only deliver data to institutional clients on a monthly basis?
Reasons for Delayed Data
Let us look at some of the reasons asset managers do not report data more frequently to institutional clients and consider if these reasons still have merit in today’s digital age.
Asset managers typically have encouraged investors to have a long-term investment horizon. Given this, asset managers view short-term data as just noise. Yet, as we learned during the period of extreme volatility in the early days of the COVID-19 pandemic, isn’t it best to arm clients with the information they need?
Reverse Engineer Your Investment Approach
Some active portfolio managers get nervous with supplying recent buys or sells of securities or lists of holdings to institutional clients. The reason is that some fear the market is not efficient enough to share this data publicly. Portfolio managers also worry clients may try to reverse engineer their investment process, and thus the manager is giving away their investment process for free. However, we need to keep in mind that clients can gather this data today from their custodian if they choose. Would you rather they get it from you, the asset manager, or their custodian?
More Questions From Clients
By giving clients more frequent information, some asset managers have felt that this opens them up to more questions from investors. Asset managers feel that this may take time away from other tasks for relationship managers, product specialists, and, ultimately, portfolio managers. However, many of the questions are likely relatively simple questions (e.g., holdings, weights) that, if given the opportunity, clients could easily get for themselves. Would more timely access to data reduce the number of simple questions and thus reduce the burden on relationship managers? And wouldn’t that give relationship managers the time to answer the questions that really matter to clients?
Data Issue Exposure
Since data is a function of front, middle, and back office processes and actions at firms, some asset managers express concern about showing clients unaudited data. Besides downright errors, daily data may contain canceled/rebooked trades, corporate actions you are still working through, bad prices, etc. But don’t these issues also need to be worked through in a timely fashion for your portfolio managers and operations teams?
With the era of digital transformation upon us, you should not expect that asset management is immune from change. Your clients should be able to get previous account market values, previous day performance, and at least high-level exposures (e.g., country, sector, quality) within their accounts. If you do not provide the data, you run the risk that others will.
Here is your chance to weigh in. Share your feedback below. Cutter members can also join the discussion in the Cutter Community, accessible via your dashboard at cutterassociates.com.