July 29, 2014

Cutter Associates, the leading provider of operations and technology expertise to the investment management industry, recently completed a benchmarking study of the client reporting function which highlighted some significant trends since the study was last conducted in 2008. Investment management firms have seen growing client demands for information and software solution providers are recognizing the need for scalable, efficient tools.

When the study was first performed in 2008, creating and modifying the client report templates was primarily the responsibility of the IT department within asset management organizations, with three quarters of firms noting IT ownership of the process. Now, with the implementation of new client reporting tools that function has shifted and now lies with client reporting teams usually located within the operations or client service departments.

“Clients don’t want to wait weeks for IT to build or modify templates to get their information,” noted Cindy Sealey, Head of Cutter Associates’ Client Facing Practice. “The tools available to asset managers now allow the appropriate teams to adapt reports. Many proprietary systems weren’t designed to accommodate quick changes as needed. Software vendors have recognized the need for end users to be able to customize and create reports quickly and efficiently.”

Another benefit that has come about through implementing specialized reporting tools is that Portfolio Management is much less involved in the creation of reports – freeing them up to concentrate on investment decision making. In 2014, only 3% of portfolio managers have the responsibility to create reporting templates – down from 17% in 2008.

In addition to a change in the ownership of reporting templates, the study found that there has been a significant change in how often reports are being produced. In 2008, two thirds of respondents provided reporting data on either a monthly or quarterly basis. Now 67% of firms have information available on a daily basis.

“Demand for timely information is definitely on the rise,” said Sealey, adding that firms need to be positioned to be able to respond to client requests without sacrificing quality or the time to production.

Lastly, the format of reporting has changed. Six years ago, the survey indicated that much of the output was being done in Microsoft Word (92%) and PDF (100%). While PDFs still dominated in 2014, Word usage has dropped to 52% and now 79% of firms provide another output method as clients request raw data and specialized file formats. The benchmarking study covered many aspects that impact the client reporting process, including organizational structure, data management, technology, and reporting capabilities. CutterBenchmarking studies allow an investment organization to see where they stand in relation to their peers and provide insight and actionable steps from optimizing processes. Reports are available to Cutter Associates’ benchmarking clients.

About Cutter Associates, LLC

Cutter Associates, LLC provides truly independent investment process expertise for the investment management community. Through three interrelated services, Cutter Associates provides investment management firms the knowledge and tools to ensure that their business technologies and processes are competitive. CutterResearch offers member firms detailed, actionable research to reduce risk, lower costs and keep up-to-date on systems and operational processes. CutterBenchmarking provides bespoke reports measuring firms’ investment processes by capabilities, risk and effectiveness through comparisons based on tried and tested capability models. CutterConsulting partners with firms to evaluate, select, and implement systems and to develop leading technology and operational strategies. Cutter Associates, headquartered in Rockland, MA, has subsidiaries in Canada and the UK.

Whether developing operational strategies that drive meaningful value, or evaluating, selecting, and implementing systems, Cutter is here to help.