Guide to Improving Performance Reporting for Wealth Management Firms

    Wealth reporting in investment management
    500 299 INDATA

    Wealth management reporting can and should be a competitive advantage for any investment firm. Investment strategies are unique from firm to firm and end clients expect customized and personalized performance insights detailing their investments. Providing this information isn’t easy for many organizations, hampered by legacy systems and manual workloads trying to bring all the data together, validate the accuracy of the data, and then create reports that are compelling and also visually appealing to the end client.

    Wealth advisors can deliver and even exceed client expectations and reduce the challenges associated with wealth management reporting within their firms. The opportunity to do so is by adopting modern wealth management reporting technology. Its key characteristics include the automation of data management and workflows related to report creation and BI Reporting with compelling insights that leverage the help of AI and machine learning tools.

    What Is Wealth Management Reporting?

    Wealth management reporting describes the creation of investor documentation regarding client investments, rates of return, risk characteristics, and performance analysis.

    Most will include the following elements:

    • Account/Portfolio information
    • Performance summary and details
    • Portfolio holdings
    • Transactions
    • Benchmarks
    • Risk measures
    • Fees and expenses

    These reports have many variations, depending on how a firm can generate them. Advanced reporting capabilities are in high demand in the industry. Most want this functionality as part of their investment management platform. It’s more cost-effective and efficient than the alternative of manually pulling it together from disparate systems, which are often legacy-based, as well as Excel spreadsheets that are manually updated or done so via macros

    Paginated, Print-based Reports vs. Interactive Wealth Management Reporting

    There are two common report types that wealth managers use now — paginated, printed reports and interactive reports based on Excel, Powerpoint, or those available in BI (Business Intelligence) reporting tools.

    Traditional Paginated Reporting is Necessary but Has Limitations

    Paginated, printed wealth management reports are the traditional outputs that are the most widely used. They’ve been part of investment reporting from the start. While valuable, they alone are not substantive or flexible enough to have meaningful differentiation. The most common paginated documents are NAV reports, transactions, and client statements.

    The main issue with paginated reports is that they tend to be part of legacy wealth management systems used by wealth managers themselves or third parties like custodian banks. As a result, they are difficult to update or customize. This gap in functionality does not allow wealth management firms to differentiate themselves effectively from one another and, therefore, they are not able to tell their unique story and value proposition to clients.

    Wealth advisors must then turn to other customization options by producing in-house reports based on  Excel. The process involves exporting the standard outputs from legacy-based wealth management reporting software into Excel. Then, the manual work of rebuilding these into macros with branding and graphics must occur.

    On the surface, leveraging Excel seems cost-effective and easy. However, many challenges arise, including:

    • Data quality is often in question.
    • Advisors often spend significant time comparing and reconciling the original output to the new Excel macros.
    • These manual tasks and processes aren’t scalable and the more clients and portfolios that there are, the greater the workload.
    • Using Excel as a reporting tool doesn’t follow best practices from a compliance standpoint

    With such a disjointed workflow, there is significant risk in delivering accurate and timely information to clients. With these challenges, many firms are seeking to implement modern wealth management reporting software that offers an automated, customizable, and interactive experience.

    Interactive Reports Deliver Business Intelligence (BI) Insights

    Interactive reports are the newest option. They are increasingly popular with firms as they seek to generate BI (business intelligence) reporting. What drives this model is the delivery of information through interactive dashboards. Clients or end users have many customization choices that can capitalize on accurate and up-to-date data.

    Wealth managers can then benefit from Excel-like features but don’t have to worry about scalability.  BI Reporting tools have been available for some time now, but most require significant time, resources, and expense to implement and were not designed for wealth management.

    These third-party systems require direct integration with underlying software to create an end-to-end solution. It becomes more complex as a continuous exchange of data is necessary. Additionally, dependence on these platforms creates issues with data integrity and lineage, as well as other data management challenges. Integrating a standalone BI reporting application most often leads to frustration and sometimes outright failures.

    Thus, the industry needs a new strategy to optimize wealth management reporting technology. It must address the factors contributing to changes in the software landscape.

    The Trends Driving Change in Performance Reporting for Wealth Management

    Savvy firms are tuning into the shifting trends, prompting a change in reporting. Looking at the scope proactively changes what software needs to do.

    The factors to consider include:

    • Generational preferences are changing: As younger generations begin to grow wealth, the demographic of investors is evolving. So-called digital natives have a greater demand for app-driven access to real-time data. According to a Motley Fool survey, Gen Z and millennials also trade more frequently than older generations. This data point supports their desire for instant and accurate information to be available at their fingertips.
    • Transparency is a demand: Investing is highly regulated and surrounded by government oversight. Security and privacy concerns are also factors in terms of compliance. Thus, transparency is a requirement for all clients. This is more readily available with advanced reporting technology geared towards wealth management performance reporting.
    • Accuracy is critical to today’s investors: The performance summaries and client statements from decades ago are no longer effective. Current investors expect accuracy and accountability. There’s no feasible way to reach a zero margin of error with paginated and manual, Excel-based reporting.
    • Investors look to tools from advisors to make decisions: According to a FINRA survey, most people rely upon insights from advisors, at least somewhat. This underscores the need for reporting that’s reliable and advanced.

    The new era of wealth management reporting meets these needs.

    Wealth Management Performance Reporting’s New Era: Integrated

    The future of wealth management reports is a fully integrated data management within reporting. It should be part of your portfolio management and trading software.

    In this framework, advisors have a robust data management infrastructure. This is absent from many systems. New technology is in a state of constant flux and needs to keep up by adding new updates and features.

    Adopting this path means the hurdles of typical wealth management performance reporting are no longer. Investors will now be able to build on-demand, custom reports. This new era includes paginated and interactive reports. The result is a blend that enables customization and clients to view visualizations based on real-time data.

    Some firms may need additional support to streamline reporting. Managed reporting services can alleviate this. Optimizing reporting capabilities isn’t just nice to have. It can be a clear difference for investors.

    Achieving this is possible with the powerful wealth management reporting software from INDATA. Architect AI Reporting offers a modern approach to data management and BI reporting. It eliminates the complexity and expense of relying on traditional data warehouses. It’s intuitive, and robust, and utilizes AI and machine learning approaches for maximum effect.

    See how it works by requesting a demo.

    Dave Csiki headshot

    David Csiki, INDATA

    INDATA provides best-of-class software, technology, and managed services to a wide variety of buy-side clients including asset managers, registered investment advisors, wealth management firms, pension funds, and hedge funds. Find out how INDATA can optimize wealth management performance reporting for your firm.

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