How are leading Asset Managers tackling Client Reporting in 2024?

Following the Covid-19 pandemic, Alpha FMC released a series of articles highlighting the importance for asset management firms to invest in their Client Reporting operating model and the perception of Client Reporting as a ‘hygiene factor’ based on feedback from Asset Owners in the industry.

Moving ahead into this year, Alpha have seen a shift in focus for asset management firms. 75% of respondents in Alpha’s 2023 Asset Management Digital Readiness Survey stated their budgets would flatline or decrease. This has been immediately reflected in Alpha’s conversations with its clients on Client Reporting. Asset Managers, Client Reporting vendors and outsourcing providers have all increased their focus on simplifying Client Reporting with increased scrutiny on operational efficiency and ultimately cost.

In the past three years, the asset management industry has undergone significant transformation. Firms have adapted to remote work challenges and evolving client expectations, however with the increased focus on operational efficiency and cost, firms are evaluating what clients actually need and how to enhance their Client Reporting operating models.

Overall, this requires managers to think across the information provision cycle including the needs of the client firm and the individual within that. This includes their preferences for data access, the types of information required, the trusted data sets that must be available, the governance and management of the data, and finally, the tools needed to automate this process with minimal manual intervention. Ultimately, supporting the optimization of cost management 

Traditionally, Client Reporting was facilitated by a combination of Microsoft Office tools pulling data from on-premise systems. This has evolved significantly over the past 10 years, with a notable market shift towards major vendors such as FactSet and SimCorp, continuous use of traditional outsourcing providers often as part of wider outsourcing relationships, and the impact of emerging vendors such as Opus Nebula, Clearwater and Assette. Additionally, Factsheet and KIID production which has often sat outside of traditional reporting models with specialist providers such as Kurtosys, Kneip and Broadridge has begun to be considered as part of the wider reporting offering, alongside regulatory reports and most recently ESG reports such as, SFDR and TCFD.

In Alpha’s 2023 Middle Office trends survey, we asked the participants for a view of their Client Reporting operating model today. The results show that  the majority of firms (82%) have an in-house model that uses a vendor solution or in-house built system. With 18% of firms leveraging outsourced Client Reporting.

 Source: Alpha’s 2023 Middle Office Trends Survey (25 participants including 40% of the UK top 25 UK’s Asset Managers by AUM)

Client Reporting vendors and service providers have been adapting to the change in mindset. For Client Reporting vendors there has been significant investment in Managed Service propositions and increased success for vendors offering a ‘Reporting as a Service’ solution to smaller Asset Managers. Both of these offerings aim to reduce the operational overhead associated with Client Reporting, by either assuming control of the entire reporting process or overseeing the setup, configuration, and workflow design before returning the tool to the Asset Manager for operation. Ultimately, vendors are taking ownership of parts of the process to help simplify the operating model and drive cost down.

In addition to cost reduction, there is a growing need to automate and create flexibility as client demands are increasingly sophisticated and nuanced. In response to this, leading firms are looking to move away from static reports in PDF or Excel and towards direct data feeds or Client Portals with dynamic data capabilities. By pushing the manual or bespoke reporting elements to the client, firms can cater to specific client needs without solving every request internally, enabling a more efficient and scalable solution long-term. In our 2023 Digital Survey, half of respondents were planning to deliver dynamic reporting capabilities to their clients however we are yet to see this displace traditional PDF reporting. Nonetheless, vendors, managed services, and outsourcing providers must support this concept or risk being made redundant as clients may prefer building their own solutions or leveraging cloud data providers separately.

For outsourced service providers, Client Reporting remains a product that is typically bundled with wider service offerings. However, service providers continue to remain focused on how they leverage the best technology from the Client Reporting vendors and how they integrate this with their wider technology and data stack and the Asset Management client themselves. This includes; integrations with Snowflake and Snowflake marketplace, connectivity with market data providers, enhanced digital capabilities or development of seamless integrations across reporting, accounting and performance systems.

There are four main types of Client Reporting operating model that Alpha sees across its client base, with some more established than others:

• Defining and understanding the vision and strategy for ‘information provision’ must be done first
• There is no ‘one size fits all solution’
• Data is still king and must be addressed first
• The change management model & transparency with service providers/vendors must be established at the outset
• Client Reporting should not be assessed as a standalone, it is a key component of the broader client experience. When engaging vendors the conversation is now broader than Client Reporting, therefore the bundling of services and data architecture efficiencies should be considered

• Reduction in cost and improved operational efficiency
• Reduction in operational risk and decrease in manual processes
• Simplified data architecture, connectivity and improved data lineage
• Increased integration and bundling of services
• Faster implementations of new systems (see Opus Nebula case study)
• Quicker reporting delivery (see Factset managed service case study)
• Expedited step towards digital transformation (see SimCorp white paper)