Expert: Mina Patel, Client Reporting Consultant at FSL Facilitator: Caroline Burkhart, Director of Wealth Management Consulting, Alpha FMC
Overview:
Client reporting is under scrutiny by clients and wealth managers alike. Today’s need is for dynamic and frequent reporting supported by real-time access to a client’s portfolio.
Participants discussed common issues, including tax reporting, which focuses on account structures rather than client-level analysis. This means manual reconfiguration across different account types and investor tax year-ends is required. This operational overhead and the need to provide multiple reports for a single investor could be eased using consolidated analytics tools and integrated client transaction data.
Manually-intensive processes, lack of standardisation across providers, and poor readability for less financially-savvy investors are all causing issues when it comes to exceeding customer expectations. Participants see that providers use inconsistent formats and calculations for tax reporting as well as other statements like performance reports and annual valuations. This inevitably means there is a need for manual adjustments when sharing data across firms, indicating potential for industry standards.
The needs of the actual investors also need to be taken into account when it comes to reporting. With lower tax allowances, more investors will now file returns and require understandable explanations. Therefore, participants thought it wise to assess reporting for clarity, context, terminology, and financial literacy levels of new millennial and elderly investors.
They went on to discuss how technology solutions can help to remedy these, noting that customer web portals versus continued use of PDF reports was one relatively easy win. They also covered the value of consolidated reporting using client transaction data – something that is in high demand from investors. In addition, tighter partnerships with tax authorities could require reporting on the client data that is shared with revenue agencies. Thus, potentially, firms need to upgrade systems to capture required details like offshore income and excluded securities.
Key findings:
- A common issue is that tax reporting focuses on account structures rather than client-level analysis
- Manually intensive processes, lack of standardisation across providers, and poor readability for less financially savvy investors are all causing issues
- Assessing reporting for clarity, context, terminology, and financial literacy levels of new millennial and elderly investors is a must
- Consolidated reporting using client transaction data is in high demand from investors
- Tighter partnerships with tax authorities could require reporting on the client data shared with revenue agencies
