Performance is still the cornerstone of many investment managers' strategy but investing in technology to improve clients' online experience could reap the greatest rewards
Using the new wave of online client reporting software, it is possible to compete with the best in the financial services industry and keep investors happy. Client communication is this year's black.
According to the IMA, UK funds under management fell from £260bn in 2000 to £194bn in 2002. After three years of negative growth, many asset managers are struggling to present any good news to investors.
Unfortunately for many investment managers, performance is the cornerstone of their client strategy. With investment houses fighting to remain profitable amid the continued poor performance of the market, maintaining client confidence has become a critical success factor for investment managers of all sizes, including individual financial advisers.
Paradoxically, the pressure to contain cost and improve profitability has led to a cut in client services investment. Frankly, this is like cutting your nose off to spite your face. Those able to look beyond the short term are banking on technology to contain costs and improve communication.
The good news is that the collapse of the technology bubble bred a revamped generation of software gurus. Not the pseudo-spiritual visionaries of the late 1990s who turned hard capitalists into devout internet believers but a group of wiser and more experienced technologists that understand the logic of good old business principles.
As a result, the dreams and promises of cost-saving technology are quietly maturing, while the investment managers are still focusing on licking their dot.com wounds.
Now is the time to invest, not in the markets as the investment experts suggest but in your own company's technology infrastructure. And here's why: the number of European consumers using financial services online will reach almost 60 million in 2003, nearly triple the number three years ago, according to analysts at Datamonitor.
As broadband access reaches the home, online financial information is becoming the norm. If you are investing in quality online services to feed this growing internet appetite, you are harnessing a great opportunity.
The best confidence-building strategy is to offer a world-class level of service; to look after and pamper your clients. A raft of new off-the-shelf technologies has emerged from the dot.com era that cost less than employing a junior programmer. Internet reporting is by far the cheapest way of communicating and supplementing those all-important personal relationships.
Investors can view their own information at their leisure from anywhere in the world through a well-designed, accessible and personal website. The only comparable medium is email but there are some serious regulatory and security issues in delivering information this way.
Web pages allow more presentation flexibility than print or email. It is a medium that allows for a highly tailored delivery: reports can be customised for important clients, from personalised commentary for high net worth individuals to co-branding for institutional reports.
Online reports also encourage cross-selling of new products. Successful targeting applied to the old 80-20 rule ' 80% of new business comes from 20% of your existing clients ' will bring a larger share of your clients' capital.
Manually consolidating data from different sources used to be time consuming.
These days, technology can do it almost instantly, slashing the cost of each report. With new software out there, you could be producing all your client reports at the press of a button, literally.
One company that has successfully used online reporting is the Credo Group, an independently-owned financial services company. Like all organisations, Credo's reports are made up of back-end databases, Excel files, Word documents and a raft of other data. For a relatively small IT investment, its online offering competes with the largest players in the industry.
We all know that acquiring new clients costs much more than keeping existing ones and that those costs have risen as markets have fallen. At Credo, enhancing the client experience has become a major priority. The main goal of its online reporting system is to make the viewing of the portfolio data an easy and pleasant experience for investors.
Credo's drive to publish portfolio reports online was not launched to cut down on face-to-face meetings and telephone calls. On the contrary, online reports are designed to support personal relationships that are so important in investment management.
Clients used to call Credo to ask for reports but now call to discuss the contents of the report. The group has achieved a deeper and more meaningful interaction with its clients.
Credo delivers monthly online reports to investors, as well as commentaries, annual reports, research and specific personalised documents. Each investor can log on to the company's website to view his or her personalised portfolio report.
Clients can drill down to access different levels of information and link to electronic fund factsheets to gain an overall view of the portfolio's performance.
The company sees the costs of delivering these reports online as being relatively low. It has found that its clients have taken very favourably to the new online offering, which has led to an improved client service.
Nobody likes a bear market but as necessity is the mother of invention, adverse market conditions are forcing all businesses to find more innovative ways to meet investors' needs and improve client confidence.
Using the internet to distribute portfolio reports not only provides an efficient and cost-effective communication channel but, most importantly, reflects a dedication to improving client services, a strategy that will be surely rewarded when the good times return.
Jonty Hurwitz, managing director of Delve Software
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