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Investment Management

Wealth reporting from the client’s point of view

Craig Apfel

19 Jul 2017

Wealth reporting from a client point of view
Establishing and reporting on client investment goals is the key to a long-lasting relationship. Photographer: Charles Platiau

Goals-based reporting is helping wealth managers to build longer-term relationships with clients, rather than having conversations that just focus on market benchmarks to communicate performance.

It’s easy for wealth managers to get into the habit of reporting results to clients based on market indices, because we think that’s what the client understands the best.

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When wealth managers are prospecting for clients, reporting general returns against market benchmarks — or even against other peers in the market — is useful because it’s the manager who is auditioning for the job of managing that client’s portfolio.

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Reports based on market benchmarks are focused on demonstrating the wealth manager’s ability to compete with peers and produce generally positive results.

And at the beginning of the process, that’s important.

However, after the client has decided to engage your firm, the emphasis on beating market benchmarks is still a priority, but equally important is how you intend to meet their individual goals.

Craig Apfel and Darren Duffy discuss personalized reporting
Craig Apfel and Darren Duffy discuss personalized reporting for wealth management

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Goals-based reporting

Once the “audition” process is over and you have a new client, one of the first meetings is about the client’s goals for his or her investing activity.

Knowing the specific goals and motivations for investing is critical to a long-lasting relationship.

Wealth stewards take the time to understand the client’s goals, whatever they may be, and take the position of a trusted team member engaged in meeting those goals.

One of the ways to do that is to focus all reporting on client goals and minimize reporting against market benchmarks.

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Goal-based reporting using First Rate’s products can help clients achieve their investment goals

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In reporting meetings, wealth advisors should call out specific goals, and report the period’s results against those goals as the most important aspect of the meeting.

Doing so develops trust in the client relationship.

Having the right conversation

For example, based on client goals, that client meeting could easily include a conversation such as this:

This quarter we gained 2.6 percent toward the goal of investing in new real estate.

“We’re now 70 percent of the way to that goal and our investment choices are appropriate to let us meet that goal within the next five years.

“Let’s talk about our other goal of securing a sufficient retirement account.”

This is a good example of a conversation where the client’s goals are the paramount focus, and reporting against market indices is not part of that conversation.

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An example of a home screen view from the First Rate CORE console. All modules, time periods and reports are customizable based on your clients’ needs.

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Trust and engagement

Once the conversation is focused on goals, deeper conversations can occur and adjustments to goals can be made.

For example, if the portfolio is performing above its established performance metrics, a conversation could take place about taking some of the risk off the table in order to insulate against adverse market events.

That’s a good conversation to have, and it’s easy to have when the relationship is client focused.

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Likewise, if the portfolio is behind its milestone marks, further conversations could include discussing the option of increased contributions from the client.

While that’s a more difficult conversation to have, it’s easier when the relationship between steward and client is well established and there’s a track record of trust and engagement around client goals.

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