Outsourcing your client reporting may look good on paper – the paper of the original business case, but does it look so good on the paper of a printed client report?

It is widely accepted that the humble client report, and the not so humble client report, represents an important and regular touch-point between an asset manager and their clients.  In some cases, the client report is the most referred to and most frequent interaction between the asset management firm and their clients.

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Maybe a business case looks attractive if an investment firm can outsource all of its reporting processes to a third party and reduce the internal costs. Outsourcing may allow the investment firm to remove a significant amount of fixed costs including:

  • Reporting team
  • Reporting system
  • Technical architecture that supports the reporting system
  • IT support for the reporting system
  • IT development for the reporting system

There may be other areas of saving too, specific to each asset manager.

However, and there’s always a “however” when it comes to outsourcing, these financial cost savings come at a cost. The cost of giving up direct control and management of the reporting process and outputs. Typically outsourcers manage the level of service they provide by a series of Service Level Agreements (SLAs) agreed with the investment firm. These tend to state the minimum service level that is acceptable. When it comes to reporting to clients and servicing clients, does the investment firm really want to manage this via a series of minimums? I’m not aware of any outsourcers offering “maximum” service level agreements – that would appear counter intuitive to their model.

Investment firms losing the direct control and management of the reporting process often means it is like working with a “black box” of a reporting system. The client service team within the investment firm may need to be enlarged to undertake the additional checking activities, and the team may not have a detailed understanding of the outsourcers systems and processes. So they will either have to spend a long time checking and validating the report prior to despatch to the client or simply accept it as right and send it out the door. Maybe the outsourcer sends the report directly to the client of the investment firm without any checking. Clearly this is not an ideal situation.

Also, as we know, firms can outsource a function, but not the responsibility for the function, and so have to retain sufficient expertise in-house to satisfy this requirement.

So, in the reporting outsource model there are clearly some tensions that exist between the investment firm achieving cost savings and the loss of control – it is not a perfect model.

It would seem that a better solution would be to outsource the “systems” that produce the client reports, yet retain the reporting staff, the control and the management of the reporting process.

This model is typically called Software as a Service (SaaS) or in the case of client reporting, it is specifically called Reporting as a Service or RaaS. In the RaaS model the reporting system is provided, maintained and developed by an expert provider. This model provides high quality systems, securely hosted in the cloud and fully maintained and supported for use by the investment firm.  The cloud hosting and efficiencies of scale allow the investment firm to generate significant cost savings compared with the traditional in-house model.

In the RaaS model, the investment firm’s own reporting team use the RaaS reporting system to control, manage and produce their own reports – to their exact content, layout and branding.  Due to the efficiency and world-class nature of the RaaS reporting system, we find that the existing reporting team can produce improved reports, more accurately and in a shorter timeframe.

Having worked in many asset management firms over my career, in each and every firm there has always been an overarching priority to control and manage the client interaction, and to not let a third-party organisation manage that interaction on your behalf.  Reporting as a Service provides cost savings, world-class and flexible reporting that is future proofed, without the loss of control and management of the process.  Some things never change… and rightly so.  Don’t let someone else take responsibility for your client servicing – do it yourself.

For more information about Reporting as a Service please visit www.opus-nebula.com or email [email protected].

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