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White paper
May 2014
Author
David Laup
BI-SAM Insights
www.bi-sam.com
Digital
Strategies
in Asset
Management
A New Client Experience
BI-SAM Insights Digital Strategies in Asset Management A New Client Experience
2
Introduction
Financial market volatility, signicantly increased regulatory
requirements and management fee compression have severely
impacted the asset management industrys protability in recent
years. In response, asset management companies have had to
rationalise, standardise and industrialise processes in an effort to
enhance their prot margins. However, this trend has made the need
for differentiation more acute. The question is how can a company
differentiate itself effectively from its competitors during times of
instability and uncertainty?
Traditionally, asset management rms have viewed investment
performance as the key differentiator, but in reality this is rarely the
case. In most asset classes, some funds will have either extremely
positive or negative performance. However, the majority of funds
will be in a concentrated performance range centred around a mean
value, i.e. a text book example of the Central Limit Theorem at work.
This pressure to differentiate, coupled with the recognition that for
most companies investment performance is a weak differentiator,
has created the need for a new approach based on excellent
client servicing. Enhancing the client experience requires a more
customised, client-centric approach. The challenge facing asset
managers is to deliver this, while continuing to industrialise and
standardise their operational processes.
Here technology is making a signicant difference. Firms that seek
to enhance the client experience by leveraging digital channels (e.g.
for delivering information about investment performance) are well
positioned to stand out from the rest of the crowd.

The question
is how can
a company
differentiate itself
effectively from
its competitors
during times of
instability and
uncertainty?

BI-SAM Insights Digital Strategies in Asset Management A New Client Experience
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The evolution of performance and reporting
Performance and reporting functions have experienced rapid development in recent years. Asset
managers used to categorise these functions as operational cost centres, rather than as value
contributors. This view is outdated. Instead, performance and reporting are now considered to be at
the heart of the customer experience and the differentiation strategy for asset management rms.
There are ve key reasons for this change in how performance and reporting functions are perceived:
Financial instrument
complexity
The search for
protability and
differentiation has
led to a growth in
the use of nancial
engineering
techniques to
create more
complex products
and investment
strategies. Derivatives,
alternative asset
types, securitisation,
structured products
and the massive
use of leverage are
all being employed
in an attempt to
increase yields for
investors. But this
has complicated the
measurement and
analysis of how these
nancial instruments
and strategies
perform, while
increasing investors
need for greater
transparency.
1 2 3 4 5
Financial market
liberalisation
and crises
Financial markets
have become more
global, with greater
internationalisation
of capital ow
movements. This has
been accompanied
by an increase in the
frequency and impact
of nancial crises.
These crises have
created many issues
for investors, resulting
in more emphasis
on client reporting
and performance
measurement.
Growth and
tightening of
regulations
Faced with the
nancial crises
and their impact
on regional and
global economies,
governments and
regulators have
become increasingly
demanding. More
constraints are
being imposed on
asset managers, and
they must provide
growing volumes of
information to clients
and regulators. The
tsunami of regulation
includes Solvency II,
Basel 3, Dodd-Frank,
EMIR, FATCA, MiFID II,
UCITS V and AIFMD,
all of which are
increasing operational
complexity and costs.
New investor
expectations
All of the above
factors have led to an
increase in the level of
information investors
want to receive about
the performance of
their investments.
Both individual and
institutional investors
now have a much
greater understanding
and awareness of
nancial products and
instruments, markets
and regulations. For
this reason, they
demand much higher
levels of transparency,
and want information
delivered sooner and
more often.
New technologies
and data
Asset management
companies now
rely on a wealth
of information
maintained in
various systems and
data stores, such
as security master
les, CRM systems,
decision support
systems, investment
books of record and
fund administration
systems. In addition,
there has been an
increase in the volume
of external market data
asset managers are
required to process,
especially index data.
All of this has led to an
increase in operational
complexity and cost.
Asset managers are
responding by using
more sophisticated
technology throughout
their businesses,
including for
performance and
reporting.
This combination of factors is leading to a restructuring and rationalisation of the middle ofce,
which in turn will lead to radical changes. Performance and reporting functions historically resided
at the back of the middle ofce. However, they are now being re-positioned at the front of the
middle ofce, closer to client-facing teams. This is because asset management companies
increasingly see them as value-adding functions, helping to deliver an excellent client
experience that can serve as a key differentiator in winning and retaining business.
BI-SAM Insights Digital Strategies in Asset Management A New Client Experience
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New challenges for client reporting
The primary aims of the performance calculation
production process are to provide clients with
information about how their investments
performed, why they performed this way, the risk
taken to achieve that performance, and to present
this information in the context of the expectations
set during the sales process. Client reports are
the principal vehicles asset managers use to
reassure clients about their investments and to
provide transparency into the investment and
administration processes.

However, since the traditional approach to client
reporting employs a process common to all asset
managers, it does not provide companies with the
competitive differentiation they need in todays
world. Standardised client report processing
has helped managers industrialise parts of
their operational processes, and thus reduce
operational risk and costs, but it cannot deliver
the customised, client-specic service investors
demand.

Evolving client expectations
So, the performance and reporting function
delivers vital services to both internal and
external clients, but expectations about those
services continue to evolve.

Internal client needs
Many different business functions
within an investment management
rm require data and information
about investment performance, including
investment teams, marketing, relationship
management, customer services, client reporting,
nance and compliance. In some cases, these
internal clients require the same information to be
delivered in the same format at the same point in
the month/quarter (i.e. scheduled reporting). But
internal clients also often require more exibility,
requesting different information to be delivered
on demand in different formats. Meeting this
demand for ad hoc reporting is difcult for
performance teams, since they cannot anticipate
what will be requested, when it will be requested,
who will request the information, and how it
should be delivered. Moreover, internal clients
demands for ad hoc reporting have increased in
recent years, in part due to the changing needs of
external clients.

External client needs
Various types of external clients
from individual investors, pension
schemes and insurance companies
to investment consultants, nancial advisors and
regulators also need performance data and
information. External clients demands primarily
have been for scheduled reporting, but this is
changing, with clients increasingly calling for
more ad hoc reports.
Implications for performance
and reporting
This growth in demand for more detailed and
ad hoc performance information is putting
intense pressure on performance and reporting
functions. In recent years, investment managers
have focused on industrialising these functions
by automating many of their business processes,
producing more standardised reporting that
enables rms to reduce operational risk
and costs. By contrast, ad hoc reporting is a
customised service, which often can only be
delivered via manual processes. Therefore, to
cope with the growth in client demand for ad
hoc reports, performance and reporting teams
have to increase their headcount, with a resulting
escalation in costs.
These developments mean it is no longer
sufcient for performance teams to focus solely
on best practices for calculating performance
data. Rather, they must now also focus on best
practices for distributing performance data to
both internal and external clients.
Internal clients External clients
Internal clients External clients
BI-SAM Insights Digital Strategies in Asset Management A New Client Experience
5
Standardised
environment
Search for
differentiation
Implementation of
the strategy
Winning strategy

take up by
competitors
Standardisation and
industrialisation
Digital strategies for scalable
customised reporting
Over time, asset management companies have
shifted from postal delivery of paper reports to
email distribution, with client reports commonly
delivered as PDF les. Widespread use of the
internet also means PDF les can be made
available to clients via extranets. However, this
approach merely uses the internet as a drop zone.
Clients are happy to use extranets as a convenient
online storage facility, but very few are happy
to use them as the primary delivery channel for
performance information.
Clients expect websites to provide a dynamic,
interactive information exchange experience, and
this expectation is growing as they demand more
customised and responsive services. It is difcult
to achieve high levels of customised servicing
though with an industrialised operating platform,
in which economies of scale are achieved via
standardisation of system functionality, business
processes and deliverables. Therefore, asset
management companies need to respond to this
challenge by exploiting the full power of digital
channels to deliver exible reporting services that
provide much-needed competitive differentiation,
while continuing to industrialise their business
processes through automation.
Digital channels allow a certain level of self-
service because they enable clients, and other
consumers of performance data, to decide what
information they want to see, when they want to
see it and how it is presented to them. The unique
value in digital channels though is that, because
they can deliver information via mobile platforms,
clients and consumers can also decide where they
access information.
In the asset management industry, digital
channels are still not widely used, so leveraging
this delivery approach is one of the key ways in
which investment managers can differentiate
themselves.
Find out more at www.bi-sam.com
Differentiation
cycle
TREND SUMMARY
A number of trends are affecting investment
management rms performance and
reporting functions:
Due to a range of external factors, performance
and reporting functions are moving from the back
to the front of the middle ofce in order to make
a more direct contribution to delivering excellent
client service.
Investment management rms are facing new
challenges in how they deliver client reporting.
Client expectations are evolving, with clients
demanding more customised servicing.
BI-SAM Insights Digital Strategies in Asset Management A New Client Experience
6
Rise of the customised
internet platform
Managers need to develop customised internet
platforms that offer clients fully congurable
access to performance results and supporting
data via a graphical and dynamic user interface
(UI). This gives clients the exibility to decide
what performance information they want to see
and how they want to see it (e.g. tables or pie
charts), and the dynamic UI means they can drill
down into further detail (e.g. by exploding one
section of a pie chart) and receive the updated
information immediately. Clients can then
create customised reports by using a library of
predened objects. This self-service approach
brings mutual benets, allowing clients to
proactively access the specic information they
need, while enabling investment managers to
reduce the FTE associated with responding to ad
hoc requests for performance information.
Investment management rms are
operating in a very challenging
landscape. On one hand, pressure to
reduce management fees and rising
operational costs are squeezing margins.
As a result, investment managers have
implemented programmes to standardise
and industrialise operational processes.
Yet on the other hand, they face pressure
to devote time and resources to enhance
and customise the servicing experience
for clients.
Innovation, especially when a market is
immature, is a key ingredient of business
success. By using digital strategies in
client servicing, investment managers
have a real opportunity to deliver a
superior level of customised service
that will differentiate them from their
competitors, without increasing their
operating costs.
Conclusion
More valuable insight on industry trends
is available at www.bi-sam.com

Leveraging digital
channels in Asset
Management
is one of the
key ways Asset
Managers can
differentiate
themselves

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Copyright BI-SAM Technologies 2014
BI-SAM is a leading provider of software and
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industry. BI-SAMs unique combination of best
product and qualied expertise has already been
selected by many international asset managers
to reduce operational risks & costs and enhance
clients experience, while maintaining high level
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About the author
David Laup has worked in the performance
sector for almost 15 years. Starting as a
reporting analyst, he became Director of
Reporting and Performance Measurement
at a leading asset management company.
Recently, David has been responsible for
developing the Western Europe ex UK accounts for the BI-SAM
group, a portfolio comprised of the biggest names in nance.
A specialist in performance measurement and reporting, David
has considerable experience in the treatment of the calculation
chain and in the measurement, analysis and allocation of
performance, as well as sound knowledge of the regulatory
constraints, transparency problems and techniques and tools
related to nancial markets.
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