Client reports are foundational to your practice. They explain how you’ve been working for your clients and can help justify your fee.
One thing I’ve noticed during my nearly five years in financial technology working with portfolio reporting, however, is that many advisors aren’t sure how to optimize client reports. In fact, there are some common mistakes that stand between an OK report and a great client report that showcases your value.
Let’s look at the top six mistakes firms make when preparing client reports and some ideas on how to fix them.
1. Paper copies
Some clients prefer paper copies of their reports, but the trend — even among older clients — is moving toward digital. Digital reports save you time as a firm and help improve accuracy since you don’t have to collate — but we’ll go more into that later.
The simplest option is to share reports as PDFs using secure communication. However, clients may want to access information between reporting periods; they may expect a client portal. Using a client portal to supplement your reports can make clients feel more like active participants. For example, posting monthly statements from custodians to client accounts is a way for advisors to move beyond reports to more continuous engagement.
Keep in mind, many budgeting apps and retail brokerages provide these digital portals to their clients, including a mobile experience. Many customers may now expect this type of access from their advisors.
2. Overly complex reports
You work hard to create a financial and investment plan that matches your clients’ risk tolerance and goals. But that doesn’t always come across in a report detailing allocations and performance.
Think through how you can simplify your reports to help clients better understand the update. This might involve including less information, like showing quarterly data but omitting month-to-date or year-to-date charts. It could also mean adjusting language, for instance using “stocks” instead of “equities” or adding high-level takeaways. Try to find a technology provider that will help you with these simplifications.
While some of these steps can take extra time, they can help your reports stand out in a client portal and highlight your value as an advisor without a client meeting.
3. Confusing charts
Charts can help you explain concepts like allocation or performance. But most people aren’t used to seeing charts as frequently as are financial professionals. Spending some time thinking through how you build your charts can go a long way toward making them more effective. For instance, a pie chart with more than six slices can be hard to read — and you definitely don’t want to include more than nine. If you have more data points that you want to include, consider a bar chart.
It’s also important to think through creative elements. Bright colors can help you separate different categories, but too many can also be visually jarring. On the other hand, using multiple shades of the same color can be visually pleasing, but hard to read. Find a happy medium by using complementary colors. Ideally, these match your logo or brand colors. If you’re not sure what colors complement yours, you can use a tool like
4. Number discrepancies
If you use multiple tools to help manage your clients’ money, make sure your reports match the numbers clients see elsewhere. If, for example, they log into a custodial account and see numbers that are different from those in your report, it could create confusion or even mistrust.
If there is an easily explainable reason for the discrepancy — the custodian doesn’t account for real estate holdings, or there’s a difference in timing between when the trade cleared and when it was settled — make sure to note that in your reporting.
We sometimes talk to advisors who see discrepancies tied to reconciliations. Upgrading to newer technology (versus manually collating reports or using legacy tech) can go a long way toward solving this. In particular, look for a portfolio accounting system that offers daily reconciliation on accounts since this can help ensure your data matches your custodian’s.
5. Noncompliant reports
I sometimes see firms attempt to make their reports more accessible without being fully aware of what compliance restrictions exist. You want to make sure reports are shared in a secure manner and that the communications are documented so you can share details as needed if you’re audited.
6. Failure to automate
Automation is one of the easiest ways to avoid a number of the mistakes we’ve talked about in this article. But some firms are hesitant to make the switch, whether they have concerns about data conversions or worry about learning a new system.
But automation allows you to pre-program report settings to follow best practices and reflect your brand. You can set your system so new clients are added to reporting groups automatically and so that reports are generated on a schedule to make life easier for you and your team.
Remedying these mistakes, whether via automation or updating the settings on your current reporting software, can make a big difference.
