It may seem like 2010 just began, but it is already September. Are you ready for the end of the third quarter? Specifically, is your firm prepared for the chores involved in producing quarterly performance reports for your clients? If I visited your office at the end of the quarter, what would I see? Is it a stressful time for staff members, trying to reconcile account data and produce client performance reports? Most advisors do not think about these routine tasks until the quarter is actually over and it is time to begin the work. However, a successful quarter-end reporting process begins well before the end of the quarter. My hunch is that when it comes to performance reporting, the clock doesn’t start ticking for most advisors until the quarter actually ends. But with such an important product as your performance reports, advance planning really pays. Anything that you can do prior to the end of quarter ultimately gives you more time when it really matters–during the first couple business days of the new quarter.
Producing quarterly performance reports ideally should be a scalable process: as your firm continues to grow, producing additional reports should only add incrementally to your work load, and it should not become a drag on your business. With the right systems and processes in place, adding new clients should only add fractional increases in the work and time required for producing reports. In the best business environments, the quarter-end processing is a very systematic, routine event. Unfortunately, it is very easy to simply allow your quarter-end processing to grow without much attention or evaluation. Or it can become a long series of one-offs, so that at each quarter-end you’re reinventing everything, and it’s as though you’ve never done it before. Or you may find that decisions and processes implemented years ago could still be in place today, even though they may no longer be required. Therefore, in order to achieve efficiency and scalability in the reporting process, the key areas to consider are: overall data integrity, consistency of the format and design of reports, packaging, and end-client delivery.
The overall success and efficiency of your quarter-end process always begins with the quality of your account data. Reconciling your account data on a daily basis is the first step in this process. Years ago, it used to be quite a task to reconcile account data each day for your portfolio management system. Today, however, this task has improved dramatically given the efforts of both the portfolio accounting system providers and the custodians producing the data files. On an average business day, it shouldn’t take more than 15-20 minutes to process and reconcile your account data files, assuming you reconcile your data every day. It is much easier to research and solve a data reconciliation problem for an event that occurred yesterday versus trying to address a data issue from several weeks ago.
Another key component to having quality data is minimizing any manual account data entry. Manually entering account transactions is time consuming and ultimately compromises your scalability. It is also very error prone given potential data entry problems or mistakes in interpreting the transactions. If you have client accounts held at firms where a direct data interface is not available, then you should definitely consider one of the account aggregators as an option for collecting this information. Companies like ByAllAccounts and CashEdge can offer you the ability to collect account data in an electronic format that otherwise may only be available by manually entering transactions and balances from paper statements. Depending on the number of accounts, using these account aggregators could lead to significant time savings, and it is certainly more scalable than manual data entry.