The Technology Coach: Quarter-End Performance Reporting Tips

Making sure that your client households or account groups are in good order is another area that should be reviewed prior to the end of the quarter. Ensure that all new accounts for the quarter are properly assigned to the correct households. Don't forget to update a client's household for any account transfers or other asset movement changes. This is particularly an important step when processing Roth conversions or other types of account journal activity. And be sure to confirm that the portfolio benchmark assigned to each client household is also correct. For those advisors that have outsourced the data reconciliation for their portfolio management system, reviewing these items should still be a part of their quarter-end procedures.

Another area to review prior to the end of the quarter is the design and format of your performance reports. For most firms, this may seem like a never-ending project. There always seems to be an opportunity to make minor format changes to the reports, or in some cases do a complete redesign, either simplifying it or making it more complex. However, the challenge is to format the reports to present the account performance in just the right light without increasing the workload involved in producing the report. If, during the report production process, your firm starts manually moving data between your portfolio management system and Microsoft Excel, then you could be compromising the scalability of the process, or worse you may compromise the internal performance calculations. There is nothing wrong with using Excel or other external systems, but the formulas and calculations should be automated or scripted to improve efficiency and minimize potential errors. It is also quite common for older "legacy" reporting decisions to still be in place even though they are no longer relevant. For example, a custom report might have been necessary to initially win the business of a new client, but perhaps this specific report is no longer needed today. Every "one off" situation potentially creates issues for the back-office staff and ultimately impacts their overall efficiency. Therefore, it is important to regularly review the reporting requirements for the overall business and to focus on minimizing exceptions. A customized report or two might seem easy at first, especially if it keeps a client happy, but you might be surprised at how much additional time is required to produce custom reports that are outside of your standard reporting procedures. Using a consistent reporting format with a simple design, and a clearly defined process for producing them, is critical to creating scale within your practice. Ultimately, for an investment advisory firm, consistent reporting is what will yield efficiency, and it will make your business more profitable.

The production of client packets is another important area to review for your quarter-end reporting process. Generally, quarter-end client packets include a number of items: the client letter, a firm newsletter, performance reports and other portfolio analyses. Historically, the conference room of the advisor's office became the hub for producing these client packets. Each document had its respective stack on the conference table, and one by one each client packet was created. It was quite a production–sometimes very impressive (or overwhelming) depending on the size and number of stacks! Today, there are several programs available that offer the ability to electronically collate these documents. Two examples include Assemblage from Trumpet Inc., and Assette Easy Reports. These programs essentially collate the various documents and produce one combined electronic file–generally a PDF that represents the entire client packet. The end result can be a significant time savings and more importantly it can improve your scalability as your firm continues to grow.

Before the end of this quarter, assign an owner and get a head start on your quarter-end process. Take the time to measure how long it takes–on average–to produce each report. You can do this by simply adding the total man-hours and dividing by the number of reports. That will give you a benchmark to use for evaluating any changes you make going forward. It can all add up to really improve the overall efficiency and scalability of your quarter-end process. Remember, time is on your side because the clock doesn't start until the quarter is actually over.

Dan Skiles is the executive VP of Shareholders Service Group in San Diego. He can be reached at [email protected].