Preventing clients from storming out the door is akin to an art form. This was underscored by the stories that emerged during a recent conference organized by Financial Technologies Forum. Meeting clients’ needs can be especially difficult when there are discrepancies between what firms think their clients need and what the clients actually want.
Some of the client issues are fairly profound as the participants in a panel for the FTF’s recent 4th Annual Performance Measurement conference revealed. But not all of the client stories have sad endings.
One panelist, working at the time as a consultant for an asset manager, had to make a presentation to a pension board about its $14 billion in assets. At the end of the long report, one of the board members said, “This doesn’t add up. It’s off by three dollars.” The panelist scrambled to find the answer and uncovered a rounding error caused by a decision to not use decimal points. Happily, the numbers did add up. The panelist also tells of a different pension board with a member who consistently asked “What does this VaR thing stand for?”
Another panelist stresses that while some pension boards need “a lot of education, some of it remedial,” other clients such as the investment team of a specialty chemical company are very sharp and will keep firms on their toes.
For performance measurement—and many other areas—clients may not be clear on the latest buzzwords as far as what they want from a firm, panelists reported. Yet they are fairly clear about what they don’t want. Topping their list is bad data about the performance of their assets—and really about any aspect of their financial investments. They can live without extraneous analysis and reports but if a financial services firm’s data turns out to be bad, the firm is dead in the water.
The panelist who faced the $3 question also once worked for an asset manager. That firm was using an application with persistent data quality problems. “The client said, ‘I don’t trust you,’ ” says the panelist, who constantly had to make excuses and fixes because of the under-performing software. Things went downhill from there. “If you’ve lost the trust of a client, what do you have left?”
In addition, firms have to develop and maintain the expertise of staff members, panelists say. The ideal scenario would be staff members who have mastered all of a firm’s product lines and who know well the needs of all clients. Firms generally rotate staff among their product lines to achieve this but that gets tricky when clients have come to rely on the talents of particular staff members, according to the panel.
Overall, the FTF panel found that firms should:
- Send good data as frequently as possible to clients
- Think twice about cutting staff members that oversee data quality management
- Develop the art of writing clear executive summaries and snapshots for reports
- Always provide “CYA” documentation
- And avoid a heavy reliance on lugubrious analysis that causes clients’ eyes to glaze over.
“What they want is the data and less reporting,” says one panelist at an A-List firm. “They’ll take the data to make reports for themselves.”
In the end, clients want basic assurances from their financial services providers that they are in a very real sense sharing their fiduciary responsibilities with them, adds the panelist from the top firm.
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