Are You Wasting Hours Building Client Reports Every Month?

In addition to all of QASGROUPINC’s core features, take advantage of features and programs designed to help agencies deliver more predictable performance for every client.

What is Client Reporting?

We can share files, content, reports, and results with clients in a manner to strengthen our mutual relationship. There are so many reasons why your client reports are an integral part of your relationship with your client, and as such, why you need to utilize them to their full potential. Client reporting enables you to interact with your clients regularly. Reports help you educate your client on what you do; regular reporting keeps both you and your client accounts. Transparency is a lot easier through your client reports. Client reporting gives credit where credit is due. Your work is all about results, and descriptions are your way of showing them.

Overview

For the financial services industry, the growing complexity of investment management products and customer relationships has led to significant changes in billing requirements. With revenue and relationships at stake, the need to streamline and automate billing processes and develop comprehensive revenue management controls has never been greater.

In other words, the introduction of more complex products and fee structures is entirely at odds with traditional billing procedures. The globalization of the industry and a sharp rise in transaction volumes are further compounding the pressure on operations.

In the simplest terms, revenue management issues are caused by under-billing, over-billing, or no billing at all. The challenge is to implement a solution that minimizes all three possibilities.

Asset management fees vary depending on the financial service provided and its administration. These fees are taken to ensure the investment advisory services and ongoing administration services offered by the firm. While there are multiple fee structures and strategies, the two most common fee structure elements are:

Management fees: Management fees are based on the total value of assets under management. The price is typically between 1-3% of total assets within the fund – but mutual funds, private equity funds, and hedge funds all have their standards in this regard. This fee structure recognizes the ongoing involvement and support provided by the investment manager and compensates the fund manager accordingly.

Performance fees:

Performance fees offer the fund manager an incentive to provide the maximum return possible to investors. A performance fee generally consists of 5-25% of net realized or unrealized gains made within a given year but can be based on a variety of criteria – including net income generated and over-performance against a benchmark. Depending on the type of fund and the arrangement agreed upon, this fee structure provides additional value to fund managers who offer positive returns, while it offers little benefit for (and sometimes even penalizes) those who underperform.

The fees charged for any given fund are ultimately based on what the investors and fund managers agree upon – and can consist of one of the structures as mentioned above or a combination of the two.

 

Challenges in institutional fee billing for asset management firms

While simple, in theory, the process of institutional fee billing for asset managers presents a myriad of complexities and challenges. From operational risks to performance fee calculations and risk management, there are several variables involved in the billing process. For example, at what point are performance fees calculated? And, are they calculated before or after management fees? Furthermore, how are these fees prorated throughout the year – particularly when a new investor enters or leaves the fund? Asset managers must also manage discounts, along with fee caps and floors for management fees.

Many asset managers are still managing most of their institutional fee billing, tracking, and analysis through spreadsheets, which are mainly dependent on manual processes. Not only do these manual processes increase labor costs, but they can lead to frequent errors that result in revenue leakage, less control over outcomes, and hesitancy among investors. In exceptional cases, these errors can lead to fines and financial loss to the manager.