Investment Performance Reporting Best Practices

For investment operations managers, performance reporting is where the rubber meets the road.

This is the tangible result of the firm’s investment decision and these results will be shared with their client.

High-quality performance reports are key to maintaining client trust and keeping your job!

Here are the best practices for making sure what ends up on your client reports from your portfolio accounting system is both pristine and accurate.

Performance Reporting Tips

Know what the results should be

Portrait of a happy group of business executives working in an office

The portfolio manager is in the best position to know about what his or her performance number should be.  They are the one selecting the securities that make up the bulk of the performance.

Ask them what they expect the performance to be relative to their benchmark and get this number prior to generating the performance of the fund or account.  It should be a good indication of what the IRR will be for the month or quarter.

This also saves you from a lot of after the fact research when the PM tells you the “performance looks wrong”.  You can do the research while you are producing the performance and if there is a big difference, you now know why and can articulate it to the portfolio manager.

Leverage a quality assurance system

Unfortunately, portfolio accounting systems generally do not provide a lot of tools to ensure that the data in the system is accurate.

There are literally millions of data points that are maintained in these systems and a missing data point or bad data point can erode lots of trust if they end up on a report and a portfolio manager or client sees it.

Build your own quality assurance system by identifying all of the data points that are going to end up on internal or client reports.

Export the data to excel, if you have a small data set or SQL or other data base if you are dealing with larger volumes of data.

Create queries to check for missing data, outliers in performance and other inconsistencies which would be impracticable to find using the portfolio accounting system.

Once you set this up, it is easy to refresh the tables with new data for the next day, week month.

The more frequently you check, the better the data quality will be.  Make it easy for you to check.

If you have done a good job identifying all of the fields that will end up on reports and have queries to check and ensure their accuracy, your portfolio managers will not have to spend time going over report by report to check your work.

Batch your work

Data coming in from custodians arrives at different times based on when the custodian delivers it.

Batch your work by the availability of the statements.  Some custodians provide statements earlier in the month than others.  Establish reporting delivery dates based around the availability of these statements.

For example, use the 5th, 7th and 15th business days.  This allows you to get out the reports for the clients with accounts at the early custodians earlier and later ones later and also sets expectations internally about when to expect the reports to be ready.

Track your performance to service levels

Lots of operations managers do not like to have hard commitments.

I believe that committing actually helps you deliver a better service and gives you something to compare your work to.

Even if you do not have a set delivery time with clients, I would recommend that you create one internally and track your delivery to them.

To paraphrase Peter Drucker, “You can’t manage what you don’t measure.”

Measuring your performance to service levels can be motivational for your team since you can see how you did this month vs last month or this quarter vs last quarter, etc.

Measuring things such as on-time performance, turnaround time and defect or error rate helps you know how consistent you are performing.  Not knowing anything else, if you know there is a lot of variability in processing, most likely there is an inconsistent client experience.

Have well tested backups

Performance reporting happens most typically on a quarterly basis.  Get it wrong only 1 quarter and your “grade” goes from an A+ (100%) to a C (75%).

If you only have one person who can do this job well, that is a lot of risk to not being able to successfully deliver come reporting time.  You need to train and test multiple backups who can do the work.

The key is testing. If you train someone today and then don’t have them do the process for 6 months, is it rational to think they will perform flawlessly?

Have your people swap reporting assignments every other quarter.  Ideally you have a team where anyone can perform at the level of the primary person responsible for the account.

People leave, get sick, get married, go on vacation – some of these you can control, most you can’t.  Do not let absenteeism adversely affect your most important deliverable.

Setting Your Performance Reporting Standards

For operations managers, providing clients and internal staff high quality performance reports is an essential part of their job responsibilities.

It can be a high stress part of the work since there are a lot of people who are looking over the information, and having a reliable and qualified team to run the reports goes a long way.

Following these best practices  will help you to produce a high quality result and perform more consistently.