Case Study: Investment Reporting
Our client had well-diversified investment portfolios with several financial institutions and received reporting packages from four different investment advisors. These reporting packages came in different formats, provided different information and did not include comparisons with the market, making it difficult for our client to understand and compare performance.
Our first step was to discuss with the client his reporting needs and to determine the composition of his portfolios. The client was not sure what information would be most useful to him, so he relied on our experience and expertise to help identify the relevant information.
As part of this process, we contacted the four investment advisors to obtain key information about the portfolios on a quarterly basis. With this information, we were able to work with the investment advisors to construct a benchmark for each investment account, based on the composition of the account.
In this case, we discovered that the client’s portfolios were heavily invested in equities, with the remainder in fixed income instruments. The benchmark for the portfolios was then set as a weighted average of benchmarks for equity and fixed income. We also checked to ensure that the investment advisors were not deviating too much from their investment mandate.
And, on a quarterly basis, we synthesized the information we received from the investment advisors and built a graphical reporting package for the client. This package included information about portfolio composition, past and current performance, and comparisons against relevant benchmarks (see below for a sample reporting package). This particular client wanted to see the big picture and to skip the details, so our reporting package was tailored to show a high-level summary of his portfolios’ performance. For other clients, we may provide more detail, or report only on an annual basis, depending on their specific reporting needs.
We also review and discuss their reporting package and investment performance with each client. In this way, we help clients better understand the performance of their portfolios and assess how the portfolios are performing against their expectations.
In this particular case, we determined that the client’s portfolios were consistently underperforming compared with the benchmark. We followed up with the client’s investment broker and were able to identify the reasons for the underperformance, enabling more informed investment decisions to be made in the future.