Buy-side sees client engagement as key driver of investment flows over performance
14 August 2024 – Asset managers, hedge funds, and wealth managers now view client engagement as a greater driver of investment flows than performance, according to recent findings from Clearwater Analytics.
Nearly half (48%) of the 136 buy-side market participants surveyed globally selected client engagement as the primary driver of investment flows, with just 30% picking performance. Amid the rise of passive investing and the popularity of Exchange Traded Funds (ETFs), the benefits of active investing have come into question over the last few years, with increasing emphasis on improving the way clients are serviced serving as a differentiator in a competitive market.
The survey also found that 44% are still overly reliant on Microsoft desktop tools, such as Excel, for the aggregation and management of their investment data for client reporting, rather than modern data management systems.
With the importance of client engagement in mind, the concern is that so many may be falling short in their levels of client servicing due to their reliance on Excel, particularly during times of market turbulence. Market instability has been pushed to the front of investors’ minds more so this year with so many elections occurring globally. In addition, client reporting teams typically receive many more bespoke requests during electioneering periods, especially amid the fallout of close-run election campaigns.
Reacting to the findings, Sam Idle, Solutions Consultant at Clearwater Analytics, said: “The formula for effective client reporting simply isn’t going to be found in Microsoft Excel, not with the amount of data that asset managers now have to grapple with. That is on top of the fact that the depth and range of insights investors now demand from those managing their money has dramatically increased over recent years.”
“To produce both regular and bespoke client reports that are going to differentiate an investment manager from their competitors, the tools they rely on to aggregate and manage the vast swathes of data being used have to be more advanced than archaic Excel spreadsheets scattered across an organisation’s IT infrastructure.”
