At our annual company away day earlier this summer, we engaged in heady discussions about StatPro Seven, our flagship middle office analytics solution, and StatPro Revolution, our new cloud-based platform for portfolio analytics and reporting. You may have heard a little something about Revolution during our North American debut of the platform at Morningstar.
While talking about the impact our products have on clients, we realized a common theme kept emerging: performance attribution. Specifically, how increasing market and regulatory complexity is creating greater demand for performance attribution in the front office – the investment advisors, portfolio managers and wealth management experts who work with investors across the desk and across phone lines every day.
Fund managers – as well as sales and client support staff – need attribution to support qualitative analysis and help their clients understand the factors that contributed to a specific fund's performance. Leveraging attribution calculations can be crucial to communicating the underlying message to an investor about how – and why – their portfolio is performing.
Fund managers know that simplicity is the key when talking to clients – even sophisticated, educated and skeptical investors of the post-Madoff era. Simple messages about investment performance attribution are essential to help sell new services, justify managers’ fees and retain clients when times are tough. Fundamentally attribution is a powerful tool to help wealth managers communicate and engage in meaningful a dialogue with their clients.
Performance attribution in the front office is a clear competitive advantage when it can be executed easily, reconciled seamlessly with the middle office, and communicated clearly to clients. Complexity is a roadblock to understanding performance attribution. Complex solutions make it hard for fund managers to make attribution a core part of their client relationship management strategies.
These are challenging times for wealth managers. Thank goodness there’s a simple front-office portfolio management software solution out there to make performance attribution not only a core part of their investment decision making, but also a simple, elegant and compelling part of their value proposition.