When the Going Gets Tough, the Tough Get Attribution
Written by Carl Bacon
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.