Top 6 reporting mistakes to avoid

A version of this article appeared in Financial Planning on November 11, 2021.

Client reports are foundational to your practice. They explain how you’ve been working for your clients and can help justify your fee. One thing I’ve noticed during my nearly five years at Advyzon working on both the service and product side, however, is that many advisors aren’t sure how to optimize client reports. In fact, there are some common mistakes that stand between an OK report and a great client report that showcases your value.

Let’s look at the top six mistakes firms make when preparing client reports, and some ideas to fix them.

1. Paper copies

   Some clients may prefer paper copies of their reports, but the trend (even among older clients) is moving toward digital. Plus, digital reports save you time as a firm, and help improve accuracy, since you don’t have to collate — but we’ll get into that more later.

   The simplest option is to share reports as PDFs, using secure communication. However, clients may want to access information in between reporting periods; they may expect a client portal.

   Using a client portal to supplement your reports can make clients feel more like active participants. For example, with Advyzon, we allow advisors to automatically post monthly statements from custodians to client accounts, which triggers an email to clients. It’s a way for advisors to move beyond reports to more continuous engagement.

   Keep in mind, many budgeting apps and retail brokerages provide these digital portals to their clients, including a mobile experience. Many customers may now expect this type of access from their advisor.

2. Overly complex

   You work hard to create a financial and investment plan that matches your clients’ risk tolerance and goals. But that doesn’t always come across in a report detailing allocations and performance.

   Think through how you can simplify your reports to help clients better understand the update. This might involve including less information, like showing quarterly data but omitting month- or year-to-date charts. It could also be adjusting language (using ‘stocks’ instead of ‘equities’) or adding high-level takeaways. Try to find a technology provider that helps you with these simplifications. For instance, Advyzon allows you to customize how detailed you make your charts and lets you name each data point. You can also add text boxes in reports where you can include summaries or takeaways.

   While some of these steps can take extra time, they can help your reports stand out from a client portal and highlight your value as an advisor without a client meeting.

3. Confusing charts

   Charts can help you explain concepts like allocation or performance. But most people aren’t used to seeing charts as frequently as financial professionals. Spending some time thinking through how you build your charts can go a long way toward making them more effective. For instance, a pie chart with more than six slices can be hard to read, and you definitely don’t want to include more than nine. (Advyzon caps charts at nine slices and folds additional fields into “other.”) If you have more data points that you want to include, consider a bar chart.

   It’s also important to think through creative elements. Bright colors can help you separate different categories, but too many can also be visually jarring. On the other hand, using multiple shades of the same color can be visually pleasing, but hard to read. Find a happy medium by using complementary colors. Ideally, these match your logo or brand colors. If you’re not sure what colors complement yours, you can use a tool like Adobe Color to help.

   

   Tip: Advyzon’s Brand Kit lets you customize charts to your firm’s visual identity. You can also use one of our default color schemes.

4. Discrepancies

   If you use multiple tools to help manage your clients’ money, make sure your reports match the numbers clients see elsewhere. If, for example, they log into a custodial account and see numbers that are different than those in your report, it could create confusion or even mistrust.

   If there is an easily explainable reason for the discrepancy — the custodian doesn’t account for real estate holdings, or there’s a difference in timing between when the trade cleared and when it was settled — make sure to note that in your reporting.

   Tip: If you generate reports with Advyzon, using the “settlement date” setting can help prevent a discrepancy in which the custodian shows a trade taking place and when payments appear in an account/report.

   We sometimes talk to advisors that see discrepancies tied to reconciliations. Upgrading to newer technology (versus manually collating reports or using legacy tech) can go a long way toward solving this. In particular, look for a portfolio accounting system that offers daily reconciliation on accounts since this can help ensure your data matches your custodian’s.

5. Noncompliant

   I sometimes see firms attempt to make their reports more accessible without being fully aware of what compliance restrictions exist. You want to make sure reports are shared in a secure manner, and that the communications are documented, so you can share details as needed if you’re audited.

   Tip: Advyzon offers compliance tools to help answer any questions you might have during reporting. In particular, we’ve built SEC Rule 17a-4(f) into our software, so you don’t have to worry about it.

6. Not automating

   Automation is one of the easiest ways to avoid a number of the mistakes we’ve talked about in this article. But some firms are hesitant to make the switch, whether they have concerns about data conversions or worry about learning a new system.

   But automation allows you to pre-program report settings to follow best practices and reflect your brand. You can set your system so new clients are added to reporting groups automatically, and so that reports are generated on a schedule to make life easier for you and your team.

   The good news is that fixing the mistakes we talk about in this article, whether it’s via automation or updating the settings on your current reporting software, can make a big difference.

Kelly Fitzpatrick is a Certified Financial Planner® with eight years of experience in financial technology. She’s been with Advyzon — the portfolio reporting technology firm — for nearly five years and has worked with 200+ advisors over that period. She currently focuses on developing and improving their reporting products.