Several factors, including the shift to an advisory approach in retail and retirement plan investing and the growth in managed money, are fueling demand for personalized performance measurement and reporting, according to TowerGroup. This demand is evident across a spectrum of channels from low balance 401k plans to high net worth and family office.
Three major factors determine the complexity of the performance reporting offered: the amount of client assets; the breadth and depth of service offerings; and the prevalence of managed money in the client relationship.
TowerGroup predicts that technology spending for this area will increase at a compound annual growth rate of 13.8%, from $190.8 million in 2003 to $415.2 million in 2009.
The delivery of a personalized performance report requires a complex advisor environment that allows for consolidation / integration of customer data and third-party data, as well as an efficient calculation engine and flexible output capabilities.
TowerGroup has issued two new reports on personalized performance reporting: “Personalized Performance Reporting for Investors: A Compelling Story Requires a Complex Environment”; and “What’s in Your Wallet? Personalized Performance Reporting Across the Spectrum of Investing Channels.”
Both are by Matt Schott, a senior analyst in the Retail Brokerage & Investing research service at TowerGroup. They outline the major drivers in retail investing that are leading to increased activity around personalized performance reporting, and discuss both the process and challenges associated with this new metric.