5 Tips to Nail Your Assessment of Value Report

The Financial Conduct Authority is on a mission to make the asset management industry more transparent and accountable – and that’s no bad thing.

Trust is needed to keep investors on board, especially when markets are volatile, active management is under greater scrutiny and high-profile falls from grace have threatened the industry’s reputation.

The FCA wants asset managers to use the new assessment of value reports to show they are adding value compared to their peers. This isn’t just another box-ticking exercise for the regulator; it’s a chance to set the record straight and tell your clients what you’re doing well, where things may have gone wrong and what you’re doing to put them right.

Below, we’ve put together a few pointers together that might help you construct an assessment of value that is of real value.

1. Write it for your clients, not the FCA

The FCA have asked asset managers to look at how they add value across seven categories, including performance, economies of scale and comparable market rates. Keep those categories in mind and certainly address them, but forget about this being an FCA exercise – there is no set way of constructing this report.

Perhaps, don’t even mention the FCA. This is an assessment of value that you have created to keep your clients informed and create a better service for them. This should be a report that reflects your company and your client base.

For example, use your own categories to present your findings – categories that reflect your culture and that your clients can engage with. It’s more important that they think you’ve done a good job of assessing value than the FCA.

2. Don’t make it look like you’re marking your own homework

Even your most satisfied customers will find 20 pages of self-congratulatory waffle a little hard to stomach. It may be wise to:

• Stress the importance of qualitative and quantitative third-party research – make sure people know there is an element of independence here. Clients will be more likely to trust the results, and not just when you pass with flying colours. If independent research raises concerns, readers will have more faith in your plans to rectify those issues.
• Show some humility. If your company passes with flying colours – and even if it doesn’t – ensure every reader knows assessing and adding value is something you will continue doing regardless of the survey’s results.

3. Construct a report that’s easy to understand

Again, you’re not writing this for the FCA, and although their input is important, you’re not really writing it for your board of directors either. You’re writing it with the least-engaged retail client in mind. And that means simple, engaging language.

Here are a few pointers that might help you reach the eternal skim-readers out there:

• A quick and easy guide to interpreting the results. Use a simple scoring system, use colours and split everything out by your chosen categories. Make sure clients can easily find their funds and the subjects they are interested in.
• Include all the relevant information in one place. Clients may not recall their fund’s performance target, for example, so make sure such facts are upfront. They shouldn’t have to refer to their prospectus to fill in the gaps.
• Keep the language retail friendly and provide a glossary. Your clients may pay those charges, but that doesn’t mean they know their OCFs from their AMCs off the top of their heads. Also, make sure performance and risk issues are described in the simplest terms possible.

4. Assessing and adding value is ongoing

Assessing value and putting in place initiatives to improve the service you provide is an ongoing process. In your introductory sections, perhaps discuss some issues that arose and measures that were introduced over the past 12 months – show your clients that this report is not the first time you’ve found ways to add value, whether through performance, client service or other factors.

It’s also worth remembering at this point that this will be an annual occurrence. When you tell your clients what you’re going to do rectify any issues the assessment has raised, be prepared to report back to them next year.

If you can show that your changes have made a difference to their investments and customer experience, your clients will trust your findings in the years to come.

5. The Marketing Document

Yes, you have to do this, but it’s an opportunity to remind you clients why they were right to invest with you in the first place

The assessment of value is a marketing document, a remarkably candid one, but a marketing document nonetheless. Use it as an opportunity to remind your clients what it is you do well. And where issues are being resolved, it’s another opportunity to demonstrate that you are putting the client experience at the heart of what you do.

If you’d like to discuss how we can help with your assessment of value reports, please get in touch.