It never fails. Whenever I attend a
conference for money managers and mention that
my company sends our clients a monthly account
statement, the response is invariably
something like this: "But the SEC only
requires quarterly reporting. Aren’t you
afraid to let your clients know how you’re
doing any more frequently than that? If
they’re not happy, they might decide to hire
someone else."
My reaction: Why wouldn’t I let my clients
know how we’re doing? It’s their money, and
they want to know whether it’s growing or
shrinking. What right do I have to keep that
information from them?
Besides, at my firm, client relationships
are about more than just performance. In fact,
performance is only a part of it. What our
clients want is someone they can trust to
manage their assets wisely. That doesn’t mean
getting over-the-top returns. That means
growing the money while the market is strong,
and protecting it when the market turns too
choppy.
Let’s look again at what clients want:
someone they can trust. Many other money
managers can offer reasonable market returns.
What distinguishes us from them in our
clients’ eyes is trust. Our clients feel
comfortable that we are being good stewards of
their assets. They believe that we act
responsibly in that role. And we do our best
to keep meeting those expectations.
Looking at the issue from that perspective,
how could we not provide monthly statements?
But there’s another benefit, serving both
our own and clients’ interests. By reporting
results monthly, we are able to bill monthly
in arrears. We benefit by having a steady
monthly income. Clients benefit by paying our
fee at the end of the reporting period, not
the start. That keeps more of their money
working for them. It also makes more intuitive
sense to pay for a service after it has been
provided than before.
So, why do we report monthly to our
clients? Because it’s the best way to do
business.
