Chief Investment Officers (CIOs) at Wealth Management firms have a hard job, whether it’s keeping an eye on the economy, overseeing investments, or managing a team of front office professionals.  One common challenge I have heard from our CIO clients is that they don’t have a place to see the information that matters to them.  The CIOs know they are responsible for overseeing all the assets invested by the firm, but where can they go to do that?  Here are three ways CIOs are being kept in the dark:

• Where can they find summarized information by investment objective for the entire firm’s assets? CIOs don’t always need to know the complicated analytics to be well informed and prepared to do their jobs, but some simple statistics would be incredibly helpful.  How much AUM do we have in our Aggressive Growth objective? How much did a particular market segment collect in fees?  How has a strategy grown over the last 5 years?  How many client accounts are in our conservative objective?  How many portfolios does John Doe manage?  These aren’t rocket science, but ask any CIO if they have one place to go to find basic demographic information on their book of business… you will hear crickets.

• Are accounts with the same investment objective getting similar results in terms of return, risk, and outcomes? One of the challenges in a distributed wealth management environment is that teams distributed between multiple offices/cities/states are implementing the same strategy in inevitably different ways.  How can these differences be quantified in terms of client return, risk, and outcomes?   When most CIOs ask this question, their teams begin running a flurry of manual reports from a handful of systems, then spend their afternoon combining them into an Excel document, then watch YouTube videos reminding them how to create pivot tables and lookups, and finally reconciling all the data for errors.  I hope you didn’t want that information this quarter; next quarter is most likely.  By then, the information is out of date and non-actionable and your team is exhausted.

• How can I ensure that “outliers” are identified, investigated, and corrected?  Once you get the basic demographics across your firm and you have data on your outliers, now what?  How do you know what happens to those portfolios, who followed up, or the reason for the variable experience?  Once you start answering questions, more questions pop up!  CIOs need to be able to oversee the compliance and risk oversight process to ensure that risk mitigation steps are occurring.  Even better, they can benefit from the knowledge that when the next OCC, FINRA, or SEC audit occurs, a report can be run showing this mitigation along with the evidence for the outliers.

These are the questions we heard over and over again.  Want to learn more? Contact me at [email protected] or reach out to me on LinkedIn.

Marshall Smith( EVP, Services )

Marshall Smith CIPM, EVP of Services, has been with First Rate since 2006. You can follow Marshall on Twitter @MarshallCSmith, or connect via LinkedIn.