Goals-Based Wealth Management: An Integrated and Practical Approach to Changing the Structure of Wealth Advisory Practices

Chapter 12Portfolio Reporting

Portfolio reporting, in the definition I use here, is meant to comprise both the regular compilation of an organized list of assets together with their historical costs—tax basis where applicable—and current values, and the dissection of these line items to allow the investor to assess exposures to various “risk factors.” This naturally leads to the computation of various performance measures and the compilation of the data required in order for the client or the advisor to assess that performance.

The Current Challenge

At present, portfolio reporting in the individual—or private client—world has become almost as developed as in the institutional market. This should not surprise as—taxes aside—the actual process architecture should not be different from one market to the other; one of the most complex tasks, securities pricing, has been highly mechanized and securities codes or CUSIP numbers remain the same irrespective of the identity of the investor or whether he or she owns one share or one million shares. Tax-aware reporting presents more of a mixed picture to the extent that compiling all the various bits of information required is absolutely available, but performance computation and assessment rarely are.

The current environment becomes orders of magnitude more complex once the problem is expressed in the goals-based framework, rather than simply envisaged in terms of a single aggregate portfolio. The challenge chiefly revolves around the ...