For many advisors, the monthly account statements they mail out to clients are often more of a hassle than a benefit. These statements frequently trigger complaints from clients who say the documents are difficult to understand and disorganized.

Advisors surveyed in Investment Executive’s Report Card series have repeatedly indicated that their firms’ client account statements are inadequate.

In this year’s Report Cards, account statements received an overall performance score of 7.5 and an importance rating of 8.3, meaning advisors’ expectations are still not being met.

Advisors complain that statements are too complex in design, with jargon-riddled wording and missing information (such as rate of return). Some statements show only the market value of the client’s investments, but don’t show capital gains and losses.

A clear, understandable and complete client statement could save advisors time and improve the lines of communication with their clients.

Peter Karavos, president and CEO of Simplified Communications Group Inc. in Toronto, and Doug Lincoln, senior strategist with that firm, have been designing client account statements for the banking, investment and insurance sectors throughout North America for 17 years.

Through their research, they have found that an effective client statement can be broken down into four essential elements: the right content; a logical flow of information; language that is clear and easy to understand; and professional presentation, which includes the typography and graphics.

> Content. Many firms can now offer advisors some discretion as to what is included in client statements, allowing advisors to personalize the information for certain groups of clients.

Firms can mandate the inclusion of certain information, such as that regulated under disclosure rules, on all statements, then allow advisors to select from a number of optional modules.

“Since the advisors know their clients’ information needs and their level of financial sophistication,” Karavos says, “advisors can tailor the statements to the [specific] client’s personal situation.”

Account statements can also provide information that goes beyond what has happened during the statement period. Helping clients understand how they are doing against certain benchmarks or tracking their progress against personal goals, Lincoln adds, will help advisors build stronger relationships with their clients.

> Flow Of Information. An account statement should establish a logical flow to the information being provided to clients, Lincoln says, with the most important information appearing first.

“The statement should ‘walk’ the investor from one section to the next,” he adds, “in a way that is intuitive and easy to follow.”

Similar or related information should be grouped together — for example, types of investment vehicles or types of accounts, such as RRSPs and RESPs — under bold, clear headings.

The use of lines, icons and graphic devices can provide visual clues to help clients locate specific information.

A table of contents can also help clients who have multiple accounts find what they are looking for quickly.

> Clear Language. A clearly written account statement eliminates confusion and increases the likelihood that clients will read the document. Advisors can add personal messages or footnotes to clarify mandatory regulatory content that is difficult to understand.

“The client is reading that statement on his or her own and doesn’t have the help of an advisor to explain things in it,” Lincoln says. “You want the client to get his or her statement in the mail, open it and understand it the moment he or she reads it.”

> Presentation. The layout of the account statement gives the first impression, which can determine whether it will be read and understood or tossed aside for later and possibly forgotten.

A jumble of tiny figures and fine print would turn most readers off; a clear design, with a typeface that is legible, along with clear, bold bar charts or line graphs, will draw readers in.

“We always put ourselves in the client’s shoes when writing and designing statements,” says Karavos. “Some content that may be appropriate for one sector or product may not be appropriate for
another.” IE