A prospective client asked me in March what our reporting looked like. Did we send a monthly performance summary. I said no, and watched him decide that was a mark against us. He'd been with somebody who sent a nicely formatted report on the first of every month, and he liked it.
I didn't argue much at the time. But it's a fair question and it deserves a proper answer rather than a shrug, so here it is.
What a monthly number actually contains
Think about what changes in a month for money you won't touch for fifteen years.
Your instalments went in. The value moved, in one direction or the other, by an amount that tells you nothing about the next fifteen years. That's it. Nothing about the scheme changed, nothing about your plan changed, and nothing you should act on happened.
So a monthly report is mostly one number that moved for reasons unrelated to any decision you need to make. It looks like information. It's closer to weather.
What it does to people
Here's the part I care about more, because I've watched it.
Somebody who sees a number every month starts to have a relationship with the number rather than with the plan. A good month feels like progress and a bad one feels like something's wrong, and neither is true. Over a year that's twelve small emotional events attached to something that was supposed to be running quietly in the background.
And it primes people to act. Three flat months and the question arrives: should we change something. Usually the honest answer is no, and the only reason the question came up is that a report landed on the first of the month.
We've written about that moment in what a red number actually means. Monthly reporting manufactures more of those moments than markets do.
What the monthly report is actually for
I'll be blunt about this because it's the honest part.
Regular reports are largely a service signal. They demonstrate activity. They remind the client that somebody is doing something, which matters in a business where most of the correct behaviour looks like inactivity.
I understand the incentive. A distributor who never contacts you can feel absent, and feeling absent loses clients. Sending a report is the easiest way to look present.
What I'd rather do is actually be present when it matters, which is a different thing and harder to demonstrate on the first of the month.
What we do instead
Three things, and none of them run on a monthly schedule.
An annual review, properly. Not a value update. What you hold, whether it still matches what the money's for, whether anything drifted, whether the schemes still do what they claimed. That takes an hour and it uses the fact sheet, which our page on the scheme fact sheet describes.
Contact when something real happens. A scheme merges or changes its name, a manager leaves, a category is redefined, a folio detail goes stale. Those are worth a message. A month passing is not.
Being reachable when you call. Which is the actual job, and it's the thing a report can't do. In a bad month you don't need a document, you need a person who knows your situation and will pick up.
The reports that are worth reading
To be clear, I'm not against documents. I'm against a monthly number presented as news.
The fact sheet for each scheme you hold is published monthly and is genuinely worth reading once a year. It tells you what you own, how the scheme has done against its own benchmark over several years, what it charges and who's running it. That's information you can act on.
The consolidated statement against your PAN is the other one, and it does something no distributor report can: it comes from the registrar independently, and it shows folios you might have forgotten, which our post on finding old investments covers.
Both of those are available to you without anybody's permission, and both are more useful than a value summary. The difference is they answer questions rather than announcing a number.
When you should look, then
My honest answer, and it's less than most people expect.
Once a year for a review of what you hold. Whenever something changes in your life, because that's when the plan might genuinely need adjusting. And before a goal date approaches, so the risk comes down on schedule rather than in a hurry, which our page on asset allocation covers.
Beyond that, looking is optional. You can check the value whenever you like and there's no harm in it, as long as you've decided in advance that seeing a number won't cause you to do anything.
Most people can't hold that line, which is the real argument for looking less.
The one time we will contact you unprompted
There's an exception to all of this and it's worth naming so it doesn't sound like a policy of silence.
If a goal date is approaching and the money is still sitting where it shouldn't be, we'll say so, repeatedly if necessary. That's the situation where the value genuinely matters, because a fall two years before a fee is due is a different problem from a fall fifteen years before one.
The same goes for a portfolio that's drifted well away from what it was meant to be, usually after a category has done well for a few years. That's worth a conversation, and our page on portfolio rebalancing covers what it usually leads to.
Neither of those is a monthly event. Both are the kind of thing a person notices and a template doesn't.
The fair objection
There's a reasonable case against my position and I'd rather state it than pretend it doesn't exist.
Some people genuinely want to see it. Engaging with something makes them more likely to stick with it, and for that person a regular report isn't noise, it's what keeps them in the game. I've met a few like that and I don't think they're wrong.
There's also an accountability argument. Regular reporting makes it harder for a distributor to be careless, because somebody is looking. That's real, and my answer to it is that the annual review should be thorough enough to serve the same purpose, and that our registration is verifiable independently, which our post on checking registration explains.
You can get the numbers without us
Worth stating, because this could read as gatekeeping and it isn't.
You can request a consolidated statement against your PAN at any time and see everything you hold, whether or not you tell us. It arrives from the registrar rather than from any person, which our page on the consolidated account statement covers.
So the numbers aren't ours to withhold and we're not withholding them. We just don't think a monthly one, pushed at you on a schedule, is doing you a service.
What I should have said in March
He went with the other firm, which is fine and possibly right for him.
What I'd say now, with the answer better organised, is that the reporting frequency isn't really the question. The question is what happens when something actually goes wrong, and whether the person you're dealing with will tell you to do nothing when nothing is the right answer.
A monthly report is easy to produce. Saying nothing needs doing, for the fourth year running, is harder and worth more.
Myfolios is an AMFI-registered mutual fund distributor (ARN-145870) working from Indore since 2014, and if you want a proper look at what you hold, that's an annual conversation we're happy to have any time you ask.
