The key to creating effective performance reports is understanding the person who will read them, says a new white paper from Archway Technology Partners.

Investment performance reports create confusion when the end-user fails to understand the data within, making it vital that wealth managers understand the spectrum of needs among investors, the white paper says. Managers must understand where investors “fall” on a spectrum from novice to expert to establish reporting criteria.

“If a performance report is overly simplified, investment professionals may consider the report to be lacking transparency. On the other hand, a complex performance report may overwhelm a novice investor,” it says.

Managers must also "have an insight as to why the individual is a stakeholder," the study says, as "these two factors greatly contribute to the reporting expectations of the stakeholder.”

Furthermore, reports can be a useful training tool for clients, and an opportunity to strengthen the client-manager relationship, the paper says.

To view the paper, click here.