Investment reporting is a recognised component in the investment management lifecycle, but there is one area within this process that it often still overlooked – the translation, argues Abbey Shasore, CEO, Factbook and Jean Bernard Le Floc’h, Partner, Fastnet Translation.
In the investment management world, investment reporting is, whilst not always given the highest priority, at least afforded a place of significance. Informing investors of their fund performance, satisfying regulators, or providing Marketing with key sales data is a crucial element of ongoing operations. Yet in terms of the translation of this critical data, there is still much room for improvement.
There are, of course, two overall translation requirements for asset managers. There are the legal, mandatory conditions; for example, a fund prospectus or KIID report. There are also the non-mandatory obligations that form part of a service level agreement between an asset manager and an asset owner or investor.
Machine translation is generally doing a very good job at the mandatory reporting challenge and can typically cover the major proportion of translation requirements. Many asset managers, however, accept sub-standard translations in this area of reporting, for three reasons. The first is that they expect few people to read them; second, these reports are not adding value to the business; and finally, the penalties for a poor-quality translation are either low or non-existent. In other words, there is a correlation between the quality of a translation and the value associated with that type of communication.
When it comes to reporting in support of a firm’s marketing and communications, therefore, the situation is very different. The firm’s corporate reputation is at stake. If you seek to enter a new market or reply to an RFP with a poor translation, there is nothing that is legally binding, but the consequences are perceived to be severe. The quality of translated materials is particularly important for new market entrants. Investors will rapidly lose confidence – and market competitors will enjoy highlighting any errors.
Of course, there are variations in demand for translating marketing or communications materials. For example, with some institutional investors, translations are not always required, whereas with retail customers translations are critical as it reflects the asset management firm’s commitment to that market. One general point here is that a translation strategy cannot go ‘backwards’ – a firm cannot translate data for five funds for a time and then six months later only translate for two funds. It sends a message to the market that either the other funds are under-performing, or those markets are no longer important to the firm.
Here are five common failings that persist among asset managers in their translation strategy.
- It’s all about context
We often see problems with static data in investment reporting, for two main reasons. One might be that the translator is inaccurate, but often it is because there is no context provided when the translator receives the extraction. Either way, the result is an unintended loss of fidelity. Or perhaps the monthly fund commentary is produced automatically by AI and then the text is machine translated – without any human intervention. Consequently, static data can often carry numerous mistakes. There must be a process for checking and validating the context, otherwise the intended meaning may be lost.
- No comment
Many fund managers no longer include asides in their fund commentaries. The reason for this is that they are concerned about causing delays in the production cycle, by which time the comments are less relevant – with the translation requirement potentially causing even further delays. And if the commentary gets delayed to T+20 or beyond, the comments become completely stale. Yet these comments are what brings the fund data to life, and they can be incorporated along with a translation – it just requires careful project management. For fund factsheets, this means getting the comments translated while the data is still current.
- Time pressures
Indeed, in an effort to maintain the service level agreement with the investor, an asset manager will do everything it can to avoid delays, even if it includes curtailing the time spent checking the translations (which occurs at the end of the content creation process). Often the problem is caused further up the production process, either in a delay receiving the numeric data or the fund commentary. The consequence is that the translation is not given due care and attention.
- Quality assurance
The quality of translations themselves can be of concern. Are asset managers sometimes overlooking quality in order to make cost savings, or are they simply finding it difficult to develop a process that will improve the quality on a consistent basis? The person responsible for issuing a fund factsheet is generally under considerable time pressure. They are usually responsible for much more than simply the translation of fund factsheets and their priority is usually the data, not the fund commentary. The individual in charge of the process is also not client-facing.
One issue is that it is the responsibility of the asset manager for what they publish, therefore the service provider is unlikely to face any legal consequences for doing a poor job. And not all translation agencies check their work before sending it on to the client – proof-reading and QA processes are not always adhered to or may not even exist.
- Cultural issues
For European asset managers, investment reporting is often centred in the UK. British firms (and to an even greater extent, US firms) do not understand the importance of translation. The UK and US have traditionally been poor at languages and with large US groups dominating the fund management world, it’s easy to see why this problem persists. And whilst this situation has been improving to an extent, it will be interesting to see how it develops in a post-Brexit Europe.
The problem with poorly executed translations is that most asset managers will be unaware that there is an issue. No one wants to be the bearer of bad news and often the problem only manifests itself when the Sales staff within the firm stop using the company’s own fund factsheets.
The frustration is that there is no need for investment managers being lost in translation. All it requires is an effective interface between a reporting solution and a fast, reliable (human) translation partner.
Quality matters and certainly in the UK there is not enough attention being paid to the standard of translations in investment reporting.
Fastnet Translation is a translation partner to software firm Factbook’s investment reporting services.