October 28, 2025 —Investors clamoring for customized service are having no trouble finding asset managers happy to oblige - if customizing the offering helps them win mandates and assets in a fiercely competitive marketplace.

But as more managers agree to these requests, they are quickly discovering that customization has some major drawbacks. Namely: Providing customized service propositions to clients is expensive and creates a level of operational complexity that can sap organizations of efficiency.

“Requests for customization create valuable opportunities for managers to differentiate themselves from rivals and deepen client relationships by providing service arrangements tailored to investors’ specific needs. However, the growing phenomenon of ‘customization creep’ represents a real risk to asset management bottom lines,” says Christopher Dunn, Head of Investment Management—Europe at Crisil Coalition Greenwich and coauthor of The Customization Conundrum: Satisfying clients without hurting the bottom line.

 
Weighing the Costs and Benefits of Customization
Around the world, half of institutional investors award extra mandates to asset managers who provide customized service. Approximately 40% of institutions—and more than half in continental Europe and Canada—say asset managers who provide bespoke or customized offerings are included in all RFPs. Many institutions are even willing to pay additional fees for bespoke service, including a third of Canadian institutions and closer to 40% of institutions in the United Kingdom.

Despite these potential benefits, managers facing client requests for things ranging from bespoke investment reporting to customized service level agreements (SLAs) face two main challenges. First, the features most prized by institutions are often also the hardest and most expensive to deliver at scale. Second, the number and scope of customization requests from clients in aggregate have the potential to bog down manager operations, adding complexity, increasing costs, and draining efficiency.

“In the end, both managers and clients lose if resources are being misallocated to unnecessary services,” says Marlie Vredenburgh, Senior Relationship Manager and report coauthor. “To avoid that situation, managers need to take a wider perspective, get closer to clients to better understand specific needs, and—most importantly—dare to tell clients, ‘No.’”

The Customization Conundrum: Satisfying clients without hurting the bottom line analyzes the customization trend, including specific investor demands and potential rewards for managers. The report then presents a framework designed to help managers make practical decisions about the costs and benefits of potential customization projects and start building an operational foundation capable of delivering cost-effective customization to clients.

Included in that framework are steps like establishing tiering standards to determine which clients get specific customization features, creating customization menus that define available features for clients at onboarding, and investing in technology such as client portals, APIs and AI that can enable managers to customize at scale.