Today, core-satellite investment strategies offer banks the opportunity to precisely meet the needs of their customers by addressing their specific interests and preferences. With the help of Finfox, it is possible to present high-conviction investment topics in an attractive, convincing format and to set new standards in terms of customer orientation and customer experience in investment advice.

Core-satellite investment strategy
A core-satellite investment strategy focuses on diversification in the core portfolio to minimise investment risk and achieve long-term risk-adjusted returns in line with the market. The satellite investments, on the other hand, can be used in selected high-conviction areas to set content or tactical accents that reflect the customer's interests, value-oriented goals or other preferences.

Good examples of the core-satellite approach are ESG, where the satellite modules can be aligned with the United Nations' Sustainable Development Goals (SDGs), or the conscious foregoing of a market-driven return in a satellite in favour of impact investing topics.
With the satellites, a bank can effectively use its expertise in key areas to differentiate itself and convey added value to its customers, and, ideally, create alpha for the investor.

Address customers optimally with satellite positions
The Core-Satellite approach offers banks the opportunity to offer a nuanced range of investment themes (so-called modules) and to communicate with customers more clearly and transparently. Detailed module fact sheets provide customers with all the information they need and allow them to delve deeper into specific investment topics. In this way, banks can bring complex topics closer to their customers and let them benefit from the research team's findings. In addition, clearly designed customer reports offer detailed portfolio analyses and attractive visualisations of portfolio performance. This structured and varied presentation of information not only allows customers to engage with satellite-related content in a flexible and attractive way but also increases their digital engagement.

Core-satellite approach in consultation
With FinfoxTouch, the tablet-based tool for interactive investment advice, advisors and their clients can quickly and easily put together the core and satellite modules during consultations according to the clients' preferences and create tailor-made core-satellite portfolios.

The customer-centric FinfoxTouch tool offers the following advantages:

• Intuitive: The preferred core and satellite modules can be selected with just a few clicks before or during the consultation.
• Easy to use: The tool provides a central hub for all information about the bank's core and satellite portfolios.
• Transparent: The tool offers full transparency about the performance and costs of the satellites.
• Regulatory compliant: The tool is part of the general Finfox advisory process, which ensures compliance with regulatory requirements at all times.

Finfox's Core Satellite module is used in various banking services. For example:

• Discretionary mandates
• Consulting mandates based on a combination of core and satellite modules
• Consulting mandates based on individual positions, supplemented by topic-related satellite modules

Position focus topics and improve customer experience
Banks can use the satellite modules to focus even more on topics and offers that differentiate them in the market (ESG, crypto assets, etc.). There is a separate and clearly defined investment pot for each selected module. Customer inquiries about the allocation of their various modules or the impact of a specific module on the performance of the overall portfolio can be answered precisely thanks to dedicated reporting for each investment pot.

This not only leads to more transparency but also to a stronger identification of customers with their investments. Higher customer loyalty usually also means higher customer satisfaction. By placing the customer experience at the forefront, the core-satellite approach offers banks the opportunity to tap into new potential in the area of ​​investment advice.

This article was published in FinTech Global's The WealthTech100 2024 Report. Read the full Finfox feature (PDF) here.