How is data being used in the wealth management sector today and what benefits are you seeing? Also, what improvements do you expect to see in the future in wealth management if data is more efficiently and effectively utilized?
Data is the fuel of wealth management and adds great value, making the business more competitive. At TechRules, we manage half a million instruments in our database from the different entities, funds and financial providers we collaborate with. The expertize of our team since the year 2000 has been recognized in the industry, because it is demanded by the largest entities across the world. But we reached a peak when one of the largest robo advisors in Europe became one of our main clients. It contacted us because they saw the potential of our data calculation capabilities and our most recent innovations to take their customers to the next level.
Then, let’s think about the data challenge in wealth management: calculations, building analytical information for portfolios and assets, dashboards, KPIs, regulation and compliance rules. Cleaning data before using it is our job. With the Data Quality Assurance service that we provide, we make sure that our final users only receive the right data filtered from any mistake. When advisors and investors make decisions, they need to have accurate data. As a company, you may have powerful analytical tools, but if data is not accurate, then it is useless. At the end it is all about accurate and high-quality data. You are taking the risk to invest based on the data and numbers you have to hand. Good data leads to good decision making, and being able to check your investments in your mobile app anywhere, anytime.
On the one hand, you need financial data. But, on the other hand, you need the data from customers. For instance, about the customized products that they demand, their perception about investments, their actual portfolio or how much risk they accept to feel comfortable with investments. This helps us to anticipate their needs. With these data, we can rebuild and redesign solutions so they fit perfectly with any kind of user. And we can create the perfect strategy for them, thanks to the use of Artificial Intelligence, among other solutions.
One of the biggest challenges we are facing in data management in the WealthTech industry is the integration of information coming from several sources. At TechRules we integrate massive amounts of data from different providers: custodians, order management systems, onboarding systems or data coming from the entity’s CRM, just to name a few.
As you see, we have already mentioned the relevance of data: sources, accuracy and aggregation. We have the right basis, but data is useless without processing. Our tools give us the data that we have to store and analyze, so we can get ahead of the changes in the market. Only with this information are we able to make a great investment proposal or track all customer investment in a portfolio. We have always worked under transparency and simplicity in terms of data management. So, now we are able to integrate any provider worldwide. We transform illegible information into the fuel of any financial product developed by any company, and this is key for maintaining your software ahead of competitors. All this research and constant work has a great reward. We have built platforms like Robo Advisor in different regions, or T-Advisor, a set of professional tools for smart, independent and self-directed investors. With T-Advisor, we can analyze market sentiment about stocks and funds and also apply Artificial Intelligence for analyzing portfolios. All these tools generate a lot of data to be processed, so that they are useful for the financial entity, the advisor and end customer.
Another challenge is the dimension that drives the world: time. With the digital technology available today we can have any data from any part of the world just in seconds. This has to do with the initial comments about data management and data processing: having data does not mean access to high-quality and accurate data. We make daily calculations on data before sending them to clients. Our calculations provide entities with an easy way to analyze results, because it simplifies data for investment purposes. With all these daily and weekly calculations, it is possible to predict global trends in the market and reach our main goal: an increasing profitability.
To be on top of the wave means also to be ahead of the market. This drives us to adapt our solutions and tools to any regulation, local or international. And we obviously have to talk about ESG. This new regulation talks about the environmental, governmental and social factors that investment firms have to take into consideration in terms of their activities. We started adapting our solutions to these new rules a long time ago, because being ahead of what is coming is definitely something that is going to bring you greater attention.
In the future, I see more efficient tools and Apps that manage structured and unstructured data. The customer is at the center of everything. That is why we need to develop solutions that turn data into stories, so our clients better understand what they are doing. I believe that we are going to really democratize investments with more AI and even more efficient hybrid advice. We are going to be able to make solutions that fit the needs of any customer, so they can have their own investments under total control, even if they are just beginners. Step by step, those kinds of tools are going to be even more rooted across a modern society.
What solution(s) does your business offer to the wealth management sector that focus on data? How do they work and how do they help wealth managers?
As data is key in the wealth management industry, all of our solutions use it. We develop modular, scalable and flexible solutions that cover the complete life cycle for financial advice. Our main solution, Tower, efficiently manages a large number of complex customer portfolios with a large volume of historical data. It positions us to be ahead of their needs and meet the most demanding regulatory requirements. Tower empowers advisors so they can get a full picture of their clients’ data and situations. In that way, it makes it easier to find the perfect strategy for them. With Tower, we use their data and the information from our providers; we analyze and clean it, and then manage their portfolios so they drive better performance.
This approach reinforces the relationship between professionals in the financial industry and clients, increasing transparency and loyalty. This type of solution opens a permanent channel of communication with clients to make them feel comfortable and secure with the advisor and the tool they are using. Just to see the power of this solution, Tower can make calculations for: portfolio rebalancing, discretionary and advisory management, investment proposals (with automated triggering), portfolio analysis, profiling, risk calculation, model portfolios, task manager, reporting, financial planning, lead generation (campaigns) and customer and proposal monitoring.
We have a huge asset database to help advisors create their own model portfolios, under their own experience and criteria. And of course, we take good care of the data we deliver using Data Quality Assurance (DQA). This means that we monitor all our calculations and results, allowing an early detection of any possible data errors in the portfolios. We have automated many of the checkings that were previously carried out manually, achieving a great agility in the service provided. We include different modules like administration or statistics that help understand the data in a better way.
The creation of model portfolios is the main strategy with our customers’ investments. We develop a powerful consultancy service that empowers financial entities to differentiate in the market providing a methodology, efficiency and transparency to investment funds. This financial solution provides tools to manage different data sources and obtain accurate reports complying with the relevant legal requirements.
In terms of managing different sources of information, we have been working on the integration of our software with third-party software for more than 20 years. This is essential for the perfect combination of data and for developing calculations that deliver error-free information to customers. Another solution for managing data is Fund Solutions, a powerful tool that can streamline the creation of fund factsheets through an automated process designed to manage all figures: feeds of data, transformations, business rules, validation, fixing, generation, packaging and distribution of the reports.
All of the data we handle complies with GDPR standards, MiFID II and ESG regulations, so entities and advisors can work with the certainty that they are complying with all the current regulations of each region and country. With all the solutions we develop, advisors can manage customers’ data in a much better way, so they can be faster and more accurate when making customizable strategies for them. They can manage risk with our calculations and achieve maximum return on their investments. They can have tools that help them better and faster understand the market data and be smarter for a more profitable investment.
This article is part of The Wealth Mosaic's recent WealthTech Views Data Management Report. Access that full report here.