Better informed portfolio management decisions will harness the power of advanced analytics, alternative data and a new generation of investment tools, according to Shiv Nathwani, Senior Consultant, Client Solutions at Trendrating. A combination of robust and sophisticated trend capture analytics, the Cloud and machine learning will provide better financial market research, unearth actionable insights and help develop innovative new investment offerings.
Challenges: What do you see as the main technology and technology-related challenges for the wealth management sector through 2020?
Heightened pressure on profitability is forcing asset and wealth managers to look harder for opportunities to reduce operating costs without impacting the quality of investment capabilities. At the same time, clients are seeking a broader service, beyond where to invest their wealth, whilst demanding a more sophisticated digital experience. As such, having the ability to extract intelligence from data, technology and digital tools will play a pivotal role in adapting to these changing conditions and expectations.
Recent survey findings amongst wealth managers in Europe indicated that the goal of any technology investment is to give advisors more time to engage with clients and to understand their needs more comprehensively. With this in mind, the priority for automation will continue to focus on getting meaningful information to clients faster and freeing up more time to interact directly with clients. While organisations have spent many years focussing on technology advancements in the middle office and other support functions, we believe one of the key challenges through 2020 will be to facilitate a deep technological integration into the investment front office.
Using advanced analytics will enable wealth managers to unearth actionable insights through large data sets, better understand market behaviour and develop new innovative offerings. Many wealth managers will have reaped the rewards of a strong rally in 2019 and a key decision in 2020 would be not to forego the gains. Ultimately, the key to a successful technological integration in the front office will be to keep client outcomes at the heart of the process - both from a performance and risk control standpoint.
Opportunities: What do you see as the main technology and technology-related opportunities for the wealth management sector through 2020?
By adopting advanced data and behavioural analytics to enhance the investment decision making process, not only can advisors increase the probability of delivering on client outcomes, they can spend more time with clients, enabling a personalised and proactive engagement relating to the events and themes relevant to their portfolios. We believe that wealth managers will continue to consider these personalised outreach programs as being a top factor leading to client retention.
Furthermore, transforming through technology can provide enhanced revenue capabilities, total control of client assets while reducing costs and risks to the business. We play a significant role in helping wealth management clients transform themselves to reach profitability, efficiency and client retention goals. Our model expands the front office toolkit by harnessing power of advanced analytics, alternative data and a new generation of investment tools. The approach combines robust and sophisticated trend capture analytics within a cloud-based system, offering functionalities designed for seamless integration into any portfolio management workflow.
Market focus: When considering your wealth management clients and prospects, where are they currently focusing their technology investments and resources: clients, advisers/staff or their business infrastructure?
Our clients and prospects recognise that portfolio management is becoming more complex and challenging. They have witnessed a weaker correlation between fundamentals and metrics and actual price performance in a decade characterised by large scale asset purchase programs and market participants betting on a revival of economic growth. As such, they have been gaining an edge over their competition by adding objective discipline and innovation to their front-office capabilities.
With a large proportion of managers having underperformed their benchmarks over the long term it continues to be essential for them to establish value and regain the trust of end investors. Trendrating clients benefit from the increased investment power our solutions can deliver to end investors in a discretionary or advisory environment through better performance and improved risk control
A clear shift from previous years has been a greater interest in portfolio reporting capabilities in response to the changing compliance and regulatory landscape. In order to support or clients through this journey we have deployed significant developer time into releasing state of the art services and applications to generate on demand and customised reporting.
Excite: When you look at the technology capabilities and resources now available to the wealth management sector, as a solution provider, what excites you most in 2020?
We are excited about the wider adoption of machine learning services that can be used in both systematic asset management, market research and compliance monitoring. An approach that integrates these advancements seems to be more in tune with the increased complexity of trends in individual stocks that are impacted by a variety of factors such as big money flow, sentiment, social media, which can overwhelm fundamentals.
Certain parts of the industry such as hedge funds have been early adopters of such technology however many institutions still lag behind. We are confident that wealth managers who are equipped with the right digital tools will have a much greater probability of moving towards their target operating model. We plan to develop more cutting-edge products that use the latest technologies that are strategically complementary to our core solution and most importantly relevant to an evolving wealth management sector.
Your support: Finally, as a solution provider to the wealth management sector, what will you be doing in 2020 to help your clients and prospects meet their main technology and technology-related business needs?
Central to our strategy is continuous innovation and embracing change. As our client base expands in size and investor profile, we are committed to continuously adding new tools and features that fit seamlessly into both discretionary and advisory investment workflows. Our cloud-based platform is comprised of easy-to-use interconnected modules and ongoing software releases are geared towards offering new functionalities that make it possible for users to extract even more value from our technology. Examples include the enrichment of our portfolio analysis functionalities to efficiently monitor and document specific risks in any portfolio and to sport key trend reversals in time.
In 2020, we will also launch our Systematic Management Engine designed to improve discipline and control, offer full transparency and consistency of the rules governing investment decisions with lower associated costs. Systematic management can easily fit into most investment strategies (value, growth or contrarian) as the starting point is the universe of stocks that satisfy the defined qualitative or quantitative criteria. These systems are then used to decide the selection and timing of investments. The foundation of our engine will be our unique and well validated ‘trend capture’ model based on pattern recognition. This is part of our software solution and is part of a sophisticated solution for asset and wealth managers that enables the design, back test and optimization of investment strategies and the implementation, tracking and maintenance of systematic portfolios.
