Eric Rocks, Vice President and Managing Director of SS&C Technologies
Running a business is a very dynamic operation that requires taking the time to consider not only how things change, but why things change. By mastering this outlook, financial executives will have a greater ability to manage control over their successes. This is important, particularly when it comes to navigating volatility. While a business might be experiencing an extended period of growth, this can easily be thwarted by increased competition in the marketplace, new technologies or geo-political factors.
Having the right technology in place is the lynchpin to running a business that can withstand change. Here are five technology concepts that support resilient business in a dynamic world.
Build a strong foundation
All of our businesses are in constant motion and existing systems can often be a barrier. Many of the operations designed for the financial services industry never contemplated the needs of today’s clients or the next generation of investors. If your back office systems do not support these core capabilities, it may be time for a technology upgrade:
- Offer functionality as services
- Accessed via cleanly engineered APIs
- That respond on demand, in real-time 24×7
- At scale
- On commoditised virtual infrastructure
These capabilities build dynamic ecosystems and allow companies to build that important bridge between financial advisors and clients. A dynamic ecosystem is stateless and an enabler for web and mobility which is where today’s clients are headed.
Be prepared for the next wave of client demands
The way investors view the marketplace has drastically changed over the past decade, and the rate of change is accelerating. Millennials are comfortable investing on their smartphones and the prior generation is looking for increased transparency to their investment returns. We are now accustomed to having access to key information at our fingertips. For wealth management firms this means an increasing requirement to provide sophisticated portfolio analytics and tools that until recently were only available to financial professionals.
These tools need to be accessible from multiple devices and be available 24 hours a day, providing immediate access to up-to-date information and capable of delivering “on the fly” analytics. Push technology is another trend we see permeating the financial marketplace. Rather than clients logging onto a site or calling their advisor for information, detailed analytics can be subscribed to with event-driven, client centric preferences being managed for all your clients. This allows your systems to automatically tell your clients about important events based on what they are interested in. This could include things like periodic payments, interest accrued, checks arriving, fees being debited – the possibilities are endless.
Better, faster, cheaper, smarter
With factors like fee pressure and compressed timelines it can feel like maximizing your business returns while providing superior services to your clients may seem to be at odds, but they really are not. Taking a close look at how you manage money and the overhead you are supporting is key to working smarter. A firm has to disrupt the status quo in order to advance. Reimagine your business as if it was five years from today.
Many firms run their operations on disparate platforms. One platform for trading, another one for accounting, perhaps another for web portal, and maybe another for statements, and the list goes on. Many times these platforms are loosely coupled via ETL (extract-transform-load) layers that amount to little more than file reformatters without a tightly coupled workflow to manage data in flight. Prospecting, onboarding, investor policy statement (IPS) management, modelling, managing, and reporting should be thought of a single stream without the need for tedious data transformation between platforms. The ability to homogenize your business and at the same time offer advanced products is the key to asset, account, client, and product growth without a correlated increase in expenses.
Offering both advanced investment strategies and products to your clients, while managing their accounts and relationships efficiently, is key. The right technology can solidify the advisor-client relationship through household reporting, and electronic communication of suggested trades. Households including held-away assets can provide extra value to clients and can be delivered easily with a good data gathering service and the right software. If an advisor has the right relationship with their client, providing suggested trades through chat or a web interface and having a client approve the decision to trade helps build that connection with the advisor.
Regulate, measure, manage
The investment world is becoming more and more regulated. Having the right financial technology is imperative to the successful execution of regulatory reporting while curtailing expenses. An open architecture built from the ground up provides transparency without the heavy investment of manually pulling, merging and massaging data from legacy platforms.
Open platform technologies natively bifurcate information and store it at a very granular level. For example, when a fee is charged to a client, this architecture will keep track of all the fee details not only at an account level, but at a household and impact level as well. This allows wealth managers to ‘slice and dice’ information to fit a myriad of reporting requirements.
An adjunct to this capability is management information. In a world where everything from onboarding a client through the entire operational lifecycle is tightly coupled, trend analysis is easy. Being able to ascertain flows, top and bottom return assets, best strategies, best performing advisors, and client billing management gives you the ability measure and manage your business with quantitative values.
Manage the overall client, not just the account
When you look at a client today, do you see everything about that client in one place? Can you see all their accounts regardless of registration and advise them holistically? The trend towards tax-advantageous investing requires that you can act on an entire household. The concept of Dynamic IPS can help manage the household to empower the advisor to make better decisions for their clients. This can be done by extending the UMA concept into layers, like UMAs of UMAs that provide a true picture of the entire client to the advisor.
Coupling this with sophisticated automation around compliance and rebalancing that optimizes trading and removes trade errors before they happen can give be advantageous with demanding clients. It also gives an advisor the capability to efficiently manage multiple high net worth households with minimal manual effort and the right checks and balances to avoid errors, leaving more money to reinvest in your business.