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Financial Simplicity

An Accident Free World in MPS Model Portfolio Management and Control

By 17 April 2023November 9th, 2023No Comments

In today’s fast-paced world, technology plays a critical role in enhancing efficiency and productivity. As industries embrace advanced algorithmic learning and artificial intelligence (AI), these systems not only improve process efficiency but also deliver higher quality outputs compared to human-dependent processes.

The wealth and investment management sectors are prime candidates for AI-driven solutions, as they involve information-driven processes focused on aligning, stabilizing, and ensuring compliance in investment portfolios.

Managing model portfolios—packaged portfolios comprising composite investments and allocations—presents unique challenges due to their deployment across various platforms with different control systems, necessitating adaptation, modification, and validation before implementation. This seemingly simple task becomes increasingly complex as the number of model portfolios and shared investment components grow, often resulting in errors due to human limitations.

Errors in model portfolio management, especially when implemented in Managed Portfolio Services (MPS), can have significant consequences given the vast amounts of money involved. This makes the implementation of robust checks and controls crucial at every stage, from managing model portfolios to overseeing platform derivatives and ensuring accurate implementation. This is where AI-driven control systems with adaptive algorithms and feedback loops come into play. These systems provide the intelligence necessary to calculate and validate the outputs for investment management and compliance.

In our articles about compliance driven processes here and here  we discuss the importance of the relationship between compliance and client servicing in the world of portfolio mandates. In MPS model portfolio management, the need for a seamless and error-free process becomes even more critical, given the diverse stakeholders involved. Implementing robust systems reduces mistakes and fosters a compliance-focused environment, paving the way for an “accident-free world.”

Financial Simplicity’s MPS model portfolio management solution combines machine learning algorithms and workflows to create a purpose-built system that minimizes errors in managing model portfolios. Our comprehensive solution features:

  1. The ability to define core model portfolios from which platform derivatives can be created.
  2. The ability to construct core model portfolios from reusable component parts to minimize duplication of work.
  3. The ability to define platform-specific rule sets for adapting core model portfolios.
  4. The ability to continually test core and platform model portfolios for mandate compliance and platform rule sets.
  5. The ability to generate checkpoint workflows for model portfolio platform files, formatted for each platform.

Implementing our solution can save hundreds, if not thousands, of man-hours each month and significantly reduce the time required to implement model portfolios across platforms. Moreover, it offers risk reduction and increased operational confidence for your business.

To learn more about Financial Simplicity’s MPS Model Portfolio Management solution and how it can revolutionize your investment management processes, contact us here.












Stuart Holdsworth

Author Stuart Holdsworth

Stuart has over 30 years of experience in the use of technology for the strategic competitive advantage of businesses in the financial markets and investment industry.

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