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From ‘Selling’ to Manufacturing: How Investment Advice Firms Can Transition to Creating Their Own Investment Portfolio Service

By 3 November 2023November 8th, 2023No Comments

In the dynamic world of investment and technology, swift evolutions are a constant. Amidst technological innovations, shifting client needs, and a tightening market, investment advice firms are hunting for unique differentiators. One trend steadily gaining momentum is the move from selling external managed investment products to crafting bespoke investment portfolio services.

However, this isn’t a mere product switch—it’s a strategic metamorphosis demanding a new mindset, adjusted resource commitments, and overhauled operational approaches. Let’s unpack this transformative journey and the steps firms need to finesse the move.

1. Visionary Foundations

Embarking on this journey necessitates a well-defined vision, one that’s an amalgamation of business goals, firm values, and enhanced value to clients. Tips to shape this vision:

  • Embody Your Firm’s Ethos: Your in-house solutions should resonate with your firm’s core principles, lending authenticity, fortifying client trust, and strengthening brand consistency.
  • Define Your Investment Identity: Pinpoint the essence of your investment strategies. Understand their alignment with your innate strengths, expertise, and the ethos you advocate.
  • Refine Client Service Propositions: Ensure your offerings integrate smoothly with your existing client servicing framework. This includes pricing, communication strategies, and reporting methodologies.
  • Craft a Comprehensive Business Case: Clearly outline the merits of transitioning from distributor to creator, articulating revenue streams, risk assessments, required resources, and associated costs.
  • Encourage Feedback Channels: Establish robust mechanisms for feedback, both from within your team and from clients. This feedback proves instrumental in fine-tuning offerings to align with client needs.

2. Essential Operational Building Blocks

  • R&D Commitment: Initiate a market analysis to gauge prevailing trends, client preferences, and competitive landscapes, forming your product’s backbone.
  • Technology & Platform Integration: Moving to a portfolio production model demands versatile tech solutions and asset administration systems. Your selections should mirror your vision, value propositions, success indicators, and organizational culture, ensuring uniqueness in your offerings. These must cater to portfolio creation, trading, risk analytics, and detailed client reporting. When choosing and integrating these components, remember:
    • Asset holding mechanisms
    • Client asset administration and reporting
    • Investment strategy formation (possibly via an investment committee)
    • Tailoring strategies to client profiles
    • Client portfolio monitoring and decision-making systems
    • Client-specific trading methodologies
  • Regulatory & Risk Adherence: Manufacturing brings added accountability. This includes rigorous compliance with regulatory norms and uncompromised risk management.
  • Revamped Marketing Strategies: In-house solutions demand distinctive marketing and distribution tactics, contrasting with those for third-party products.

3. Rethinking Management & Resourcing

  • Mental Shift: Transitioning requires a paradigm shift from sales-centric mindsets to a focus on long-term product quality and client contentment.
  • Resource Re-alignment: Crafting solutions in-house entails niche skills, especially in investment operations. Consider onboarding experts like portfolio managers or analysts, or upskilling existing staff.
  • Redefining Success Metrics: Success is no longer sales volume. It’s now about product efficacy, sustained client relationships, and asset management growth.

In Conclusion

Switching from the use of 3rd party investment products to a manufacturing mindset is audacious, promising step. Investment advice firms can develop a distinct market stance. Yet, it’s a meticulous journey, demanding thoughtful planning, strategic recalibration, and unwavering dedication to improvement. By centering on operational essentials, re-envisioning management perspectives, and grounding in a clear vision, firms can master this shift, priming them for enduring success.

Ultimately, the goal remains unaltered: delivering unparalleled value and service to clients. With the correct blueprint, firms are well-equipped to achieve this through their personalized investment portfolio solutions.

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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