We live in unprecedented times, and managing people’s monies is not immune from the evolving changes in the world today. With product commissions banned in much of the western world, one of the key sustainable revenue streams for wealth management businesses is providing a valuable service in terms of managing client investment portfolios.
Ultimately this leads to firms seeking to adopt technologies to assist with the process of monitoring, rebalancing, and determining adjustments to client portfolios, and implementing them with mass efficiency. There are perhaps hundreds of portfolio management systems in the world today, and not to mention one of the best (only if you have a handful of clients) being good old spreadsheets.
So what is differentiating portfolio management systems today, and what is important when comparing and contrasting them ?
In the last decade, standard features such as model portfolios, data feeds from investment platforms have all become the norm, yet there are still some very key differentiating factors that differentiate portfolio management systems in the market.
I would say that one of the most subtle, yet probably the most important, differentiation is to do with what is underneath at the core of the system, being what is the whole philosophy of how the system is built, whether it’s about investment or whether it is about servicing clients or both, and if both then how is this achieved. Portfolio management is moving well beyond being just about the investments and portfolio, and very much now becoming more, if not all, about the client experience. Portfolio management engines are becoming the computational engines of delivering investment experiences to clients.
And like most experiential engines today, the more it is tailored to each and every client, the more that builds trust, empathy, understanding, and depth of relationship with the client. And it has to do this quickly, in fact, anything short of ‘on demand’ means that portfolio managers and wealth managers are delaying the news and latest experience to their clients. The modern-day requirement is about delivering experiences tailored to clients quickly and responsively. Just think how this compares with an outdated approach of delivering yesterday’s news in a ‘one size fits all manner. Customers are savvy and they compare their investing experience with the experience of the best app on their phones. How does your portfolio experience map to Facebook ?
So what’s the most important thing to consider when selecting portfolio management systems ? I would say that it is the discussion with the people who invented and designed the system as to what their vision of the client experience is, how it is delivered, and how the system is designed to do this tailored to each client on demand’ with scale. This then becomes a real assessment of values and vision as to whether a portfolio management system is best for you, and for your clients.
And just think…. if your portfolio management system is less aligned to your clients ideal experience, and your competitors is, you may be somewhat disadvantaged. The weighting of customer experience design in overall wealth management is ever increasing.