Data is a front-office and client experience issue, as well as a back-office concern, and cloud-based technologies are radically changing the ways wealth managers can implement change, according to one expert.
Boris Bykhovsky, Senior Director, Solutions Management and Consulting at SS&C Advent, explains why wealth managers should be looking to front-office solutions which manage and transform data in the cloud – whatever their business model, target market and strategic plans.This piece forms part of this publication's new report "Technology Traps Wealth Managers Must Avoid 2022," published in partnership with EY, which is available for complimentary download now.
If I had to name the most neglected piece of wealth management technology, it would be data quality. Data integrity is often associated with the back-office, but it is also a front-office and client experience issue. After all, relationship and portfolio managers can only make good decisions for clients – and have meaningful conversations about those decisions – if they have accurate and timely data.
Just as in every other walk of life, the sheer amount of data wealth managers have to handle grows exponentially. Data quality issues include the institution's core asset management platform and the information received from external data providers.
Consider all the market data across the vast range of investments clients want to hold today. Add the various currencies and custodian interfaces, and the magnitude of the potential data quality challenges become apparent. Moreover, with the proliferation of additional factors like ESG with highly variable datasets, firms find it necessary to work with several vendors or produce proprietary research. Again, more data to manage.
Data management and quality isn't perhaps the most thrilling issue at a surface level. Yet, data management technology is sold – and bought – based on new features. However, the trouble with that approach is that it's like buying a new car based on its looks alone. Sure, the colour might be perfect, but if it hasn't got an equally great engine, then you're going nowhere.
If wealth managers wish to turbo-charge their efficiency, profitability, and growth, data management should be a priority. SS&C has always invested in data management, but never more than now as technological advances have fundamentally changed the data game.
With our new portfolio management solution, Genesis, we've moved the bulk of data management and transformation into the cloud.
Historically, systems had unique integration points into accounting systems, data warehouses and other front- and middle-office solutions. The future of integration, which we are bringing the industry today, is to leverage flexible and scalable data lake and warehouse technology in the cloud with ETL (Extract, Transform, Load) or build transformation logic right onto the cloud infrastructure.
Leveraging the best of what the landscape offers today creates the ability to handle transformations with ease, whether structured, semi-structured or unstructured data is in play. Suddenly, today's wealth managers needing sophisticated front-office analytics is more easily attainable.
Hours, not months
I've been in the investment management tech business for many years, and it is no exaggeration to say this new technology is proving transformative. Implementing a new portfolio management system invariably involved months of getting data into the right shape. Today, an environment can be stood up in less than a day. Now we spend 99 per cent of our time impacting the institution's bottom line with training and, just as significantly, the development of personalized workflows, which make life easier for asset management professionals.
We are helped immeasurably by our move to the cloud, and we can now roll out new features weekly. Our recently released fixed income tools are a case in point. First, we made it so that users can group their portfolios dynamically by credit quality, issuer and other relevant attributes to see their exposures at any of those levels. Then, we turned to multi-asset portfolios to create an ability for managers to shut out the "noise" of the non-fixed income portion for specific analyses of those exposures. The ability to switch effortlessly from high-level analytics to deep dives into one asset class is what real insight looks like.
Having invested in our platform to deliver new updates weekly has had a hugely positive effect on adoption. In addition, we get personnel excited because the new enhancements will work for them precisely as they would like it to work.
The need for speed
The same goes for institutions as a whole. With business logic and processing in the cloud, calculations can often be carried out by several orders of magnitude faster. How firms want to harness this is entirely their call. Some firms might focus on trying to improve returns through faster trading. In contrast, others might leverage this speed to run scenarios live in client meetings and deliver a richer experience. Dramatically improving operational efficiency, such as by rebalancing many more portfolios at one time, is a game-changer.
From a macro perspective, we see more and more firms look to scale through mergers and acquisitions. However, going cloud-based also facilitates change in the broadest sense of integrating after M&A or launching new business lines. Firms want to stand back up as a newly merged, enlarged organisation, time and again after multiple acquisitions. This operational challenge is tailor-made for cloud-based infrastructure. The cloud approach also works for firms that diversify and extend their services into tax or financial planning systems or other services more organically. Whether growth is organic or through acquisition, the ability to plug into whatever you need, whenever you need it, is at the heart of the data transformation story.
Cloud-based data management and transformation is the front-office differentiator of the future. The result supports a better client and advisor experience – no matter their business model, target market and strategic plans. For us, the future is now.
About SS&C Advent
SS&C Advent is a proven and trusted provider of technology solutions and services to investment managers around the world.
We help over 4,000 investment firms in more than 50 countries – from established global institutions to small start-up practices – to grow their businesses, minimise risk, and thrive. We have been delivering unparalleled precision and ahead-of-the-curve solutions for more than 30 years, working together with our clients to shape the future of investment management.
To find out more and discover our full suite of solutions, visit www.advent.com