Technology & Finance
Wealth Management
Wednesday, December 09, 2009
Time to Invest in Integrated Wealth Management Systems, Says a Vendor
Bruce Raine, Founder and President of IPBS, says this is a good time to invest in comprehensive systems for wealth management rather than relying on Excel and Sneaker Net, or perhaps in UK parlance that would be Trainer Net.
“As revenues shrink in the Wealth Management space, staff costs are harder and harder to justify, especially in the back office. Continuing to invest in efficient integrated IT systems makes sense even during an economic downturn,” he says. And just coincidentally, he has just such a system.
Here’s his take on the industry and technology issues it faces:
The current climate has forced many companies to look for areas where costs can be cut and budgets pruned back to a minimum. As a result, many essential IT projects have fallen down the list of priorities. However looking back at how companies have recovered from previous recessionary times, shows that this approach can be too focused on the short-term.
If cash flow is an issue then it makes sense to cut all but the most critical areas of expenditure but this isn’t the case for the majority of companies in the wealth management space. Analysts are cautiously optimistic that the worst of the financial crisis is over, therefore the next 12 months may represent a real window of opportunity to review existing systems and processes to ensure you are well positioned to benefit from the inevitable upswing in the global economy.
There are several other key reasons why wealth managers should continue to invest in modern systems to support their operations:
Breaking the reliance on manual methods
Too many companies are still using manual record keeping and accounting systems, or relying on legacy technology that is no longer efficient and often expensive to maintain. Servicing customers has become reliant on greater levels of manual processing which can lead to excess staff levels compared to the size of the customer base.
The use of Excel and paper based record keeping for basic reporting such as preparing financial statements, fee management and administration means that key information resides in multiple information silos, often only existing in hard copy. This manual record keeping and accounting is expensive and all but impossible to provide demanding customers with up to the minute reports. The introduction of effective automation can slash the manual effort required to maintain records and reduce the time needed to access key customer data.
Rising expectations driven by internet communications
In the past, customer service was based on personal interaction, e.g. speaking to an account administrator or a portfolio adviser sending printed reports in the post once a month. Whilst customers still prefer to speak to a member of staff for the most important transactions, customer behaviour has changed, driven by the growth of the internet and its ability to enhance the flow of information.
Rising expectations means that customers are now demanding 24x7 access to their accounts and balances. We live in an era where self-service is becoming a pre-requisite and this can be an important service differentiator. There are examples of wealth managers, whose systems cannot support this type of access, actively losing business to providers with a more up to date technology infrastructure.
Legacy systems struggle with the threat of money laundering
An additional reason behind the drive for new automated systems is the requirement to meet the latest Anti-money Laundering (AML) and Know Your Customer (KYC) legislation. There remain a high number of legacy systems in use today in the wealth management industry that were designed from an accounting perspective when the internet was in its infancy and AML was not a primary concern.
The cost of supporting legacy applications is high as they tend to be complex systems, built originally for mainframes. Whilst they frequently provide key business functions they are not geared to exploit the advantages of a client/server and PC environment. Also the design of most legacy systems means that it is not easy to take a customer centric view. Therefore there is a clear benefit to investing in IT to eliminate legacy support costs, raise service levels and ensure regulatory compliance.
More efficient systems are needed to meet customer demands
Modern wealth management systems offer an integrated approach with multiple modules that can carry out all of the tasks that you need, within a single system. It allows you to process transactions with higher rates of straight-through processing (STP) which is a vast improvement on situations where manual effort is required to take data from one system and rekey it into another so the next activity can take place.
Companies that do not have integrated systems are spending far too much time on this kind of effort and it is not uncommon for one system to be used for tracking fees, another to create invoices and a third to reconcile them. This gives rise to greater levels of risk resulting from the possibility of data entry errors.
By carefully implementing more efficient systems, wealth managers will benefit from lower transaction processing costs, increased accuracy and reduced operational risk. By eliminating unnecessary manual processing significant cost savings can also be generated. Resources can be redeployed to other client relationship activity and there is the possibility to reduce headcount through natural attrition without affecting service levels.
To compete effectively in the future, wealth managers need to put in place more appropriate systems to meet customer demands. The very nature of the customer loyalty has changed as customers are more willing than ever to move their business elsewhere if they feel they can get better service at a lower cost.
Reaping the benefits of investing in efficient IT
Investing in up to date modern technology that can deliver exactly what the customer needs is an essential step in developing a lean IT infrastructure that can reduce costs, increase efficiency, mitigate risk and ensure wealth managers simply remain competitive.
Those that continue to review their business processes and update their systems will reap the benefits. Costs will be contained and any future business expansion can be accommodated using existing systems without the need to increase staffing overheads.
Whilst organisations are under pressure to reduce costs, it is important that this is done without impacting on the performance of the core business. This recession offers an opportunity for wealth managers to seek our new solutions and assess areas of weakness. By continuing to research appropriate technology, businesses can put themselves in the best possible position to thrive as the economic recovery builds momentum.
Monday, July 14, 2008
Software Integration Lets Investment Advisors Spend Far More Time with Clients
In a new report Aite Group’s Alois Pirker says that registered investment advisors with fully integrated systems can spend 52 percent of their time with clients compared to 13 percent for advisors whose systems don’t talk to each other.
“The business model of RIA firms is in line with the needs and demands of today’s wealth management customers, and has resulted in substantial growth opportunities for the firms,” says Alois Pirker, senior analyst with Aite Group and author of this report. “However, only firms that have scalable technology and efficient business processes will be able to grow significantly while maintaining high-quality service.”
Sunday, July 13, 2008
WealthServ Updates Offering with Morningstar Data
Winsoft Software, developers of the WealthServ family of financial software products, has announced the release of WealthServ Investments v4.0, now with Morningstar Product Data and Daily Pricing feeds from Morningstar.
The integration of Morningstar’s tools into WealthServ Investments expands the range of tasks that can be completed within the single WealthServ interface. Automatic data feeds from Morningstar eliminate the need for broker dealers to manually maintain the product database including breakpoint data, suitability risks, and daily price valuations—ensuring more timely and consistent data.
Thursday, April 17, 2008
Aussie Stockbroker Crash Impacts Fintech Firm Bravura
Iain Dunstan and Simon Woodfull, co-founders of Bravura after a leveraged management buy-out of the business from CSC in 2004, face a loss of control after Australianstockbroker Lift Capital collapsed.
But Dunstan and Woodfull’s shareholdings were backed by margin loans held through the collapsed stockbroker Lift Capital. In fact, the company revealed last week to the market that close to a third of its issued capital is caught up in the collapse,” reports Smart Company.
Trading has been suspended until next Tuesday 22 April or until an announcement by the company, reports Smart Company.
Merrill is owed about $650 million by Lift. The investment bank has taken possession of a client share portfolio estimated to be worth about $800 million, according to an Australian business magazine.
Bravura Solutions revealed this week that predators were circling as Merrill prepared to dump 30 per cent of Bravura’s stock onto the market in order to recover loans to Lift.
“Caught up in the troubles of margin lender Lift Capital, homegrown financial software group Bravura has become an even juicier takeover target for IT companies, private equity and even fund managers, with Archer Capital, GBST, DSTi and Perpetual named among the likely buyers,” reports the Financial Standard.
Friday, April 11, 2008
Charities Aid Foundation Selects Financial Objects
Charities Aid Foundation (CAF) will implement activebank Wealth Manager to support its investment activities for charitable trusts.
CAF has signed an agreement to extend its relationship with Financial Objects, positioning the company as its primary technology supplier across all areas of its business. This is the third phase of an ongoing project with Financial Objects, which will see the implementation of activebank Retail as the core solution to support all of CAF’s back office operations including the Give As You Earn and Matched Giving schemes as well as its Charity Accounts and Trusts.
“The beauty of activebank Wealth Manager is that not only will it help us to achieve our growth plans, but it will provide us with a single customer view,” said Sheila Hooper, marketing and private client director at CAF. “Having all of the data in one place will be invaluable, enabling us to provide a much improved service to our customers.”