5 Keys To Successful Investment Portfolio Management

1. Make your bets on companies whose business model you understand

It’s always essential to completely understand what you’ve invested in rather than invest in every shiny opportunity that presents itself. There may be a lot of noise and cry in the market about the next big thing, one day it may be Bitcoin, while the next it may be Ripple or even weed stocks. However, it is essential that you keep your wits about you while investing. Look at strong metrics such as per capita product consumption, past returns, future projections, input costs and margins before making any kind of investment. You must be confident enough to forecast different projections for the firm based on your understanding and confidence level in the market. When you ignore this basic tenet and invest in companies or channels that you don’t understand, you stand a high possibility of watching your investment go bust. Avoid being seduced by the new opportunity in the block, the ‘boring’ groundwork and research is where the real gold (scope for building wealth in the long term) lies. The top billionaires in the investment space, such as Warren Buffet, advocate this philosophy. It’s all about being sure about what you know and betting on that.

2. Always hedge your bets

There’s always an endowment bias when it comes to investment decisions. Investors often make the habit of making predictions about stock performance without considering all the kinds of risk factors. Hence, we are often overly optimistic about our prospects which may backfire in our face. It’s important to be conservative about the prospects of an investment. It helps if you have data and analytics helping you hedge your bets rather than relying on pure instinct. All speculation must have a strong backing in data and an appropriate distribution of asset allocation must be maintained between high exposure investments like stocks and low-risk debt funds.

3. Minimize Costs, Expenses, and Fees

Professionally managed firms and family offices may charge high fees for management and advisory fees. This can either be in the form of a percentage of assets or in the form of a flat fee/retainer. It’s even more dangerous if they earn income through commissions as their financial interests may be at odds with yours. This fee can heavily eat into your long term corpus generation in various ways due to the interest lost on the amount that would have otherwise compounded. Hence it’s better to go for a Robo Advisor or a wealth management firm that subsidises is management fee by providing Robo Advisory services rather than using a Human advisor for all client interaction. The cost-saving by the Wealth Management firm is transferred to the benefit of the investor.

4. Maintain your portfolio boundaries

Be very clear on what level of exposure you are comfortable with in terms of risk and what profits you will be happy with. If you have data and analytics driving your decisions, you can set up a flagging mechanism to raise a red flag whenever a trade hits an upper or a lower limit. Setting boundaries for your portfolio help you minimize the probability of a loss. It’s important to be opportunistic, but it’s also essential that you aren’t too greedy. A very diverse portfolio with an appropriate mix of funds from across industries will help you create a portfolio that performs well in a bull or bear market.

5.Leverage Technology

Nowadays, wealth management paradigm has shifted and investment managers are using technology to back their decision making. Wealth management software and platforms have emerged which use a combination of AI and Analytics to de-risk investments. Robo advisory services are now part and parcel of every Wealth Management firm’s offering. These services help firms crunch the numbers and make data-driven decisions about investing. Robo-advisors provide the right kind of recommendations and give a wealth of analytics and historical data to help guide investment choices. These technologies also take care of monotonous tasks such as asset reallocation, portfolio attribution, KYC, onboarding amongst others and provide great transparency to investors. This helps Wealth Managers free up a large portion of their time and dedicate it to providing excellent customer servicing.

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5 Things To Look For In An Effective Wealth Management Software

Over the past decade, wealth management as we know it has undergone a digital transformation. Wealth Management firms, family offices are increasingly recognizing that in the digital now, the legacy systems of the past just cannot keep pace with customer demands and expectations. Clients are now looking for complete transparency on how their money is being invested, they also want to access this data at all times. They also expect their wealth managers to give their hard proof and data backing every single financial decision. It is no longer a ‘seller’s market’ and investors are asking for maximum bang for their buck, especially when they are going for professional wealth management services.

In this challenging environment, wealth management software has come to the aide of wealth managers. The firms that are embracing innovation are increasingly looking to the tech industry to build solutions that help them scale and meet customer expectations. Undergoing a digital transformation is one of the most critical business decisions that a wealth management firm will ever make in its course of business, hence it’s essential to evaluate the platforms comprehensively to every minute feature before adopting it.

We’ve developed this guide as a quick primer of what to look for when on the market for a Wealth Management platform. This checklist will help guide your search and help you zero in on exactly the kind of features and tech capabilities that your firm needs.

  1. Is it Mobile friendly with anywhere, anytime access?

This is one of the most crucial considerations for both your wealth management clients and your time-pressed advisors. The platform should have a client-facing and advisor facing app or mobile presence that allows both advisors and clients to access and control their portfolio from a mobile phone. This unfettered access can be a key variable in whether tech-savvy millennial investors choose to invest with your firm.

  1. Does it help the synergy between the front office and back office?

The system you adopt must be able to integrate with all the disparate tools your wealth management team uses in front and back-office operations. The advisor must be able to quickly source the data that he wants from the system in seconds and show the client their real-time account data. It should also allow for a full API system that allows third-party applications to function seamlessly on the platform.

  1. Does it save your advisor’s time?

The number one reason why wealth management firms are going for digital transformation is that advisors are increasingly under pressure. As a single advisor caters to 10s, the 20s or even 100 clients, every second of the advisor becomes valuable. If the advisor has to spend hours reconciling portfolio data, the investor will lose patience and the advisor will be unable to leverage their bandwidth for customer servicing. Wealth management software or platform helps advisors automate mundane tasks and carry out others efficiently such as Client Onboarding, portfolio attribution,  rebalancing, compliance, reporting, document management and more.

  1. Is the system cloud-based?

Legacy systems are cumbersome to maintain and update, it can take months of time to upgrade to the latest technology and can also incur significant costs. A cloud-based SaaS platform, on the other hand, receives regular updates and can be updated in a matter of minutes. Also, as all of the upgrades are done at the Service company end, there are no additional costs involved in hiring talent to make sure the systems are up to date, secure, and running optimally. Cloud-based systems also allow users to access the data from anywhere and with any kind of device, removing the dependence on company owner hardware.

  1. Is the user experience easy to navigate?

Often, the senior talent at Wealth Management firms may not be very tech-savvy and may prefer to work on their excels and workbooks if they find the technology difficult to adopt. Just rolling out the platform is not sufficient, the advisors must be convinced of the benefit and they must be comfortable with the interface. Otherwise, the platform becomes a liability and leads to parallel processes running within the organization. The UX of the platform must be intuitive and consumer-grade, the advisors must also receive comprehensive training and support in the adoption phase to ensure a smooth transition and avoid costly mistakes.