What to Expect from Wealth Management Platform in 2020?

Posted on December 18, 2019November 15, 2022 by Valuefy

2020 promises to be a year of fundamental shifts for the Wealth and Asset management industry. The evolving technology landscape and digital transformation of the industry will lead to a number of significant changes in the way that wealth managers operate. Here are some of our predictions for the coming year.

Costs to stay in Business will remain high, Platforms will find new Efficiency

The costs of complying with regulations in the wealth management space will remain high. The growing cost of doing business will put continued pressure on firms to drive up profits. However, competition pressures will lead to lowered fees and cannibalization of the market. In this scenario, wealth management firms will have to invest in technology such as wealth management platform and data to maximize alpha for customers and justify higher management fees.

Passives will become core Investment Channel, Platforms will help Wealth Managers compete

It is predicted that by 2020 close to 35% of assets under management will be pooled into passive investment products such as index funds. ETFs and Mutual Funds will also see steady growth. As investors increasingly invest in passive products, actively managed funds will be under pressure to show a higher alpha. This higher alpha can only be generated if investment decisions are made on hard data that helps wealth managers make quick and reliable judgment calls that can beat the market. The power of terabytes of historical data can be leveraged by wealth managers that use Robo-advisors. These Robo-advisors can give recommendations in real-time and can raise red flags when portfolios are not performing. This will help de-risk investment strategy and help increase the chances of creating value for clients.

Platforms will help Wealth Management Firms improve transparency and gain Client Trust

Clients of today expect transparency in investment decisions. They are no longer happy to rely on Wealth Manager’s decisions alone and need hard data backing up any investment strategy. Wealth Management platform gives wealth managers all the data they need at their fingertips. This means that the chances of making decisions purely on instinct are greatly reduced, this fosters greater trust in the clients. Clients can also use Wealth Management platform to check their portfolio performance at any time 24X7 and ask the Wealth Manager questions proactively instead of waiting for a monthly call or meeting.

Platforms will help meet higher expectations of On-demand Customer Service

Clients who have grown familiar with an ‘app economy’ expect service to be available to them 24X7. In such a scenario, wealth management platform that helps customers get visibility into their portfolio data will give an edge to ‘digitally enabled’ wealth management firms. These platforms also help in automating mundane front office and back-office tasks helping free up manager time to focus on strategy and servicing their customers. This is especially crucial in a climate where over 87% of HNI clients confirm that they switch wealth management firms for lack of satisfactory customer service experience.

Mobile Apps and Customer Portals will become par for the Course

Clients of today are increasingly tech-savvy and need access to their portfolio data on their fingertips. Wealth management platform can no longer be solely facing the wealth manager, they need to have a customer-facing presence both as a portal and as an app. These mobile apps must have key functionalities such as rebalancing, portfolio monitoring, withdrawals, etc so that customers are empowered to make their own decisions. Investing in online platforms and mobile apps should be a top priority for Wealth Management firms as less than 50% of HNWI reported being satisfied with their current online and mobile financial platforms

5 Keys To Successful Investment Portfolio Management

Posted on November 25, 2019December 8, 2023 by Valuefy

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.

Looking for Wealth Management software that can help your Wealth Management practice flourish? Contact us for a free demo

The Wealth Management Industry: Outlook 2020

Posted on August 23, 2019November 11, 2022 by Valuefy

As we complete two decades of this century, GenZ has entered their early adulthood and GenY, popularly known as Millennials, are close to being middle-aged. These are the people who grew up with the internet, they have their entire lives around it. And their love for the digital space seems to grow every year.

And these will be the people wealth managers will be serving in the coming years if they aren’t already.

The current industry veterans are from the pre-internet era and their methods are, traditional which has worked fine so far because they have been serving the clients who belonged to the same generation.

But the times are changing and this generation gap needs to be filled if they want to attract, and retain, customers from this generation and the one after. To do that, wealth managers need to adapt to the latest technologies and methods in the wealth management space too.

So, here’s a non-exhaustive list of industry trends that will be seen come 2020.

The Number of FinTech Companies will Rise

FinTech companies with their innovative and technology-oriented approach have been disrupting the industry with solutions like data analytics, predictive analysis through Artificial Intelligence and Machine Learning. There will be a rise in the number of these companies as better, more sophisticated solutions emerge.

Interactions with Clients will Increase, Less in Person

As the industry moves towards a digitalized ecosystem, the number of interactions between the wealth managers and their clients will increase significantly. Only, these would be more in the form of textual or visual interactions rather than in-person meetings. There will still be meetings but far less. The new generation of affluent likes to stay updated with everything all the time which means they would want to have daily updates and reports.

The Need for Customizations will Increase

Technology has enabled customizable solutions for wealth management. FinTech is playing a huge role in making this option available to the wealth managers. With these customizations, every client could be presented with a portfolio or wealth plan tailored to their needs. This would need in-depth profiling of the clients and prospects to propose the most relevant customization to them.

These emerging technological trends would mean that wealth managers would need to find relevant technological partnerships with FinTech companies to prepare themselves for these challenges.

Valuefy is a FinTech company that enables wealth managers with technological solutions to ensure the digitalization of their processes and empower them with comprehensive analytics, Portfolio Management solutions, reporting, and relationship management.

7 Wealth Management Mistakes You Shouldn’t Make

Posted on August 12, 2019November 11, 2022 by Valuefy

Running a wealth management firm is not easy. When it comes to your clients, you are obliged to listen and comply with their wishes but having the required expertise, you understand the market much better than they do. Which is why, sometimes, you have to comply with a preposterous request.

This could possibly be the biggest mistake you could make until you take the right steps to avoid it in the first place. Of course, everybody makes mistakes and your expertise doesn’t make you an exception to that rule.

But if you know what the possible mistakes are, you will be equipped to avoid them. Please note that this list is, in no way, exhaustive.

Not Pushing Clients for their Reasoning

When clients make requests to buy or sell assets voraciously, it’s important that you ask the reasoning behind those thoughts. It is entirely possible that their decision is based on impulse or misunderstood financial standing rather than a sound rationale. They may want to take a risk that they can neither afford nor need, considering their financial goals. As a wealth manager, it is your duty to advise them when they are wrong and heading towards a possible loss.

Working with All Kinds of Clients

One thing that your wealth management firm doesn’t need is a client that doesn’t share your financial philosophy. Niche down to the kind of investors you want to work with based on your experience and your financial philosophies. Taking in clients that are not a good fit for your firm will not only waste your time but also put you through unnecessary conflicts. You would do much better without them.

Overemphasizing on ROI

When you emphasize more on ROI than you should, the expectations of your clients rise unrealistically high. If the client is migrating to your firm from a different one, there’s very little increment on the returns that you can provide. Rather, you must emphasize the security and long term benefits that you can provide them with.

Proceeding without Paperwork

This is a given, you should not proceed without paperwork. When you don’t have all the paperwork in place, you might reach a disagreement with the client at a further stage. If the client decides to walk away from you then, you would waste all the time and effort that you spent working on their portfolio and investment plans.

Neglecting your Own Business

When you are managing wealth for businesses, you sometimes forget that you are running a business too. And just like any other business, you need to grow too. You need to look for opportunities and ways that can help you be more efficient and bring in more clients and eventually, more revenue.

Spending More Time on Mechanical Processes

There are a lot of mechanical processes involved in wealth management and these processes, although important, need not be as time-consuming as they are. For example, spending days on portfolio analytics when tools like ValueAT can do it for you in seconds isn’t wise. You want to automate all the processes that you can so that you can concentrate on decision making and strategizing.

Staying Relevant

As the world moves ahead faster than ever before, businesses need to match the pace if they want to stay relevant to not just today’s clients but tomorrow’s as well. You need to bring in the technology solutions that can provide you with the ease and convenience and reduces your manual effort

Valuefy is a fintech company, empowering wealth management firms with innovative and highly-effective technology solutions that are transforming the way financial institutions approach wealth management.