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NOV 04, 2021

Portfolio management technology to drive competitive advantage

Marianna Vilardi


Reading time: 2 min


Wealth and asset managers are facing new challenges: greater uncertainty, peers with competitive offerings, new technologies, constant changing customer demands and higher level of personalised preferences, but also regulations, legal compliance and safety standards.
Investment management is therefore forced to evolve quickly and new trends are emerging that will influence how firms will be managing portfolio daily and changing how investments are handled, eventually.

A step-by-step look at Portfolio Management: key and risk drivers

Portfolio Management is currently holding a wide appeal among wealth management firms, with more than half of them considering portfolio management to be a high value technology.
Indeed, a recent report by a leading global advisory and market analysis firm for executives highlights that the vast majority of wealth managers intend to increase spending on portfolio management over the next two years. A noteworthy number of wealth managers will increase spend by approximately 7% and upward.

As accounted by firm, the level of perceived risk can vary widely within the overall scenario: slightly less than 20% firms consider portfolio management to be a low-risk technology, and a third consider it high risk, but most consider it moderate risk. Among the biggest risk burdens, we reckon the most selected as vulnerability to security threats, inaccurate or time-consuming compliance with regulatory requirements whilst a lower but still significant percentage also emphasises service disruption or system failure, overdependence on external partners and difficult system integrations; more than 30% are also alarmed by the potential overdependence on specialised in-house resources.

However, as far as driving forces are concerned, three key drivers for portfolio management spotlight are identified. Indeed, it can be a game changer in terms of:

  • Keeping pace with competitors
  • Improving customer experience
  • Lowering risk

Although investments in CRM or financial planning continue to be sky-high when customer experience and its direct improvement is concerned, these tools will only help the advisor to fulfil the basics.

Many firms are adding one more piece to the overall investment puzzle and focus on portfolio management as an essential component of the investment advisor desktop, moving to an integrated systems to deliver advice efficiently, based on the notion that advisors need to see how a client’s entire book of business is impacted by regulatory compliance, market moves and investment mandates.

The aim of taking customer experience to the next level lies at the heart of every great differentiation strategy. This is the moment business competitiveness is triggered. As the majority of wealth management firms judge keeping pace with competitors to be the main driver for portfolio management, CIOs are challenged to boost differentiation by incorporating and assimilating their broader advisor desktop. To achieve such result, a major priority for asset managers will be to integrate a set of aspects: alternative investments, real-time market data, advanced analytics, artificial intelligence and tailored reporting tools.

IT portfolio management is therefore quite a step forward in terms of increasing revenues for clients and reducing risks – security threats, non-meeting regulatory obligations being the most concerned, as seen – and to a large extent it plays a pivotal role in improving operational efficiency and corporate agility.