Recently, TIME magazine observed that uncertainty is here to stay. And anyone who has looked at the Dow Jones Industrial Average performance in the past few weeks knows that abnormal is the new normal.
But for investment management firms, accepting market volatility doesn’t mean accepting defeat. Rather, it should be a catalyst for assessing whether their technology systems have the flexibility, speed and accessibility to inform smart investment decisions, support responsible risk management and provide tools to reassure skittish and skeptical clients.
Ultimately, clients’ confidence hinges on two things: how well their portfolios perform against their expectations, and how well their portfolio managers communicate with them. And speed (therefore time) is of the essence here. In the current environment, markets can shift so quickly that managers must operate at faster speeds than ever.
So technologies that support both portfolio performance management and transparent reporting have to work quickly as well as accurately. Enter: the cloud.
Cloud-based portfolio measurement and reporting technology absolutely are the key to analysis and reporting in a volatile market. With this type of application, the investment manager does not control the source data itself but rather the usage of that data. The headaches of syncing NAV data, running performance and risk analytics as well as producing the reports for client consumption are entirely streamlined. This, in sum, enables greater interactivity and flexibility for the investment manager and their clients.
Say, for example, that a U.S.-based investor’s portfolio is heavily weighted toward Asian financial services stocks. With an interactive cloud-based solution, asset managers can immediately get in front of the investor about the potential for impending losses. The manager could post a reassuring note in the system and present reports that allow the investor to understand the risks in their holdings and strategize how best to hedge against the exposure.
In this way, the asset manager is more visible – virtually -- to the investor. The investor doesn’t have to sweat for a month before discovering how much money his portfolio has lost. This creates confidence that poor results are not being hidden by the investment manager.
The basis of any investment managers’ success is the trust that their clients’ have in their strategy and in their relationship. As such, investment managers need to be confident that the reports that they create and communication strategies they pursue have the best interest of the client at heart.
In a few days, we’ll be exploring how shifting market dynamics have changed how investment managers need to service their clients and how new cloud based portfolio analytics platforms can help secure investor confidence.
Key questions we hope to address include:
• Tactics investment managers use to ensure client trust in times of stock market distress: are they working during the uncertainty that we’ve now come to adopt as a norm?
• How have technology needs shifted as a result of the unsteady economic terrain?
• What types of reports and analytics are clients demanding in today’s environment?
• What are the top considerations investment advisors should make when investing in new technology?
• How can investment experts manage technology and exceed client expectations?
In volatile times, transparency is paramount, and cloud-based reporting systems help enable investment managers to be upfront and open with their clients. In other words, the cloud is the key to riding out the storm.
—Andrew Peddar is CEO of StatPro, a platform for portfolio analysis, asset valuation, reporting and research.