Asset Management

08:10 PM
Raltson Roberts
Raltson Roberts
Commentary
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Dig Deeper for Data: Enriching Wealth Management With New Market Insight

To compete, wealth firms are providing direct electronic access to the content. Exposing the information to their clients is driving an evolution of the traditional advisor value proposition.

With so many sophisticated research tools now at our disposal, wealth managers need new ways to add value for their clients. In a data-rich world, unique sources of information are proving both precious and elusive. How then, can today's data providers help?

The average age of wealth management clients is falling and a new generation of younger investors is emerging. This tech-savvy and more progressive generation of investors does much of its own investment research. They are now able to educate themselves in investment decision-making through rapid technology advancements. With plenty of opportunities to access and consume information, they are using stock screeners and a range of analytical solutions online.

So, where does this leave the wealth manager? Traditionally, advisors acted as the gatekeeper to unique value-add content. Now to compete, wealth firms are providing direct electronic access to the content via sophisticated online toolkits. Exposing the information to their clients is driving an evolution of the traditional advisor value proposition.

However, despite pressure on fees and a growing need to continually provide value to their clients, wealth managers continue to play a critical role in the investment process -- especially for high-net worth individuals with large and complex portfolios. Investors may be more educated and informed than ever, but they won't usually have their advisor's level of market insight. Even with access to the same information, investors still need advisors to interpret the implications for their portfolio. What's more, they'll have questions that require a rapid and highly informed response.

What will set them apart is the speed to which they can access information, stories and events in order to best advise their clients of any age. Clearly, data providers and data aggregators need to evolve to provide more advanced tool sets for the advisor.

Currently, most data providers and aggregators offer similar services, but there are enormous opportunities to dig deeper and wider to leverage the broad access to data and provide unique value-add content.

When it comes to processing news, for example, there are a host of highly sophisticated social media algorithms that traditional terminals may not yet pick up on. Solutions for capturing social media data could tap into a rich new source of insight -- feeding business stories to wealth managers and their investors long before they hit the wire.

The key for data vendors is to find their own niche and provide their own unique content. Media content, social or traditional, is just one path to gain more insights. These and other insights can lurk in all sorts of places currently present in existing platforms but yet to be discovered.

Certainly, new market data opportunities are there to be mined and seized. Whether it is consumed through a data feed, terminal or a web portal, the goal is to make the information as relevant as possible; data can then act as a true differentiator. Unique content will not only keep wealth managers several steps ahead of their clients, but it will also help set them apart from their own competition.

Ralston Roberts is the chief operations officer of SunGard's global trading business, responsible for SunGard's market data business, MarketMap and global trading's overall strategy. Before that, he was senior vice president, product management and helped shape the strategic ... View Full Bio
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IvySchmerken
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IvySchmerken,
User Rank: Author
10/28/2014 | 9:26:52 AM
Advisors face competition
The Internet, financial news sites and online investing tools have given the individual so much acess to data and information today, that retail investors don't really need to depend on an advisor to tell them what's going on in the stock market. We are also seeing the rise of so called robo-advisors that automatically recommend changes in asset allocation to investors in the mass affluent space and charge a fraction of the fees.  One can argue that people are drowning in information and what they need is insights and transparency into their performance. Are they meeting their goals to pay for college or save for retirement? This is where the financial advisor can bring value. But if advisors are not beating the benchmarks, investors will not be able to justify their fees no matter how much information they are getting.

 

 
NJ_trader
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NJ_trader,
User Rank: Moderator
10/28/2014 | 12:06:49 PM
Re: Advisors face competition
yes, investors can get information from almost anywhere today. They really need their wealth manager to provide some insight into what is happening in the markets and with their portfolio. Most investors don't want to spend the time it takes to get up to speed on market happenings. If the advisor or wealth manager can give guidance or make specific/actionable ideas to clients, they can justify their fees.
IvySchmerken
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IvySchmerken,
User Rank: Author
10/28/2014 | 1:08:34 PM
Re: Advisors face competition
I agree. There are multiple segments of the investor space - those who spend the time monitoring their portfolios and keep up on the news, while others aren't able to spend the time or lack the expertise. Advisors can bring a lot of value with insights for the individual.  But I  think advisors pay more attention to their larger wealthier clients. The less affluent client is put into mutual funds and really is on their own. That is why some are trying out new online investing sites.
fstechexec
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fstechexec,
User Rank: Moderator
10/28/2014 | 12:22:01 PM
Re: Advisors face competition
Fees are getting compressed as investors find more information outside of traditional advisors. Advisors really need to work harder (and smarter) to improve interactions with their clients. 
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
10/30/2014 | 10:41:24 AM
Re: Advisors face competition
Very true, Ivy. At the end of the day, the advisors need to show value by increasing returns above the market average. That is very hard to do, no matter how much data they crunch.
IvySchmerken
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IvySchmerken,
User Rank: Author
10/30/2014 | 11:52:53 AM
Re: Advisors face competition
Absolutely, Greg. Look at hedge funds. They are known for crunching data and subsribing to feeds they can analyze, with some paying expert networks and hiring their own internal analysts to conduct original research. Hedge funds had a good year but a "torrid" September and October. Some are said to be down 15%.  They crunched a lot of time but got hurt by the market correction, proving how difficult investing can be. Now they will need to communicate these results to clients.
somsagar
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somsagar,
User Rank: Apprentice
11/2/2014 | 4:28:34 AM
Dig Deeper and connect dots
Agreed Ivy, where an Advisor can justify fees, is where he can able to justify opportunities and threat in clients portfolio, as news are same for everyone. Practical example is Ebolo, in case they use some good big data tool, not only they get to know latest stuff in news, where as how it is going to impact my portfolio. Ebolo brings lot of opportunities in terms of moving my investment in companies like Lakeland and moving out of few travel companies. So now its not about just news, its about connecting dots. This can justfy the fees and forward things of wealth advisors. Events are happening everyday, they need access to tools that are focued and tell them implication both in terms of Threat and Opportunities at same time.
IvySchmerken
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IvySchmerken,
User Rank: Author
11/4/2014 | 9:59:09 AM
Re: Dig Deeper and connect dots
The Ebola crisis is a good example of how financial advisors can add value to their client portfolios by defensively moving them out of sectors that are adversely affected and opportunistically moving them into areas that can benefit in curing the disease or protecting againt it. By using big data filtering and analytic tools they can see the patterns emerging in Africa before it hit U.S. shores, and already be thinking about what to do next. Impact on travel/airlines could be an area. I agree these tools are ways to connect the dots and financial advisors who use them can add value and justify higher fees if this contributes to better performance.

 
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