The old adage that if you want to do something right, you've got to do it yourself has never rung truer. Small to large investment managers have long been satisfied with vendor-provided portfolio management systems, but the onslaught of the Web and the promise it brings, is forcing larger firms to design front- to back-office solutions on their own.
Neuberger Berman, the New York-based investment advisory which is known for writing a lot of its own software, is creating a browser-based account management system for its internal money managers that updates accounts in real-time and includes access to both internal and external research. The firm, with over $50 billion in assets, is set to go live with the first phase of the project, which includes rolling up all portfolio information into a single browser front-end, and the second phase, including live portfolio updates, is set to be released by the end of the first quarter.
The money manager is also preparing to offer a stripped-down version on its Web site for its clients by the end of 2000, a move that will take online account access to a whole new plane if Fred Tenaglia, vice president of application development, has his way.
"We're moving toward Web-to-Web technologies," says Tenaglia, vice president of application development. "Our money managers currently do a lot of this manually, whether it's downloading portfolio information from spreadsheets and proprietary systems or calling down to the research department. What we've created is a one-stop shop."
Making extensive use of XML, the new front-end will allow money managers to drill down within a portfolio to more intensive levels of detail, extracting research and data from internal systems as well as outside Web-based and market data sources. Speaking of the importance that XML has played in this project, Tenaglia says, "it allows us to take advantage of other sites that are implementing XML. I can re-route portions of a site to ours. It really is a convenient way of parsing up and then aggregating data."
The second phase of the project will include real-time executions. If a money manager is holding 100,000 shares of IBM, for example, and has traders working another 50,000 shares throughout the day, the portfolios will update automatically as that order is filled. "We're not going to have anymore of this waiting for the next day," Tenaglia says.
The new system, in fact, stands in stark contrast to many vendor systems which still rely on batch-style throughput, a process not suited for today's hyper-time world, where five minutes can mean the difference between huge gains and losses.
Neuberger is employing a Microsoft Transaction Server on the back-end as well as tapping into numerous market data sources, which Tenaglia declines to name. The Web front-end also extracts data from other proprietary systems that reside on Informix and SQL servers.
Tenaglia admits that Neuberger is looking to offer some version of this application to its clients via the public Internet later next year, but he declines to specify what components will make it into the consumer release. The decision to offer a lighter version to online investors is nothing new, as many of the functions included in the professional release are considered too weighty for the average person to master.
Neuberger, which is also weighing whether to buy or build a new order management system, will tie that together with this new Web interface, so that when a trade is executed, the portfolio management system will be updated automatically.
At last months' Financial Technology Expo in New York City, representatives from some of the leading order-management systems vendors reacted ambiguously when asked whether their products will come to employ Internet technologies. Tim Rudlin, DST International's sales manager, North America, went so far as to declare any drive to do so as, "hype, hype and more hype." If the vendors perceive that to be the case, and future application releases don't include even the most basic Internet functionality, Tenaglia may just be confined to building a browser-based order management system on his own. But then, he's never really had a problem with building a system from the ground up.