Guest Contributor: Andrew Peddar, North American CEO, StatPro
Registered Investment Advisors (RIAs) have long relied on one of two choices for portfolio analytics and reporting: enterprise wide technologies and services or niche technologies. While enterprise technologies are packaged with lots of functionality, the functionality often doesn’t meet the granular needs of the advisor and lack the flexibility for customization. On the other hand, the cheaper, more customized niche technology often doesn’t provide broad enough functionality and is difficult to integrate with other technologies. In both cases, RIAs are trapped into an operational mode where the technologies they use for analytics and reporting feel a bit like a cheap suit: they may look okay form the outside, but are actually ill-fitting and uncomfortable.
The lack of custom-made solutions that don’t cost an arm and a leg have opened up enormous opportunity for open, cloud-based technologies that eliminate integration pain points often associated with existing technologies, while also supporting strategic business goals, enhancing customer service and improving day-to-day workflows for improved business execution.
Thanks to the cloud, more RIAs than ever are able to turn analytics and reporting into a source of competitive advantage. So what’s the secret for moving from the technology of the past into the cloud? Read on.
Out with the old systems
First, it’s important to understand the baseline for most RIAs’ portfolio analytics and reporting. Traditionally, accessing the type of powerful portfolio analytics found in hardware-heavy terminal-based systems and licensed software has been reserved for big firms with big budgets. Bottom line: these systems tend to be expensive, and mapping them to in-house software and hardware requirements can require immense integration time and budget – which the majority of firms don’t have
The intention is good – traditional systems are powerful and have proven data and analytics capabilities. But the execution is flawed – terminals and licenses, for example, haven’t kept pace with the shift in technology infrastructure that is moving so many applications and platforms into the cloud.
In with the new thinking
A recent survey by Investment News cited 32 percent of RIA respondents said they were using cloud technology1. That’s a significant indicator that firms are thinking outside the box when it comes to the technologies that will support their businesses. In particular, we find that RIAs are looking to cloud and SaaS platforms to help support portfolio performance measurement and direct-to-client reporting.
One example is Regan Investments, a Minnesotabased RIA, who recently started using StatPro Revolution, a cloud-based platform backed by powerful data and analytics for portfolio performance management, asset allocation, attribution, risk measurement and instant client reporting. In using Revolution, Regan Investments is tapping into a resource that will help the organization scale its business while delivering better client service.
Companies like Regan are benefitting from the most sophisticated technology solutions available, but accessing them in a way that makes it fast, easy and affordable for the RIA to use. This then allows the RIA to share the benefits with their clients and ultimately grow their business.
For example, developing innovative client reporting tactics is a driving force for making he most of technologies such as customer relationship management (CRM) systems and secure client Web pages. Investing in the right technology can be a boon to human capital, especially for firms with a limited head count. Adopting cloud solutions often frees resources to focus on core business development activities such as building better rapport with clients because these solutions streamline mission-critical, time consuming tasks like computing Sharpe and Sortino ratios.
To continue to part II of this entry please click here.