Quant-in-a-Box: Risk Management Made Easy for Advisors

“Living at risk is like jumping off a cliff and building your wings on the way down.”Hidden Levers Logo
― Ray Bradbury

“Risk comes from not knowing what you’re doing.”
― Warren Buffett

It often seems that the world has been just lurching from one crisis to the next, playing havoc with buy and hold strategies and modern portfolio theory.  Wirehouse advisors have access to macroeconomic analysis and sophisticated tools to assist them with risk management.  RIAs are at a disadvantage since these tools aren’t readily available and can be prohibitively expensive.

Levers Impacting Portfolio 2 @@@

Hidden Levers is a technology company that I believe is well-positioned to help. I first encountered them at the Tools and Technology Today (T3) Conference back in February, although they have been around since 2009 and currently are located in the Bloomberg Technology Incubator in New York City.  They offer a web-based service that provides a toolkit for advisors with the goal of helping them to turn risk management into a profit center by:

  • Enhancing prospecting for new clients
  • Prompting existing clients to be more pro-active
  • Increasing wallet share by providing opportunities to impress clients

The biggest value of their service is assessing the impact that macroeconomic trends and scenarios will have on your portfolios and what actions to take.  HiddenLevers isn’t a fortune teller, what it does is illuminate the sensitivity of portfolio holdings against over 100 macroeconomic indicators or levers.  These include indices, commodities, currencies, and interest rates, to name a few of the statistically significant ones. Continue reading

Which Portfolio Rebalancing Software is Right for You? Smartleaf’s Response

I recently posted a summary of the Portfolio Rebalancing Software Panel from the Tools and Technology Today (T3) Conference that took place in Miami back in February 2012. The responses from the four vendors were very informative and I thought it would be interesting to hear from a few other vendors who couldn’t be part of the panel.SmartLeaf logo

Another of the vendors I reached out to was Smartleaf. The company takes a very narrow product focus. They provide an overlay portfolio management system with only two components; an automated rebalancing engine and model management. They currently have more than 40 customers that run approximately $50 billion in AUM using their system. Some of their largest clients include US Bank, Peoples United Bank, BB&T, City National Bank, and Bank of Hawaii. (See my previous post FundFire: Bank of Hawaii Launches $2B UMA Program.) SmartLeaf was founded in 1999 and their headquarters is in Boston, MA.

For this article, I spoke with Gerard (Jerry) Michael, the President and Co-Founder of Smartleaf. I asked Jerry the same questions that were posed to the T3 panel and he was gracious enough to provide the following answers. Continue reading

5 Ways a Web Portal Can Excite Your Clients

This is a summary of part of a panel discussion from the Tools and Technology Today (T3) Conference that took place February 11-13, 2013 in Miami, FL. The original subject of the panel was Advent/BlackDiamond integration, but it morphed into more of a discussion of how firms are leveraging their CRM systems to become the central integration hub of their business.Junxure logo

In this article, I’m focusing on the experiences of Jennifer S. Henderson, CEO, Pinnacle Wealth Planning Services, who described how her firm implemented Junxure’s ClientView Live web portal.

Searching for a One-Stop Shop

Pinnacle had been trying for many years to find a robust solution that they could implement as a one-stop shop for their client-facing experience, Henderson explained. The critical first step is to find the one piece of software that will become the anchor for your overall solution, she advised. Continue reading

Which Portfolio Rebalancing Software is Right for You? FolioDynamix Response

I recently posted a summary of the Portfolio Rebalancing Software Panel from the Tools and Technology Today (T3) Conference that took place in Miami last month.  The responses from the four vendors were very informative and I thought it would be interesting to hear from a few other vendors who couldn’t be part of the panel.

The first vendor I contacted was FolioDynamix.  They have been wracking up some impressive customer wins with Cambridge Investment Research and LPL Financial signing on to deploy their wealth management technology platform.  FolioDynamix is also the engine behind the block trading and rebalancing functionality in Pershing’s NetX360 product.

For this article, I spoke with Aaron Schumm, who was recently promoted to the position of Chief Customer Officer.  I asked Aaron the same questions that were posed to the T3 panel and he was kind enough to provide the following answers.

What are the main differentiators of your product?

The FolioDynamix trading and rebalancing tool (FDx Manage) has several differentiators that resonate through the fee and commissioned-based trust and brokerage industries – all of which contribute to increased productivity, efficiency and insight, Schumm responded.   It is cloud-based and integrates seamlessly with existing internal and external systems across multiple custodians.  It also monitors 30 types of drift and cash movements for accounts, he said.

Their alerts dashboard allows portfolio managers to rebalance all of their accounts in a single trade scenario, Schumm continued.  Since scalability and visibility are critical to their clients (LPL Financial for example), FolioDynamix designed a highly-scalable rebalancing engine that allows for multiple accounts to be linked to multiple models, which are held at multiple custodians and can be traded and executed simultaneously, he stated.

According to Schumm, their platform is tax-aware and automatically checks for wash sale violations, restrictions, minimums and replacement securities.  FolioDynamix also follows custom trade workflows for orders over defined amounts, discretionary, non-discretionary and commission-based accounts.  Finally, FDx Manage seamlessly interoperates with the other modules of FolioDynamix SingleSight wealth management technology platform – allowing firms to deploy a single cloud-based system to support the entire wealth management life cycle, he noted. Continue reading

Which Financial Planning Software is Right for You? Fiserv AdvisorVision Response

I recently posted a summary of the Financial Planning Software Panel from the Tools and Technology Today (T3) Conference that took place in Miami last month.  The responses from the four vendors were quite enlightening and I thought it would be interesting to hear from a few other vendors who couldn’t be part of the panel.

The first vendor to get back to me was Fiserv.  I spoke with Pierre Bossaert, Vice President, Product Management of their Financial Advice Management group. This unit was created after Fiserv’s purchase of AdviceAmerica in 2010.  I asked Pierre the same questions that were discussed in the T3 panel.

What is your firm’s approach to financial planning?

Fiserv Retirement Illustrator

Fiserv believes that financial planning should be the cornerstone of an advisor’s product recommendations, Bossaert began, so the decision was made to integrate their financial planning software products into their industry-leading middle and back office advisory solutions.  This end-to-end platform has improved advisor efficiency and reduced implementation time, he said.

According to Bossaert, Fiserv’s financial advice software is flexible and can cater to the different needs of partners and end clients.  For example, AdvisorVision, their financial planning tool, offers comprehensive, goal-based financial planning that can scale from basic to advanced needs.  Retirement Illustrator, an interactive retirement planning tool, analyzes income and expenses in retirement using a unique methodology for assessing potential vulnerabilities and demonstrating solutions to help avoid catastrophic risks.  Their Proposal Generation Manager product focuses on portfolio analysis by dissecting an investor’s current portfolio and highlighting areas that diverge from the client’s risk profile.  This allows the advisor to construct and propose a more suitable portfolio. Continue reading