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Blog - OFS - Wealth Managers, Time for a PMS!

  • on 31 March.2023

Wealth managers have the challenging task of managing their clients' investment portfolios while balancing growth and risk. It might be difficult to remain on top of everything with a rising number of investment possibilities and complex market conditions. By offering a unified platform for managing investments, monitoring performance, generating reports, and assuring compliance, portfolio management system (PMS) software can lessen this burden. In this post, we'll look at the broad justifications for why wealth managers need to use PMS software, as well as some recent developments. We'll go into the advantages of adopting PMS software and how it may support wealth managers in risk-adjusted portfolio optimization for their clients.

Q: Why is there a need for a PMS System? What are the Emerging Trends?

-        Alternative investments are becoming more significant, which encourages their integration into platform offers.

-        Data normalization and aggregation from non-traditional sources are increasingly important for business success.

-        New investment options are constantly developing, adding to the complexity of the financial markets. Because of this, managing portfolios and keeping track of all the investment alternatives can be difficult for investment managers.

-        An increasing number of investors are requesting customized investment solutions that are catered to their unique needs as their investing needs become more sophisticated.

-        Financial sector is being heavily regulated, and investment managers must adhere to a number of rules to make sure they are operating in their clients' best interests by offering a consolidated platform for managing client accounts and transactions that can assist in remaining compliant with regulatory requirements.

-        Technological advancements of the investment sector like artificial intelligence and machine learning. These new technologies can be included into a Portfolio Management System software to give investment managers strong capabilities for managing investments and data analysis.

As for the trends of having a PMS that are emerging lately:

1)     They are easily being integrated with other systems such as CRM systems, Core Banking Interfaces, Accounting Softwares…etc

2)     On-The-Go Accessibility is heavily requested, such as mobile applications. Being able to access portfolios and data from anywhere around the world is one of the new trends in the Asset Management industry.

3)     For investment managers who must base their judgments on current market conditions, real-time reporting is becoming more and more crucial.

4)     ESG Investing

Q: So how can someone decide which Portfolio Management Software is best for their fund?

1)    Flexible

Using new software always involves a learning curve. But how much can you alter your new system so that it works for you? You will come across a number of new interfaces while searching.

2)    Modular

Understanding how the workflow has been designed is essential before delving into the PMS' architecture. Has it been conceptualized ideally from front to back? How do the various modules interact with one another, from cash management and compliance through portfolio construction, analysis, order, and risk management? Look for workflows that can be completed seamlessly.

3)    Connected

Understanding how the PMS will fit into your present setup is crucial throughout the due diligence process. Which of your current counterparts (Prime Brokers, Custodians, and Administrators) can it connect to?

4)    Complete

How to allow their operational staff to concentrate on high value tasks rather than time-consuming ones is a topic that comes up frequently in our conversations with fund managers. The outsourced middle office service we have developed for our clients at Omega Financial Solutions serves as our internal "test-lab," identifying and resolving the operational pain fund managers experience on a daily basis. Due to our team's extensive training in the software, we are the system's first clients. We were able to create operational modules for the PMS that cover the entire operational cycle as a result. These issues are related to the workflow query raised above since it's critical that your PMS product incorporates operational capabilities like NAV, cash reconciliation, and cash management, subscriptions and redemptions.

5)    Pick a Partner

Service providers should be seen as an extension of your team rather than as a business that is merely offering you a service. Once you have decided on a Portfolio Management System, it is critical to quantify the help and training you have gotten. What are the backgrounds of the team? How well-versed are they in the product, as well as the trading tactics and goods? How long should it take for requests to be processed? Is support available over the phone, online, or in person?

6)    Scalable

Although it is important to think about how this will change as you grow, there will be an absolute level of expense. What is the pricing model—is it a flat price or determined by AUM? What are the conditions, and is the contract adjustable or am I tied in for X years? Are there any unstated fees? What features/users are a part of the base offering? Are there additional fees for bespoke development requests or new modules? Should I pay for all the features that are embedded? Can the modules be customized to my company’s needs?

Here at OFS, we highly stress on the clause that our clients can pick and choose what they are in need. There is no obligation to install all of Gaia. And it can be specifically customized to your own needs & desires

There are many factors to take into account when looking for a new PMS; hopefully, the information above will give you some useful pointers.

We could not end this blog article without a few words about our recognized Portfolio Management Solution, Gaia.

Gaia is Flexible, Modular, Connected, Complete, Scalable. The team behind it (our team!) is expert about portfolio management and technology, and provides real daily partnership over time.

CITATIONS

-        https://www.hedgeguard.com/portfolio-management-system-how-to-choose-it/

-        https://www2.deloitte.com/lu/en/pages/investment-management/articles/pms-portfolio-management-system.html

-        https://www.securities-services.societegenerale.com/en/solution-finder/portfolio-management-system-pms/

-        https://www.g2.com/categories/investment-portfolio-management

-        https://insights.daffodilsw.com/blog/the-role-of-ai-in-intelligent-portfolio-management#:~:text=Portfolio%20Optimization%3A%20AI%20helps%20in,be%20resolved%20by%20adding%20constraints..

-        https://www.blackrock.com/corporate/literature/whitepaper/viewpoint-artificial-intelligence-machine-learning-asset-management-october-2019.pdf

-        https://www.landytech.com/blog/top-asset-management-trends

Wealth managers have the challenging task of managing their clients' investment portfolios while balancing growth and risk. It might be difficult to remain on top of everything with a rising number of investment possibilities and complex market conditions. By offering a unified platform for managing investments, monitoring performance, generating reports, and assuring compliance, portfolio management system (PMS) software can lessen this burden. In this post, we'll look at the broad justifications for why wealth managers need to use PMS software, as well as some recent developments. We'll go into the advantages of adopting PMS software and how it may support wealth managers in risk-adjusted portfolio optimization for their clients.

Q: Why is there a need for a PMS System? What are the Emerging Trends?

-        Alternative investments are becoming more significant, which encourages their integration into platform offers.

-        Data normalization and aggregation from non-traditional sources are increasingly important for business success.

-        New investment options are constantly developing, adding to the complexity of the financial markets. Because of this, managing portfolios and keeping track of all the investment alternatives can be difficult for investment managers.

-        An increasing number of investors are requesting customized investment solutions that are catered to their unique needs as their investing needs become more sophisticated.

-        Financial sector is being heavily regulated, and investment managers must adhere to a number of rules to make sure they are operating in their clients' best interests by offering a consolidated platform for managing client accounts and transactions that can assist in remaining compliant with regulatory requirements.

-        Technological advancements of the investment sector like artificial intelligence and machine learning. These new technologies can be included into a Portfolio Management System software to give investment managers strong capabilities for managing investments and data analysis.

As for the trends of having a PMS that are emerging lately:

1)     They are easily being integrated with other systems such as CRM systems, Core Banking Interfaces, Accounting Softwares…etc

2)     On-The-Go Accessibility is heavily requested, such as mobile applications. Being able to access portfolios and data from anywhere around the world is one of the new trends in the Asset Management industry.

3)     For investment managers who must base their judgments on current market conditions, real-time reporting is becoming more and more crucial.

4)     ESG Investing

Q: So how can someone decide which Portfolio Management Software is best for their fund?

1)    Flexible

Using new software always involves a learning curve. But how much can you alter your new system so that it works for you? You will come across a number of new interfaces while searching.

2)    Modular

Understanding how the workflow has been designed is essential before delving into the PMS' architecture. Has it been conceptualized ideally from front to back? How do the various modules interact with one another, from cash management and compliance through portfolio construction, analysis, order, and risk management? Look for workflows that can be completed seamlessly.

3)    Connected

Understanding how the PMS will fit into your present setup is crucial throughout the due diligence process. Which of your current counterparts (Prime Brokers, Custodians, and Administrators) can it connect to?

4)    Complete

How to allow their operational staff to concentrate on high value tasks rather than time-consuming ones is a topic that comes up frequently in our conversations with fund managers. The outsourced middle office service we have developed for our clients at Omega Financial Solutions serves as our internal "test-lab," identifying and resolving the operational pain fund managers experience on a daily basis. Due to our team's extensive training in the software, we are the system's first clients. We were able to create operational modules for the PMS that cover the entire operational cycle as a result. These issues are related to the workflow query raised above since it's critical that your PMS product incorporates operational capabilities like NAV, cash reconciliation, and cash management, subscriptions and redemptions.

5)    Pick a Partner

Service providers should be seen as an extension of your team rather than as a business that is merely offering you a service. Once you have decided on a Portfolio Management System, it is critical to quantify the help and training you have gotten. What are the backgrounds of the team? How well-versed are they in the product, as well as the trading tactics and goods? How long should it take for requests to be processed? Is support available over the phone, online, or in person?

6)    Scalable

Although it is important to think about how this will change as you grow, there will be an absolute level of expense. What is the pricing model—is it a flat price or determined by AUM? What are the conditions, and is the contract adjustable or am I tied in for X years? Are there any unstated fees? What features/users are a part of the base offering? Are there additional fees for bespoke development requests or new modules? Should I pay for all the features that are embedded? Can the modules be customized to my company’s needs?

Here at OFS, we highly stress on the clause that our clients can pick and choose what they are in need. There is no obligation to install all of Gaia. And it can be specifically customized to your own needs & desires

There are many factors to take into account when looking for a new PMS; hopefully, the information above will give you some useful pointers.

We could not end this blog article without a few words about our recognized Portfolio Management Solution, Gaia.

Gaia is Flexible, Modular, Connected, Complete, Scalable. The team behind it (our team!) is expert about portfolio management and technology, and provides real daily partnership over time.

CITATIONS

-        https://www.hedgeguard.com/portfolio-management-system-how-to-choose-it/

-        https://www2.deloitte.com/lu/en/pages/investment-management/articles/pms-portfolio-management-system.html

-        https://www.securities-services.societegenerale.com/en/solution-finder/portfolio-management-system-pms/

-        https://www.g2.com/categories/investment-portfolio-management

-        https://insights.daffodilsw.com/blog/the-role-of-ai-in-intelligent-portfolio-management#:~:text=Portfolio%20Optimization%3A%20AI%20helps%20in,be%20resolved%20by%20adding%20constraints..

-        https://www.blackrock.com/corporate/literature/whitepaper/viewpoint-artificial-intelligence-machine-learning-asset-management-october-2019.pdf

-        https://www.landytech.com/blog/top-asset-management-trends