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How Personalized, Precise and Scalable Rebalancing Can Drive Growth for Wealth Firms

August 13, 2020
Blog: How Personalized, Precise and Scalable Rebalancing Can Drive Growth for Wealth Firms

Even in the current environment of unprecedented market volatility and concerned clients demanding more attention, many wealth managers are working on growing their businesses. A personalized touch and fast, thorough responses to questions and preference adjustments can make all the difference.

Many advisors have replaced their clients’ strong emotions – not surprisingly driven by fear and uncertainty, which could easily lead to bad decisions – with tactical rebalancing, tax-loss harvesting, and making incremental portfolio adjustments to make sure clients are where they need to be.

Whether an RIA, family office or money manager, wealth firms need to be able to differentiate, compete and grow. Rebalancing that is personalized, precise and scalable can change the game for advisors looking to grow their businesses.

Personalization and Precision

Winning and onboarding new clients is driven by personalization and flexibility. Today’s investors demand tailored models that fit their preferences per rules and exceptions, since no two have the exact same situations and positions. Advisors must be adaptable, and able to personalize and tailor models to the client’s situations using rules, parameters and exceptions as well as explore tax loss harvesting opportunities and what-if scenarios to better position clients for the future.

This is also driving the evolution of portfolio modeling towards greater precision, whether considering the intersection of trade restrictions and hypothetical investment decisions, or using rules for a select time period.

Rebalancing Scalability

There are two ways for a firm to address its ability to scale. First, it must be able to process many accounts in a timely fashion and manage all the related data effectively. Second, it must be able to scale across functions regardless of the number of individuals within the firm who have a hand on any particular trade.

Whether your firm is processing 1,000 or 20,000 accounts per day, rebalancing scalability and efficiency should be no different between that of a small firm – where one person would wear the hats of model manager, advisor, portfolio manager, trader and compliance officer – and a larger firm where these functions are distributed across different individuals or departments.

A rebalancing solution should meet the needs of each touch point and role, as well as provide the flexibility to either condense flow down to one person or expand the process to multiple people with additional workflows as needed. Such workflows may include setting up account restrictions, equivalents and suggested trades; an approval process for the advisor to review and approve suggested rebalances; trade execution; handling pre- and post-trade compliance; and reconciling orders.

Pivoting to Digital

The coronavirus crisis has been a catalyst for growth-oriented advisers to embrace more digital strategies and processes. At a time of volatility and uncertainty, the demand for personalized and sound financial advice has increased as investors seek guidance on navigating many complex emotional and financial impacts of the crisis. As a result, many firms have pivoted rapidly in terms of how they engage with prospects and clients in a virtual environment. The right rebalancing and trading technology can help RIAs, family offices and money managers to guide their clients toward the right path, and help to grow and adapt their firms to the new normal as well.