In this era of robo advisors and everyday investors using Reddit forums and Robinhood to make GameStop a stock market Cinderella story or a date with her Wicked Stepmother, financial advisors and wealth management firms can stand out by offering tailored, customized portfolios to their clients that can stand the test of market volatility and deliver the returns they need to reach their financial goals.
But, again, this is the digital age and one of impatience. You need efficient trade creation solutions to back up your expertise and make execution seamless, or your clients will find someone or something that will.
In today’s blog, we’ll look at four ways to make trade creation more efficient and the importance of trade processing solutions for advisors.
4 Ways to Make Trade Creation More Efficient
Even in 2023, trading can still be a very tedious process for most investment firms even if you have a dedicated trading desk, sophisticated trading application, or rebalancing software.
At Flyer, we are experts at streamlining the entire trade life cycle, and we help wealth management firms make trade creation more efficient in four key ways:
1. Automate Your Manual Processes
Timing matters when managing client portfolios and so does accuracy. So being able to not only eliminate manual processes but also speed them up using automation can give you a huge edge.
For example, you can set up rules and run them against thousands of accounts with proposed orders. Your workflow triggers will then tell you if there is available cash in an account so you don’t overdraft your client’s account.
Plus, you can have other seamless order routing with predefined routing rules so that each order is sent to the right destination, be that a broker or custodian.
2. Integrate Your Systems and Data
Of course, your systems have to be integrated for order routing to be completely seamless. Integration is a complete necessity, and not just for trading. Decisions for the client’s entire portfolio cannot be made in a vacuum.
Financial plans and investment decisions have to align. And, in order for you to have a complete 360-degree view, your trading, financial planning, and portfolio management systems all need to be connected and the data integrated.
Integrating your entire technology stack can be a little tricky without the right fintech partners, which leads us to point number three.
3. Leverage Open API Partners
APIs, or application programming interfaces, are connections that allow two software systems to talk to each other. They create a truly extensible ecosystem that fosters system integration and for each party to develop features, advanced functionality, and processes for how their business is run.
If you work with API partners for each software solution you need, you can build a more custom and integrated technology stack that better meets the unique needs of your firm and your advisors and clients instead of relying on, for example, an all-in-one solution developed by someone else.
4. Use Technology to Reduce Error Rates
When the trade life cycle starts with automated workflows, not only does the trade creation process get more efficient but it also gets more accurate. And your integrated tech stack simplifies processes the entire way through that trade lifecycle to reduce error rates.
From trade creation to post-trade management, you can completely eliminate manual workflows, streamline the advisor experience, and ensure consistency.
Importance of Trade Processing Solutions for Advisors
Making trade creation and trade processing more efficient is important for the advisor experience, but the overall firm and its clients gain from the streamlined operations as well:
Improving Compliance and Reducing Risk
Taking the manual work out of the trade creation process and the trade life cycle helps everyone in the firm. The manual process of running complex formulas in spreadsheets and relying on that for trading accounts and managing cash balances is a disaster waiting to happen.
One simple way that trading solutions can help advisory firms improve compliance is through automated pre-trade checks. Pre-trade compliance is crucial, and it can be as complex as ensuring a trade stays within a client’s risk tolerance limits, or as simple as verifying that there is enough cash in an account to cover a buy.
Maximizing the Right Outcomes for Clients
You can’t guarantee portfolio performance for clients, of course, but you can put in place processes and a technology that will make it easier to deliver outcomes aligned with clients’ goals.
Again, creating rules and automation in your trading systems can lend a hand in creating more opportunities to deliver better outcomes. If a portfolio isn’t being constantly monitored or rebalanced, it’s all too easy for it to become overweight or underweight in various asset classes and become misaligned with a client’s investment objectives.
For advisors who prefer to rebalance portfolios, setting up automatic rebalance rules to keep portfolios aligned without the extra work can be a life saver.
Enhancing the Client Experience
Your trading technology is often looked at as an internal tool since your client’s will never see it or access it. However, the results it delivers directly impact the client experience.
While the very term “client experience” can be somewhat nebulous at times, it becomes clear when you think of it in terms of costs, performance, and time spent with an advisor.
With automated trade processing solutions that require less hours of an advisor’s team, more clients can be brought on. Working with more clients may allow an advisor to bill at a lower percentage across clients, because they can work more efficiently with more people—and still end up making more at the same time.
With automated rebalancing systems in place, better outcomes are a possibility. While better performance isn’t a given, lower volatility may be, though; and that is something investors can feel directly.
With less manual work on the to-do list, advisors are freed up to focus more intently on client relationships.
Automate the Most Time-Consuming Parts of the Trading Process
Take the first step toward equipping your firm with robust, efficient, and powerfully integrated cloud-based trading.
For more about PMS, read our Guide to Portfolio Management Software
