The Future of Portfolio-Manager Workflow


Technology has enabled portfolio managers to be much better connected and informed compared with years ago. What workflow advances does the future hold?

One way to gain insight on the trends of tomorrow is to assess the hitches of today, on the premise that those are the areas that buy-side firms and their technology vendors are working on.

For portfolio managers at T. Rowe Price, “the biggest pain points include the mobile experience, access to quality data, mastering multiple systems, and understanding a holistic view of their workflow,” said Katie Crawford, Head of Investments Technology Product Management at the $1.01 trillion investment manager.

Katie Crawford, T. Rowe Price

“Our goal is to provide tools based on workflow,” Crawford told Markets Media. “In addition to supporting separate applications for risk, quant factor analysis, research management, and myriad other sets of applications, we also want the PM to pull all of those applications together into one module-based experience.”

The largest, ‘Tier 1’ buy-side firms trade a multitude of asset classes, across multiple markets around the globe. The idea of one technology system that meets all the needs of all portfolio managers and traders is ideal, but not realistic; the next option is to have the best system for each specific function, which makes the challenge one of integration and optimizing user experience.

Having siloed systems for different asset classes is clunky, but the premise behind its emergence as the standard was sensible. “There was a belief in the niche product’s ability to achieve a better understanding for each asset class,” said Tracy Wolfe, Senior Vice President, Senior Director, Strategy at FactSet. “That desire has not gone away. What has gone away is the tolerance for having disparate systems complicate workflow.”

Investment managers have multiple motivations for upgrading portfolio management systems. According to a November 2017 Aite Group report, the chief reasons for doing so are operational efficiency (cited by 26% of buy-side firms), replacing manual processes with automation (26%), and improving the quality and integrity of data (21%). Other reasons include the wish to focus on investing rather than building, and a desire for an integrated front-to-back platform.

Stan Kwasniewski, FactSet

“The middle and front offices are speaking the same language more, in the sense that they’re managing the portfolios and analyzing the portfolios based on the same underlying data set,” said Stan Kwasniewski, Senior Vice President, Senior Director, Strategic Business Unit Operations at FactSet.

Crawford of T. Rowe noted the number of applications supporting the portfolio manager has proliferated to the point of being overwhelming, which can lead to inefficiencies. “One-stop shop applications seem to leave the PMs wanting, but dozens of different apps that specialize in one task are difficult to master and involve too much context switching,” she said. “The best architecture is one of a build/buy/integrate strategy for supporting PMs. Component applications that can be connected and allow a PM to go easily from security selection to trading, while utilizing features and components of all the applications that are optimized for those tasks, can be really beneficial.”

“PMs may model in a tool like FactSet, CRD Manager Workbench, or Bloomberg and pull in custom analytics from internal systems, but they also want to integrate or connect on their desktop with full internal applications that integrate risk, client, and quant front ends,” Crawford continued. “The open source frameworks that connect systems are what PMs are responding positively to in a market inundated with apps.”

A linchpin to the PM workflow of the future comes down to three letters: API. That is, Application Programming Interface, which is a set of subroutine definitions, communication protocols, and tools for building software. In layman’s terms, a good API makes it easier to develop a computer program by providing all the building blocks, which are then put together by the programmer.

Tracy Wolfe, FactSet

According to FactSet’s Wolfe, “To the question of ‘How will this all work?,’ I think the answer is that some of the business walls across vendors will need to come down, and we’ll have to leverage the modern technologies that we have today regarding APIs to really deliver what the asset management community is looking for.”

“The future workflow will be built around APIs,” Kwasniewski said. “An investment manager will go out, find the best solutions they can in the marketplace, then use APIs to connect into those best-of-breed data sets or analytical engines.”

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