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Portfolio Managers Need Better Technology to Transcend Information Overload

Portfolio managers are overwhelmed with data. AI and ML technology can help them zero in on the information that actually matters.

by jcp
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By Dean McIntyre, senior director of Portfolio Management Business Development, FactSet

It’s time for investment technology to take inspiration from Netflix’s algorithm.

Netflix makes it easy to find something to watch by organizing the titles to suit your personal preferences, which it learns by analyzing your viewing history. Of course, you can always access any of the countless movies and TV shows in Netflix’s library, but the AI helps you sort through the overwhelming amount of content by recommending shows you’ll enjoy.

AI could do the same for investment portfolios. With recent advances in technology, it’s possible to bring together datasets from disparate sources and alert portfolio managers (PMs) to data points, news items, and market trends that are having the biggest real-time impact on their portfolios. And, by layering data with market updates, the tech can go a step further to help you uncover hidden gems of information that would have been impossible to spot otherwise.

PMs need technologies that organize and personalize data to tame the neverending flow of information that inundates them from all directions. In an increasingly fast-paced, interconnected, and data-driven world, you can look to new innovations to help you sort through the noise, automate low-level tasks, and eclipse the competition.

Disparate data systems cause confusion and waste time

PMs use a plethora of technology platforms every month to gather market insights, access third-party data, evaluate ETFs and stocks, simulate potential trades, and more. Frustratingly,

most of these platforms can’t talk to each other, forcing you to develop your own methods to synthesize data from multiple sources. And that means spreadsheets.

Infinitely flexible and customizable, spreadsheets enable you to track, compare, and collate data from various systems. But spreadsheets are an imperfect solution that opens the door to typos and errors while lacking safeguards to automatically flag discrepancies or conduct an audit — a regulatory must. And, on top of that, the manual process extends your already overflowing workweeks.

To add to the chaos, it’s not unusual for PMs at the same firm to each use a different suite of competing platforms. Firms often give you the autonomy to select your preferred software, sometimes going as far as to guarantee access to specific providers in top performers’ employment contracts. With PMs managing billions in wealth, firms are happy to provide the tools you need to do their best work, even if that means jumping through hoops to accommodate everyone’s personal preferences.

Over time, this arrangement leaves firms contending with a patchwork quilt of disjointed systems and siloed data stitched together with Excel files. Inefficiencies build up slowly, resulting in missed opportunities, unrecognized gains, and frustrated users. You’ve likely felt these inefficiencies yourself, but the idea of untangling these systems seems too daunting.

4 reasons to embrace new investment technology

Innovations in AI and machine learning (ML) technology can help you streamline data from multiple sources to provide hyper-personalized decision support without relying on a jumble of spreadsheets.

The autocomplete feature on your phone remembers and automatically enters your name and address when you shop online, and learns your writing style so it can suggest words and phrases before you type them. Similarly, an AI-powered portfolio management tool could learn your preferences and priorities to help you create focused, customized workflows that eliminate manual processes.

Consider these benefits of advanced technology to unite data from multiple points into a single source of truth:

  1. Answers at your fingertips. What if you could have all your data from internal and external sources synthesized in one convenient tool, allowing you to view datasets from various providers side-by-side? New advanced technology makes it possible to keep your finger on the pulse of everything that’s happening across your portfolio by highlighting the most relevant changes and updates requiring your attention.
  2. Breaking news analysis. Imagine if your investment platform could scan the news, zero in on top stories, and predict how they could impact your portfolios. When an investor calls you to ask what a world event means for her investments, you’d have immediate access to internal models to give her reliable information and advice.
  3. Personalized insights. AI and ML tools incorporate behavioral science to provide insights that reflect your personal investment style, learning how you approach specific situations to surface relevant opportunities and nuanced information. The technology adapts to the way you work, helping you to refine strategies in real time.
  4. An edge over the competition. Traders have long embraced automation to execute simple trades, leaving them free to focus on more complex and interesting deals. It’s time to start asking how new innovations can eliminate manual elements from your own workflows. Adopting new technology early can give you an advantage over your peers by enabling you to make more data-driven investment decisions and earn bigger returns for clients.

Developments in AI and ML can help you wade through the daily flurry of information to pinpoint crucial action items. Adopting these new innovations will empower you to make more confident investment choices and focus your time on the tasks that matter most. Be ready to explore the possibilities when they arrive.