Fund managers can use data they already have to monitor each step of their investment supply chain — from broker research to in-house analysts, trade execution and portfolio management with a new tool from Advent Software.
Data which already exists inside firms has great potential to improve returns, said Todd Gottula, chief technology officer at Advent Software, whose investment software tools are used at more than 4,500 firms. The company is rolling out Advent Direct, a new cloud-based system that lets investment managers take data from their Advent modules and other enterprise systems such as SalesForce.com, to generate a view of their investment processes and, soon, of their customers.
“Clients are focusing not on how to get more data but how to get better access to the data they already have,” added Gottula, “and use it in new ways to make better decisions and offer more transparency out to their clients and stakeholders.”
Information on the original investment hypothesis, the research it was based on, the analyst behind it and the trade execution, is typically held in a variety of separate silo systems, even in small firms, said Gottula.
In the past, several software providers have offered ways to track sell-side research and its results, but narrowly focused research evaluation systems are not sustainable, he explained.
Advent is looking to solve a much bigger set of issues and deliver more value, Gottula added. The quality of information about investment research is highly variable with some firms using software like Advent Tamale or CodeRed to track it, and others using Microsoft Outlook and shared folders — a fairly primitive approach that requires a lot of work to deliver even mediocre results.
“To really understand the quality of the broker information you need a repository of who the analyst was who received the broker research through to the point where you decided to act, and beyond that to tracking the performance. That involves lots of data from different systems, which is where a point solution fails because it requires that you build duplicate systems or undertake a massive integration project. If you are doing all that just for broker evaluation, you will fail.”
The challenge is to reach into the source systems and surface the underlying information to improve collaboration within the firm, make better investment decisions, and communicate the firm’s investment strategies with relationship managers and ultimately investors — often institutional managers or high net worth clients.
“Traditionally, communication among the departments has been done in printed paper reports. The analyst pitches an idea to the portfolio manager and then it goes to the trading desk. When relationship managers sit down with clients tor prospects to talk about why the firm is invested in IBM, they don’t have the information.”
Rather than getting more data and creating a data warehouse to store it, Advent is proposing that firms go to the source systems and put together views and presentations that cut across the silos. To achieve this, Advent is using an open eco system that can take information not only from Advent systems but also from other software packages, in-house systems, a firm’s internal research and SalesForce.com or other CRM solutions, and delivers the results, with some effective visualization tools, through the cloud.
“We have been Microsoft, but our new platform uses SQL and Mongo (an open source NoSQL data repository) for doing a lot of the data set manipulating so we can get the best out of the technology. That is one reason cloud can be so powerful — we can use best of breed technology behind the scenes and not subject our clients to managing the environment,” he explained.
“Our first focus is on transparency and then helping the investment manager understand clients and prospects and find better sources of sticky capital. The investment manager is interested in raising the funds and keeping the funds.”Capital retention is a key concern of managers, he added, and flight risk is never far from their minds.
“We can help them have better conversations with their clients and prospects and explain how they are making investment decisions.”
Search capability in Advent Direct will allow analysts to find information they may not be aware of.
“People often don’t know what is already available,” Gottula said. “Broker research comes in — it might be a report on IBM but it also talks about how IBM is selling systems into Brazil which they see as a growing opportunity. Generally people will stuff that into an IBM folder, while a portfolio manager who is interested in South America would never know about the report.” Advent’s system uses a natural language search engine so an analyst can easily check for mentions of Brazil or South America across all the reports within the firm’s systems.
Advent’s initial focus is on investment management and the investment lifecycle process, but the relationship management process is probably the next step. Gottula sees a large opportunity there.
“The quality of information on customers is surprisingly, often shockingly, low, especially for high net worth individuals where a lot of publicly available information exists. Investment firms will know the name, address and Social Security number but they often don’t know much about the investor’s other investments and about them personally. Sourcing what is available though social networks we can provide a lot of value by augmenting that data set.”
Advent is rolling out Advent Direct to a few clients in Q4 and hopes to have several hundred of its 4,000 clients using it by the end of 2013.Comments