Software systems are the means by which expertise that selects securities and investments, allocates them and manages them are delivered to the private client portfolio manager. They are the only means by which high level investment expertise can be delivered personally to large numbers of private investors. Given the complexity of managing the relationship between assets and financial needs over time, it is not possible nor is it efficient for portfolio managers to be conducting their own individual research, asset allocation and market timing at the same time as managing large number of complex relationships. Systems should be able to deliver the same portfolio that would be have been constructed by the best asset manager in the company. In fact, because they should deliver an organisation’s focussed asset management expertise, they should be capable of delivering far better portfolios. Of course, this depends on the sophistication, the design, structure and decision rules underlying the system. It also depends on the asset management expertise supporting the system. The best systems and really any system should be able to react automatically to market moves, adjusting security selection, strategy and asset allocation for all clients irrespective of financial profiles and risk preferences in seconds. Additionally, portfolios produced by the best systems under pinned by the best planning and portfolio construction should not have their ability to meet planned financial needs affected by significant market moves.   Why is this ability important? If you have hundreds of clients, there is no way you are going to be able to rework all portfolios in the time needed. Complex systems can automatically assess the affect of changes across all clients. It is important to note that these systems can be set so that changes to asset allocation brought about by changes in relative market movements are only triggered by significant asset allocation deviations and by significant under or over valuation. They can therefore not only deliver better portfolios, but better management and lower costs of management, reacting only to significant valuation differences and planned financial needs. Valuation, allocation and management If a system is going to be able to deliver advanced asset management expertise to the client, the system needs to be directly integrated with an organisation’s valuation models. This means that as prices change and the relationship between prices change, the system is able to automatically adjust strategy and analysis for client portfolios. Most systems do not have this vital relationship with valuation models. Because of this they cannot manage risk and return at a point in time. The link between asset management expertise and the portfolio is broken. The more advanced systems should be able to adjust investment strategy for each client’s preferences and financial needs.
| 
