Wealth Management Technology and Market Events – Time to Get Our Heads Out of the Sand?

Our industry has been through several significantly challenging times recently with market swings and volatility. Is it over?

Given recent events related to natural disasters and the potential downgrading of US Treasuries by Moody’s, it may not be over. A better assessment may be that this is life, as we know it for the foreseeable future.

What does that mean to Wealth Management technology leaders? It means that the ability to continue to operate effectively with large market events may separate the ultimate winners from the ultimate losers in our industry. The larger the firm, the bigger the challenge to support large market events. If an unpredictable event happens – how will you react? The wrong reaction (or lack of one) could mean the firm will suffer significant financial exposure.

So, what is a firm to do? Here is a great place to start:

  • Increase visibility
    • How many senior managers really know how many transactions, trades, or processing events happen daily, weekly or monthly? Not many.

If asked by executive management what would happen if “X” happened, most could not even tell what happens daily, weekly, or monthly. The data and tools exist to increase this information flow to management – it should be budgeted for, the project executed, and the information provided.

  • Scenario Modeling
    • Once a baseline of daily activity is determined, do some “war room” like modeling to socialize what could happen. What if the investment management group decided to do a massive move from equities to foreign bonds? What if a mutual fund company was found to have some financial problems? What if US treasuries are downgraded? What volumes of transactions can your operations and technology infrastructure support? If volume concerns are identified, then do some volume testing to determine where limits are.
  • Action Plans
    • Based on lessons and socialization of scenarios build action plans that:
      • Correct any short comings of existing infrastructure
      • Build management tools to alert management of extraordinary or potential problems that could surface – try to be proactive, not reactive.
      • Determine key, trusted individuals that would be consulted during a market event and form a critical event team that meets periodically with specific defined roles. When the event happens, use that team structure and organization to have your responses to management ready before they ask for them. The most important thing this shows – leadership!

The ability to incorporate these key ideas into action plans may be the first step in keeping a firm one-step ahead when our industry is challenged with these unpredictable events.

Be prepared for life…as we know it.

Contributing author: Craig Cook, President Oakbrook Solutions

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About Oakbrook Solutions

Oakbrook Solutions delivers consulting services and business process management solutions (WealthWorx®) focused on the system, process, and change initiatives occurring in Wealth Management. Oakbrook leverages expertise in strategic consulting, project management, business analysis, and operations support to increase our customer’s competitiveness and profitability through optimizing their use of talent and technology.

View all posts by Oakbrook Solutions


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