Could you please introduce us to your business?

Mike Toole: "Artorius is a multi-family office and wealth manager, founded just over four years ago. Our Swiss branch will turn 4 years in December. Our assets under management have since grown to CHF 1 billion.

Wealth planning is our core business, backed by strong investment solutions. We also offer comprehensive and extensive succession and legacy planning, financial planning, investment advice and discretionary management.

Our European clients are located across the UK, Belgium and the Netherlands. Artorius is also specialised in servicing families from the Middle East, mainly in Saudi Arabia and Dubai."

How does a portfolio management system (PMS) support Artorius?

"In the current environment where clients increasingly seek value for money and personalised service, Artorius fundamentally believes that technology will turn into an essential differentiator among financial intermediaries. More stringent regulatory requirements will simultaneously significantly increase the burden on firms.

Our philosophy ensures that clients are not forced into a narrow range of, say, five discretionary models for the sake of simplicity and efficiency. Our proposition offers each client the opportunity of a personalised solution, meeting their wealth management needs. We often tailor the asset allocation and selection around the requirements and preferences of the client, for example by taking tax constraints into consideration.

We are not tied to one custodian bank. Artorius can therefore manage and monitor a significant number of personalised portfolios taking into account their unique complexity. By utilising a PMS with effective and reliable interfaces with our custodian banks, Artorius is not only able to deliver on our commitment to clients. We can also offer tailored consolidated reporting for clients using multiple custodians."

What is your experience with regard to the PMS currently used? What are your conclusions?  

"Artorius initially installed a system that was meant to be a one-stop shop; client relationship management (CRM), portfolio management, banking interfaces, client reporting, document management, client portal .... and learnt that it is difficult to find a one-stop solution that excels in all areas. We recognised that in order for us to be able to achieve our business strategy, we needed to source ‘best of breed’ solutions for the various areas of functionality we need. The multiple systems must, however, be able to interface with each other (e.g. through application programming interfaces (APIs)).

The need for ‘best in breed’ is amplified when one considers the advancements being made in certain areas of functionality: a great provider of PMS solutions may for example have been left behind in terms of app development versus specialist developers. Furthermore, we learnt that as a wealth manager trying to offer a personalised service for each client, you need systems with a high degree of self-managed user configurability. Many of our clients for instance look for reporting unique to their requirements. If you cannot self-configure reports on a system, this leads to heavy development costs.

In summary, we now understand that you can either force your business and clients to work around a system or, build systems that work to meet the needs of the clients. The latter is our strategy. To achieve this objective we recognised we have to dedicate time, capital and expertise. We believe this is essential for an intermediary that has scale. It will over time become a differentiator for us in the Swiss external asset manager/independent asset manager (EAM/IAM) market – that is highly fragmented."

Which approach are you using to select a new PMS provider? What are your key criteria?

"We are currently reviewing our current provider, to source a new solution vendor. Our key requirement is the breadth of interfaces that their PMS has with Swiss banks, as well as custodian banks based in the UK and on the Channel Island. Performance and risk management at a portfolio level is another given. To enable us to manage numerous customised portfolios we need strong management reporting tools, as such these form a key part of our requirements.

We apply a standard process to search the market, to be able to draw up a shortlist. We will than carry out deeper due diligence on two to three parties, before selecting our preferred vendor."

What kind of support have you obtained from Julius Baer?

"As a business with headquarters in the UK, the assistance from Julius Baer gave us a head start in establishing the system providers active in Switzerland. Our current vendor is a UK supplier, but we started searching the Swiss market for vendors as we believe the UK vendor market is not as strong.

Julius Baer’s research saved us the effort of fully scoping out the vendor market in Switzerland and enabled us to quickly move forward to shortlist a group of potential vendors to concentrate our diligence resources on. We also found, bearing in mind that many of the Swiss vendors are relatively young firms, Julius Baer’s insight and knowledge of these firms to be very useful."

Where do you currently stand in the selection process?

“We have a set up a shortlist for PMS. We are considering investing in two systems for two distinct client segments: family office clients and wealth management. We are nearing the conclusion that we actually need a specialist system for family office services to be able to cope with illiquid investment classes, as well as more complex accounting and reporting.”

What would you suggest to an intermediary planning to evaluate and introduce a PMS?

"At first: “Do you have the capacity to manage your system or should you outsource this task?” This is a critical question with the Swiss Financial Services Act (FinSA) pending, as FinSA is going to stretch resources and challenge profit margins through increasing costs. The new rules will also mean moving away from the current light-touch regulatory environment to a high-touch one. Financial intermediaries will need to be able to demonstrate rigour in their diligence and selection process. 

Installing and configuring PMS, however good the vendor, is dependent on the intermediary firm having in-house expertise and time to embed the system into their practice. Thereafter, the challenge for an intermediary is that there are so many solutions, with a wide range of pricing, capability and ability to configure. Furthermore, the natural tendency of an IT vendor is to be optimistic: They always overpromise on functionality, development and delivery time frame. For a small organisation this can be overwhelming.

I would therefore recommend speaking to the Julius Baer team, who have shared their research with us. Their research of the market can, if nothing else, help you accelerate the search for the best PMS solution for your business and thus enable you to focus on your core business – where your focus should be."