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Alphen Asset Management explores new portfolio management systems

How can small asset management firms bolster efficiency and growth? This Zurich-based asset management firm has found that a new generation of portfolio management systems promises to significantly enhance efficiency and reduce costs, freeing up resources to grow its business.




It’s widely-accepted that technology breakthroughs often trigger productivity growth. For small asset management companies, a new generation of portfolio management systems (PMS) looks likely to do just that.

This is the view of David Jenter, General Manager at Zurich-based Alphen Asset Management, who is in the latter stages of assessing the PMS available on the market today, and has discovered that they offer better functionality than the previous generation, leading to operational efficiencies and cost savings.

At a time when Switzerland’s new regulatory environment is adding to the administrative tasks of small asset management companies, these considerable efficiency benefits are welcome. While the previous PMS were primarily aggregators of portfolio data, the new generation automates and simplifies tasks including trading, workflow management, regulatory compliance, reporting and invoicing. 

“This is about very basic things; it is saving money,” explains Jenter. “The software offers more functionality at a lower cost than our current software. It increases efficiency and will save salary costs down the line. The regulation aspect will become very prominent in the near future, but the PMS tool will help with everything from pre-trade checks, to term sheets, to client approvals.” 

But why is Alphen looking to change PMS provider now? Simply because the new generation of PMS systems promises substantial business benefits – a fact Jenter only became aware of after a discussion with Julius Baer’s intermediary support team in late 2019. “A few functions are very eye catching. In particular, order entry is supported with FIX protocol and STP to all of the custodians. There is no need to place the order individually with two or three custodians, which is very time consuming. Instead the tool executes orders automatically,” he says.  “This is one of the biggest advances. It also reduces the scope for human error.”

Efficiency and growth
By improving efficiency, the new PMS should also foster business growth. Alphen is finding that complying with Switzerland’s new rule book, introduced from the beginning of 2020, takes a lot of time that would otherwise be spent managing investments, generating performance and generally maintaining healthy client relationships. But the technology behind the portfolio management software promises to free up some time for those key activities. “That strengthens the relationships and the trust that we have and ultimately leads to more business,” says Jenter. “Alphen is a people business and the more time we spend on the phone with clients the more we can help them.”

Additionally, the new software tools help meet younger clients’ expectations for slick technology interfaces, allowing them to access their portfolios through an online browser and aggregate all positions held at different custodian banks. As Alphen does a lot of estate planning on behalf of families, it increasingly finds itself working for the original clients’ children who have grown up with digital technology. 

Julius Baer’s role
At the time of writing, Alphen’s search is close to its conclusion. Armed with a list of PMS providers selected by Julius Baer, Jenter met his preferred two on the list, ranked according to the number of interfaces with custodian banks, functionality and costs. 

When weighing up these two PMS systems, he found that each had similarly impressive capabilities. However, while one charged a fee for individual users, the other based its fees on assets under management. This charging model made the latter PMS considerably cheaper for Alphen, ruling out the former. 

“Preparing the list of PMS as Julius Baer does is a huge task,” concludes Jenter. “Without that list we would not be looking at the software. It’s just part of the continuous support we receive from Julius Baer on a daily basis for improving our processes, regulatory compliance and other areas, including investment strategy.”

The next step for Alphen is finally deciding whether to opt for the new PMS and its promised productivity improvements.

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Key take-aways

Alphen Asset Management has found that new PMS systems offer far better functionality and save costs. In its view, the most notable function is direct order routing, supported by the FIX protocol and straight-through processing. Julius Baer assesses PMS providers on an ongoing basis, and equipped Alphen with a shortlist.

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