Customised, highly automated investment solutions for all client segments will become more important in the coming years. Investment managers therefore need to focus on providing such solutions while keeping their costs under control: they must make the delivery of customised solutions scalable. A whitepaper co-authored by Tindeco examines the drivers, current challenges and future developments in “mass customisable” investment management.

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Demand for customised investment strategies for all client segments from institutional clients to retail investors is on the rise. The M&A activity of market-leading investment managers in the area of “direct indexing” is just one indication among many that this trend is here to stay. This is driven by the increasing demand for investment solutions that are consistent with clients’ values and their holistic financial needs. Investment managers must implement highly systematic approaches to portfolio construction and portfolio management that can leverage new technologies to increase automation. Successful organizations will implement new operating models and new technologies enabling them to reduce the marginal costs of providing customised investment mandates to near zero.

“This is about the democratisation of investment management. Fifteen years ago, the industry offered customised investment solutions to UHNWIs and institutional clients. Today, it is possible for clients of all types and sizes to have access to portfolios and advice that truly meet their individual needs. As clients increasingly expect bespoke solutions, investment managers are looking to adopt the right technologies to give them a competitive edge.”

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Michael Kaimakliotis, CEO Tindeco

Developments in cloud computing, process automation, machine learning and distributed ledger technology (DLT), will largely reduce production costs in investment management and thereby enable the offering of customised, rules-based investment strategies for all market segments.

In the future, it is expected that the industry will (re)organise itself more around functional needs rather than around normative client types. An example of this can be seen in the convergence of the asset and wealth management industries today. In the future, Investment management platforms, expert investment managers and customer channels will be the primary segments around which the industry will be organised.

Tindeco is a leading wealth tech company and offers the Tindeco VISION technology platform. VISION supports asset and wealth managers in the implementation of highly scalable operating models to enable them to efficiently deliver customised investment solutions.

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