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Mobile Apps in Wealth Management

4/29/2015

168 Comments

 
Private banking and wealth management clients are a lot more tech savvy and a lot smarter than they were just a few years ago. This makes them a rather demanding group. The world of private banking and wealth management however, has not been able to keep up with the pace of change. Every single aspect of the industry has been screaming for progress yet the conservative culture combined by the added weight of regulatory change and the shell shock of the financial crisis has created an industry that is reactive rather than proactive. Change is only done when forced upon it. This type of business culture is rather far from boosting growth.

To make my point, allow me to give you a simple example of something that is at the very core of the business of managing wealth and which is changing rapidly; relationship management.

A decade ago client meetings were easy. I would wine and dine the client and then somewhere during the gateaux, just before the cognac, I’d mentioned the client’s portfolio, show them a three page print out of their portfolio with a bar chart of the past twelve months’ performance and then we’d stick our noses in a snifter and ask for cigars. Glory days ladies and gents, glory days.

While we still get to have the odd long lunch or two (old habits die hard) the clients’ demands for information, how it is delivered, presented and consumed has changed completely. Clients, regardless of age demographic, are using tablets and mobile apps to follow and find new investment opportunities and yes, even new financial services providers. It simply isn’t enough anymore for a relationship manager to walk into a client meeting with a brochure or two and a print out of the client’s portfolio, there has to be more!

Mobile wealth management apps are right at the heart of the clients’ changing behaviour. Most retail banks have some form of mobile app that a client can conduct their day-to-day banking business on, yet many private banks and wealth managers don’t offer mobile apps for their clients. Do wealth managers really think that their clients are only following their investments on paper documents sent by their wealth manager? Clients are downloading third party mobile apps to their smart phones and tablets, allowing them to follow and analyse their portfolios. Every industry senior executive should think about that for a moment: Your clients are using outside providers to manage the investments they have with you. This results in a) You appear out of date b) Your client is open to the solicitation of their business by your competitors c) You don’t have access to what data the client is using.

A wealth manager should attempt to make sure that when a client is involved with their investments, that client is interacting with no one else other than the wealth manager. That means providing up to date information and tools for the client to use under the wealth manager’s own name. This isn’t a difficult task to achieve, there are wealth management solution providers which offer mobile apps that can work in conjunction with an existing wealth management system. For example, PROFILE Software has a mobile app called Mobius, which can be integrated with the current back office software and it can be white labelled. It’s secure and meets regulatory requirements. Everything for the client is there, under one umbrella (I do like that word umbrella): Analytics, real time portfolio management and trading.

When your client wants to or needs to do something with their portfolio they will automatically be connecting to you, not someone else. You not only get to keep your client happy and informed. You get to keep your client and more!

168 Comments

CFA Institute Annual Conference

4/26/2015

17 Comments

 
Greetings from Frankfurt and the 68th CFA Institute Annual Conference. I'm here to speak today about getting started with social media strategies for financial professionals. This is a real career highlight and honour to be invited by such a globally recognised and universally respected institution. If you're attending, come and say hi after my presentation. See you there.
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17 Comments

Greek Finances. What the Numbers Tell You

4/8/2015

9 Comments

 
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You don’t need a degree in economics to understand that Greece is in a bit of a pickle. Instead of going down the usual route of blaming the Greeks or blaming the banks or blaming the EU, let’s have a quick look at the numbers. Don’t worry, this won’t be boring. I’ve put the numbers into colourful graphs and we all know that everyone likes a colourful picture.

Thanks to all of you on Twitter who helped me gather the data. It did take quite a bit of googling. Most of the data used are official figures from the Greek Finance Ministry and one of the interesting things is that the data is not given out in a logical and easy to find way, which tells you quite a bit in itself, but thanks to Google, once you get the right search term, it can all be found.

So what’s the gist of this article? Simple. It’s about Greece’s primary budget surplus. If you don’t know what that is, it simply means they are bringing in more money than they are paying out (a good thing) BUT, BUT, BUT!!! That’s before they pay their debts. So think of it like this: Our friends to the south, the Greeks, are making money, sitting down at the end of the month to a nice glass of Ouzo and saying, “right-ho then, time to pay our debts, I’ve got plenty of money left over, how much do I owe?”

Then reality sets in, because they owe a lot. Or as Cilla Black likes to say, they owe a lorra-lorra-lorra money.

The reason the primary surplus is so important is because if the Greeks have a plus sign in their piggy bank at the end of each month, then it means they should be able to pay their debts if we just stretch and fiddle the debt terms somewhat… well kinda. Read on.

What I’ve done is place all the numbers month-by-month (not the way the Greek Finance Ministry presents them) showing how much of a primary surplus (or deficit) they made month-on-month in 2014 AND compared that to the targets set out by the Greek government (all the links to the relevant data can be found by clicking here)

So what do we learn from the charts below? Well, three things

  1. The official targets are worth absolutely nothing.
  2. Greece will never, ever be able to repay their debts.
  3. The current status quo is an utter disaster.


The Targets are a Joke


Below is a chart showing by how far the primary surplus targets were missed month-on-month in 2014. Look at the swings in the targets versus the actual outcome. Only in one month were they even close, the biggest swing was in May 2014 with a cumulative over performance in the outcome of 240% (a good thing obviously) only to be followed by a cumulative under performance in outcome the next month of 211% (a bad thing). What’s the point of having targets if you’re missing them by over 200% from one month to the next?

More worryingly, it shows that the government has absolutely no idea of how much money it has coming in. Zip, nada, nothing. Predicting earthquakes is easier than predicting Greek public finance inflows.
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Below are the same figures on a monthly basis. What's worrying here is the end of the year. The actual outcome dives and unfortunately (according to official figures) this trend continues in January and February of 2015. 
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The Debts That Cannot be Paid

Let’s move things on to this year, 2015. I did try to find the month-by-month estimates for 2015, but found it an exercise in futility, which I lost.  The Greek Finance Ministry does however publish the overall estimate for the 2015 primary surplus, which they’ve given as €5.798 billion. The problem with this figure is that:

  • It does not give a monthly breakdown of the estimates 
  • (More importantly) We’ve already established that the estimates are of no use
  • The overall estimate for 2015 is optimistic to the extreme
  • The January-February reported outcome figures for 2015 are already behind the 2015 estimates.

So what I’ve done is use the outcome figures from 2014 and compared those to the repayment schedule in 2015. Yes, I know it’s a bit apples and oranges, but my argument is that using the historical ‘real’ numbers from 2014 is a more realistic approach than the estimates for 2015. The point here is to give an overview of how dire the financial situation is.

What I do want to stress is that even the reports regarding the repayment schedule for 2015 differ. I’ve used what I found as the worse case scenario from Startfor Global Intelligence, but you could also use these from CNBC or these from the Wall Street Journal. Please also note that the figures ignore January and February as the repayment data begins from March.
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It's a sad sight to behold, is it not? Every single month, except November, the debt repayments are far in excess of what the Greek government has in its coffers. It gets even worse. If the Greek government had to go to the markets on their own for refinancing they'd probably have trouble just paying the interest on the debt, let alone the principal.

Conclusion

I know, I know, I’ve ignored some important stuff here, such as the ability to roll over debt. Also, it’s completely possible that I’ve gone all Reinhart and Rogoff and there’s a mistake somewhere in the Excel spreadsheet I’ve used. If you have the time and ability please feel free to check it, correct it, further expand on it. All the data in this article, including the spreadsheet, is available on this webpage. Knock yourself out.

The main point of this article is that however you shake the numbers it’s obvious that Greece is unable to repay its debts and the ongoing policy of the Troika, which has now been going on for half a decade, is based solely on what is known as Escalation of Commitment, which is when you make a purchase/investment and it turns into a dud, but because your ego gets the better of you, you can’t admit the mistake and instead keep adding to the mistake. Anyone who’s ever bought an Alfa Romeo will know what I’m talking about.

The only conclusion to this sorry saga is that what is being done now is just not working and it's the Greek people who suffer for it the most.
 It is inevitable that at some point events will overtake the institutions and the system will crack. 


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Aaaaand... the blog is back.

4/7/2015

85 Comments

 
Apologies for the radio silence. It's been a bit hectic this past month with the kind of stuff that actually pays the bills. 

Later this week I'll publish a bigger post on Greece, with all kinds of lovely graphs with colours and everything. Lovely. For now, you may amuse yourselves by reading my article in Management Today in which I have a good old fashioned rant at the management consulting industry. Click the link here, or then on the logo below.

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