Bill Hortz's picture

[In the Institute for Innovation Development ’s ongoing interviews with active asset managers, we are seeing a growing trend of portfolio construction exploration and experimentation driven by the aftermath of the 2008 financial crisis. Many have taken Modern Portfolio Theory and other traditional methodologies and have, in essence, blown them up, and are now reassembling the pieces into new types of investment strategies and risk management approaches.

It’s interesting timing that YCharts just announced its new Model Portfolios feature that can be leveraged to visualize portfolio analysis, share ideation with clients and prospects, and monitor portfolio performance on an ongoing basis on any device, at any time, in any place. We decided to dig further and ask Caleb Eplett , VP of Product Management at YCharts , some more behind-the-scenes questions on the thinking behind building the added technology enhancements into the company’s FinTech research platform .]

Hortz: What inspired you to build this new feature onto your investment research platform?

Eplett: Over the last several years, we have attracted clientele that employ a thoughtful process in making investment decisions. As our product offerings have continued to expand, we’ve remained focused on a single mantra: “enabling smarter investment decisions.” Investment professionals are facing more competition than ever before, and it’s driving a need for increased differentiation and value delivery. In talking to our clients and surveying the technology resources available, it became clear what the market was asking for: a solution for developing and analyzing portfolios with the same ease and intuitiveness as you get when evaluating a single security in YCharts. We built Model Portfolios as a tool for gauging the impact of new ideas once incorporated into an existing portfolio and a medium for explaining these results to clients, who ultimately benefit from an elevated strategy.

Hortz: How did you go about developing your new Model Portfolio functionality?

Eplett: We didn’t set out to build a better hammer. Instead, we started by compiling a list of all the use cases that we’ve heard requested of us and other tools, making an effort to really understand the pain points with existing processes. We coupled that data with the feedback we’ve collected about our existing tools, then sought out ways to capture the benefits our clients referenced most and incorporate those into our solution. To start, we developed a simple way for our users to group and weight securities in a portfolio. Then, we built that portfolio into the user’s account as a living and breathing security that could be analyzed, similar to a stock or mutual fund. Model Portfolios was a considerable undertaking, and we still have a ton of exciting evolutionary features on our roadmap. By taking this route, we’ve supplied our users the best of both worlds - portfolio-level functionality with all the analytical capabilities expected on an individual security.

Hortz: How does your research platform enable an advisor to “say goodbye to complex formulas”?

Eplett Traditionally, to get the same level of detail now provided by YCharts on a model portfolio, an analyst would need to pull all sorts of data into a spreadsheet and perform some complicated calculations. They’ve often had to turn to Excel spreadsheets to achieve the level of analysis and customization they require. While extremely powerful, Excel is not always conducive to quickly switching between diverse data sources and easily building, tracking, or answering questions about strategies. We’ve reduced the effort to just a few inputs. Once a model portfolio is built on our research platform, an advisor can then evaluate the allocations, fundamentals, exposures, risk, performance, and other data, as well as compare it to other portfolios or securities in our charts and tables. Model Portfolios will add to the already reported 4+ hours our data and tools save clients every week.

Hortz : Can you give us an example or use case of how Model Portfolios empowers easier and more robust model portfolio creation?

Eplett: Imagine wanting to compare two portfolios to understand their asset allocations and risk exposure. Now, swap out a few holdings in one of the portfolios to see how that would better suit your client’s risk tolerance and re-evaluate. This can now all be done, on-the-fly, wherever you are, in minutes.

Hortz: What is the significance of designing your web-based research platform to be available anywhere, on any device, at any time?

Eplett: More than 40% of Americans now do at least some of their work remotely. Financial advisors are certainly no exception. Whether they are traveling to visit clients, attending events to stay abreast of new topics, or simply away from their office, today’s advisors expect to have the tools they need to be productive wherever they are. Their clients are also adopting new expectations. Whereas several years ago a question about the markets or an investment could be fielded with an “I’ll do some research and get back with you in a few days,” the best advisors are now responding to these requests in real time. Advisors armed with YCharts often bring an iPad or laptop to meetings to access information and add value to their client interactions. We expect this trend to continue in an increasingly mobile world .

Hortz : How does your new Model Portfolio feature push your value proposition even further?

Eplett: One of the common pain points that we hear expressed by our market is how often they are required to switch between tools. One system for managing clients, one for reporting, one for marketing, one for compliance...and so on. We consistently ask our clients, “What are you doing right before you use our platform? What do you do right after?” So often, the answer to one or both of these questions revolves around portfolio construction or analysis. By adding tools with those capabilities to YCharts, we’re expanding the amount of the investment process that can be completed in one place. We’re also reducing the number of times our client needs to toggle to a different screen or service. In some instances, it could provide an opportunity to discontinue another service and further reduce their expenses.

Hortz: Any last comments or suggestions to model portfolio creators based on your experiences in designing new tools?

Eplett: Realizing that time is our clients’ most valuable asset, we’re constantly focused on providing tools that suit their demands and give them time back in their days. By significantly reducing the time it takes in the construction, comparison, tracking, and evolution of model portfolios,we are allowing clients to focus more on the actual analysis needed to build better portfolios.

If you are an existing YCharts Professional customer, we provide you this hugely powerful functionality at no extra charge. If you aren’t yet a current YCharts Professional customer, Model Portfolios provides another reason to explore our online research platform as a powerful and valuable tool to aid your practice.

Written by Bill Hortz, Founder & Dean, Institute for Innovation Development

The  Institute for Innovation Development   is an educational and business development catalyst for growth-oriented financial advisors and financial services firms   determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors - Pershing, Voya Financial, Ultimus Fund Solutions, Fidelity, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines). For more information  click here .


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