What Is a Portfolio Management System?

What is a portfolio management system (PMS)? It’s the type of software used in wealth management to streamline investments, model client portfolios, and support wealth managers' decision-making process (or turn it into an algorithmic one). In this article, we will look more closely at the functions of such systems, with a particular focus on our own wealth management platform. We invite you to read on!

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What Is a Portfolio Management System? Definition in a Nutshell

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A portfolio management system is a software solution designed to improve the efficiency and quality of the work performed by wealth managers. It enables them to, among others, calculate asset performance, prepare investment strategies, consolidate and overview the whole investment portfolio of a given client, and even create risk evaluations. However, you need to remember that the list of features might depend on the type of solution you choose—there is no single recipe for what a portfolio management system should be.

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In general, such a system may be deployed separately or come as a module in a larger wealth management hub (as is the case with the WealthArc solution). Therefore, you should always pay attention to the software you obtain for your family office or wealth management branch—it might be so that it already comes with the features for portfolio management.

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What Are the Benefits of Using a Portfolio Management System?

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We’ve briefly discussed what a portfolio management system is, so now, let’s look at its value. What profits can it bring into your business, whether it’s a family office, a bank, or you’re an external assets manager? Take a look below.

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Data Centralization

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A portfolio management system will enable you to integrate all the data and consolidate the whole portfolio into a single source of truth. Thanks to this, you will gain a holistic view of all the assets, which will lead to better-informed decision-making. Moreover, this will be crucial if you plan to deploy AI models to help your wealth managers—they need to operate on complete, standardized data, and that’s exactly what you get with portfolio management software.

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Improved Efficiency

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Many features of portfolio management systems include partial or full automation. Thanks to this, you can streamline your operations and increase productivity across your whole business.

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Take, for example, automated reporting—all you have to do is select the parameters, and the report will be generated for you. The same goes for portfolio consolidation and risk concentration features—you reduce the manual work to a minimum, which lets you focus on truly value-bringing activities.

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Enhanced Services Quality

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With centralized data and higher efficiency, you or your asset managers will be able to spend more time strategizing, contacting the client, and selecting the best investment opportunities to pursue. Thanks to this, the overall quality of your service will be higher, driving new clients to your organization.

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Security

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Relying on a reputable third-party solution for portfolio management will also help you improve your wealth management cybersecurity. After all, you will be dependent on the provider's expertise, which will likely be higher than that in your organization unless you already have an experienced data security team.

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Working on the Best Data

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Do you know what is the biggest obstacle preventing businesses from utilizing their data effectively? Poor data quality. In order to fully unleash the power of the information you collect and store, you need to first normalize your data, cleanse it, and ensure that it isn’t biased.

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A portfolio management system might also help you with this. For instance, our solution at WealthArc includes (automated) data normalization, cleansing, and aggregation. Thanks to this, you don’t only create a single source of truth—you get a source you can rely on.

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Enhanced Risk Management

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Prioritizing risk mitigation is currently one of the most important trends in wealth management. Yet, when done with traditional methods, it won’t be as effective.

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With a portfolio management system, you will be able to simulate multiple scenarios, draw from historical data, and, thus, assess risks better. With the current instability in the markets caused by geopolitical factors, the worldwide market slowdown, and the general decrease in wealth, this might prove crucial for keeping your clients and emerging as the best in the field.

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Discover the WealthArc Portfolio Management Module

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At WealthArc, we offer you a complex hub for wealth management, with a portfolio management module included. Our solution comes with all the features you need to manage your clients’ wealth end-to-end. We offer you functions such as:

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• portfolio data consolidation with a consolidated overview of the whole portfolio,
• performance calculation,
• investment strategies and guidelines,
• portfolio benchmarking,
• risk concentration,
• advanced risk metrics,
• AI-driven insights and tactical asset allocation,
• real-time alerts,
• “what if” analyses.

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To add to that, our software comes with a private equity module, an investment fee analysis optimization tool, a client management system, and customizable reporting, available in multiple languages and formats. What is more, we pay a lot of attention to providing you with the finest data—our portfolio consolidation module is overlooked by our Data Team, which catches and corrects errors to ensure that you work only on accurate information. Choose our platform and take your portfolio management to the next level.

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The Takeaway

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What is a portfolio management system? It’s a complex IT tool for asset managers that helps them optimize and streamline their work. In the end, using such software translates directly into higher productivity, better quality and improved profitability. Therefore, if you still haven’t implemented such a platform in your organization, we recommend that you do it as soon as possible.

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You may also read: What to consider when choosing a wealth management tool?

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