Market Data in Wealth Management: An Asian Perspective
28 July 2010
One lesson of the recent crisis for wealth management firms is the need to address changes in client attitudes. Of late there has been a massive increase in the range of products leading to complex combination of investment scenarios. Wealth managers, in their aim to remain trusted advisors, have turned to market data providers to remain knowledgeable about market news and gain deeper insight into market analysis. Market data, considered a commodity till recently, is gaining importance for wealth managers for redesigning portfolios and to provide information from different sources in a single and user friendly space. The primary users of market data through wealth management applications include front office staff, including advisors, relationship managers, and investment specialists who use data to analyze existing portfolios and develop investment strategies. Market data is also used in the back and middle offices for handling the management, oversight, and administration of investments and trades. In Asia, different countries are at different levels of maturity in terms of wealth management. Japan is the biggest market and mostly institutional; Singapore and Hong Kong are sophisticated and closer to the Swiss private banking model. Outside Japan, Australia, Singapore, and Hong Kong, requirements are very local and domestic in nature in terms of product choices, regulatory and compliance requirements, and language issues. Investors in these countries prefer domestic asset classes, and mostly invest on their own without relying on advisors heavily. So far wealth management firms have mostly been relying on traditional portals like Bloomberg, Thomson Reuters, etc. With greater regulatory oversight post-crisis, emerging focus on online channel and greater demand for global data, wealth management firms’ approach to market data is changing. Before the financial crisis, firms mostly preferred siloed solutions for separate job functions. This not only increased cost for data management systems but also resulted in duplicate data. This attitude is slowly changing, and firms are after an enterprise wide market data strategy. Move to web-based technology, request for specific services like email and mobile alerts are also notable trends in this market of late. Still, the market is not as sophisticated as those in the West. Many global market data vendors use the same central solution in Asia, with some customization required for local requirements. Celent has learnt that some vendors use a simpler version of their product in Asia by disabling many functions and having small, product-specific resources. Local data vendors have strong presence in Japan; many software vendors, working in conjunction with the content providers, are active in this space, especially in India and China. Other regions are mostly dominated by the global players.