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HOW SOFTWARE CAN HELP ADVISORS AVOID TRADING ERRORS

Uncertainty in the markets requires certainty with your technology

In these turbulent times with record market volatility and uncertainty, it is critical to have accurate information about client accounts. “It’s very clear what I have to do when risk rises. I have to reduce exposure,” said Roberto Croce, Senior Portfolio Manager overseeing about $1.3 billion at Mellon Investments. 

Seasoned advisors know that a volatile market can be both a time of opportunity and loss. Without a solid technology infrastructure, the risks inherent with trading increase drastically. It’s more important than ever for RIAs to have the right technology to help avoid trading errors.

The right technology will help to mitigate trading risks while helping you stay focused on what’s best for your clients. There is almost nothing more frustrating than wasting time double and triple-checking inaccurate data before a client meeting. Accurate data that is available in an instant is critical to confidently communicating with clients.  

From portfolio rebalancing to reconciliation, here’s how technology can help advisors avoid trading errors and leverage valuable portfolio data in times of high market volatility.

Checks and balances for accuracy in times of market volatility

Intraday Accounting
With intraday accounting, we calculate positions and cash balances in real-time. This means that you can start trading with accurate positions when the market opens, even if accounting data is delayed.

We’ve seen many delays in transaction processing across all our industry partners. This is due to the significant increase in trading volumes and personnel reduction industry-wide. The accounting systems data processing is delayed when trades are processed late at the custodians. Because we are downstream, we also may not get timely data.

Intra-day accounting allows our users to start trading at market open based on the trades and cash balances calculated the prior day.  Once the accounting data is ready we can refresh the accounts intra-day.

Reconciliation
We track all the trading activity in the system and match that up against the new positions that come in from the accounting systems the following day. If there isn’t a match, we restrict trading on the account.

In scenarios where custodians or mutual fund companies have delays with transaction processing for an entire day, our system has accurate positions.

Stale data Validation
Any inaccurate data increases an advisor’s trading risk. Our software constantly monitors accounts to ensure they are updated with the most current information. We also monitor securities to ensure pricing is up to date.

The system will automatically attempt to update any information that it can. Then, it displays warnings for users attempting to trade any accounts with stale information.

Restrictions and Cash Minimum
Our Pre-Trade restrictions identify potential issues before they happen. If there are accounts and securities that should be restricted from trading due to client requests or any other reasons, these restrictions can be set up to prevent trading or alert users when trade violations may occur.

The system also tracks more advanced scenarios including wash sales and mutual fund redemption penalties.

Portfolio Analysis in an Instant
Portfolio rebalancing is often done annually or quarterly, but with market volatility, it is important to identify areas of concern daily instead of only periodically.

Our drift analysis tool can be used to specify asset allocation drift thresholds on the asset classes or sectors in an advisor’s model. Once these thresholds are hit, the software can highlight out of balance areas, and trigger efficient portfolio rebalancing. New clients are often excited to be able to leverage this drift analysis, which can identify an opportune time to rebalance. This is particularly important during periods of high volatility. 

The Blaze Portfolio platform can help an advisor avoid trade errors in a highly scalable way by calculating trades across thousands of accounts while also automating daily processes such as cash management, drift monitoring, following restrictions, avoiding wash sale violations and handling security swaps. 

For more on how technology can help advisors avoid trading errors and start saving time every day, schedule a personal tour of our software!