Key Factors When Selecting a Portfolio Management Software Solution

However, there are many software options which can make it difficult for a financial industry professional (banker, advisor...), to choose the one that best fits their needs (or business). We want to help you choose the right solution by highlighting the key factors in this article.

1. Functionalities and Capabilities

When choosing portfolio management software, it is crucial to analyze the functionalities it provides, since it would vary a lot from one provider to another.

• Portfolio tracking: This might be the most important feature (and is available in every solution) helping you track a variety of products and asset types, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), cryptocurrencies, etc. Your provider should offer reliable data integration between all of your accounts (as well as data provider) and real-time updates.

• Performance Analysis: Check if the program has all the necessary performance statistics and ratios to help you understand better your portfolio's evolution.

• Asset Allocation: This functionality will help you visualize and understand the asset allocation across different categories such as sectors, regions, top holdings, currencies, and asset classes that the portfolio is invested in. This information can be shown in pie charts or heat maps and will help you analyze your portfolio’s diversification.

• Reporting Capabilities: Detailed reports to visualize on the screen or download as a PDF to track investment performance, tax information, and other regulatory requirements. It's especially relevant for entities to look for customizable reports to share with their clients afterwards.

• Financial Planning: Some solutions include integrated financial planning tools that help you project future cash flows, retirement needs, or savings goals. This can be especially useful for individual investors or financial advisors managing client portfolios.

2. Integration Capabilities

Existing integrations with banks and brokers minimize manual work and allow investors to keep their portfolio information updated. Integrations can take a lot of time, so it's better if the software solution already works with your custodians or brokers.

• Broker and Bank Automatic Integration: Make sure that the portfolio management software solution you choose integrates with your banks and brokers. This integration will avoid manual work (minimizing errors) and automate data feeds.

• API Access: It's important to choose a state-of-the-art software that has API services in case you need to integrate information with other platforms, such as CRMs or accounting tools.

• Data Import/Export: Even if there is no automatic integration, you may still have the ability to upload files from your custodians and maintain a consolidated view of your investments.

3. Technology Options

Analyze whether you prefer a cloud-based (SaaS) software or an on-premise solution (see articles regarding SaaS software):

• SaaS (Software as a Service): hosted in the cloud and accessed via the internet. Costs might be lower and investors can access their portfolio from any device with an internet connection.

• On-Premise Software: installed locally on your servers (more convenient for companies than individuals). Usually involves higher costs and the need of an IT team to maintain the software.

Either way, it's crucial that the software has strong security measures implemented ( encryption, two-factor authentication, and regular security updates).

4. Ease of Use and User Interface

It's important to be able to navigate through the solution easily. Important factors:

• Intuitive Navigation: The software should have a clean and intuitive interface with easy and straightforward access to features.

• Customization: The ability to customize the dashboard, reports, and alerts will help you fit your or your clients' preferences.

5. Customer Support and Training

Portfolio management software solutions typically integrate multiple counterparties, such as banks, brokers, CRMs or data providers, among others. This means there might be some incidents from time to time, making it crucial to have strong and experienced customer support teams. Keep in mind:

• Support Channels: Important to understand what support channels you will be using—email, phone, live chat, or an account manager, and the availability of support.

• Training Resources: Such as webinars, user manuals or tutorials to help you understand all the functionalities you will be using.

• Community and Forums: To help you interact with other investors (or companies) using the software.

6. Scalability and Future Needs

You may purchase a product that meets your current requirements. However, in the future you may require additional features or information. The importance of this aspect also depends on whether the buyer is a company or an individual. Typically, for companies managing large and demanding client databases, this aspect becomes more relevant. Make sure you understand the conditions of adding new developments in advance.

Individuals often buy the product as it is, but companies usually engage with digital providers in tailor-made projects that evolve over time, needing more sophisticated functionalities and analysis.

• Scalability: The software should support a larger number of clients or investments without losing performance.

• Flexibility: As mentioned before, the digital provider should offer flexibility in adding new developments or integrations easily and quickly.

7. Cost and Pricing Structure

The price of a portfolio management software solution can vary significantly. It will depend on the included functionalities, provider's expertise, and the deployment model. Consider the following aspects:

• Upfront costs: These are the initial expenses the buyer will pay to the provider to get the software ready for use (including customization and adaptation to the business). On-premise solutions usually have higher upfront costs than SaaS and include hardware, software licenses, and implementation services.

• Maintenance and license fees: The annual fee the customer will pay to use the software, including support and incident management.

• Extra Fees: There may be additional costs related to hosting, API access and other premium features.