Megatrends can influence how we invest but what happens when it blends technology, investment acumen, and human expertise? Manju Boraiah discusses what personalized investing means to financial advisors and clients.
Manju Boraiah: We work with the advisors hand in hand, which, personally, I think is super critical to suit the needs of their clients to get him or her across the finish line.
Sean Burke: That’s Manju Boraiah, head of Systematic Fixed Income and Custom SMA (Separately Managed Accounts) for Allspring. I’m Sean Burke, head of the Remi Specialist Group, and you’re listening to On the Trading Desk®. In this episode, we’re continuing our conversation on megatrends. Look back about six episodes earlier when we discussed the great wealth transfer of $84 trillion that’s beginning and that we expect will continue over the next 20 years. Certainly an exciting opportunity for investors. Today, we will tackle another megatrend: personalized investing. Manju Boraiah joins us to provide his insights. Manju, thanks for joining us today.
Manju: Happy to be here, Sean.
Sean: There’s been a lot of buzz around personalized investing. Can you spend some time telling the audience what that term means to you?
Manju: Sure. In today’s world, consumers are getting used to personalized experiences across different media. For example, when I log in to my Amazon account, the product recommendations that are displayed to me are personalized. On the social media platforms, my ad experiences are personalized. And when I log on to the streaming platforms, the content recommendations are personalized, as well. So, it feels like personalization touches all aspects of our lives these days.
Manju: So, why should investing be any different? I think the future of investing, especially in the retail channel, will be driven by personalization, customization of advice, investment strategies, and portfolios based on an individual investor’s unique financial goals, risk tolerance, and preferences.
Sean: I’ve been an investor for all my adult life and I’m certain most of our listeners can say the same thing. I’ve been working with a financial advisor, and we have a financial plan that’s been in place for years. That feels like personalized investing to me. Am I wrong?
Manju: Not at all, Sean. But I think that nature of personalization has evolved through time. And looking into the future, I think the overall financial goals may or may not resemble that of yours or your parents. However, I think the path to get there will probably look a lot different given how investing continues to evolve to become more and more personalized.
Sean: What are your thoughts on balancing personalization and investment acumen?
Manju: Well, personalization does offer various benefits. I think it’s important to strike a balance between customization based on personal preferences and investment acumen. I think the best way to summarize this approach is customization with guardrails. Customization with guardrails really refers to an ability to kind of personalize investment strategies and portfolios while implementing a predefined set of constraints to manage risk and compliance and to balance competing objectives. And a key differentiator is benefits of customization and tax management with the necessary constraints and safeguards to maintain the portfolio integrity and kind of achieve the desired outcomes for investors.
Sean: Yeah, Manju, that nails it because, frankly, this trend is much more than theoretical. It’s very similar to the wealth transfer we were talking about several weeks ago. This is actually happening. Investors need to be aware of it. And they need to be talking with their clients about it.
Manju: Yeah. Absolutely, Sean. I was actually out on the road meeting some financial advisors last week in New York and in New Jersey. And what was interesting to me was to understand how advisors really understand the value proposition, and they do understand, from a practice management perspective, what personalization brings to the table. I think working hand in hand and understanding how the personalization achieves their desired outcomes.
Sean: Yeah. To me, it’s a blend of portfolio manager acumen, specialists, and technology.
Manju: Yeah. The concept of an advisor requesting a proposal is really kind of step one of the process and we can go back and tweak that and incorporate their feedback and regenerate the proposal. So, there’s this iterative nature to the whole process, which, personally, I think is super critical, where it’s not, regenerate something, you take it or leave it, but there’s this aspect of being able to go back, tweak that, and make changes to the proposal to suit the needs of their clients to get him or her across the finish line.
Sean: Thanks. So, we’re getting close to the end of our time today. Last question, Manju. What should investors be cognizant of while embracing personalized investing?
Manju: In my view, Sean, personalization for the sake of personalization is really suboptimal. And it should really be driven by goals or outcomes for investors.
Manju: Also, we believe that the desired outcomes for personalization can only be achieved by blending technology, investment acumen, and human expertise. And I think the human expertise is super critical here because it brings knowledge, experience, and common sense to the table. So, if you think about financial advisors, portfolio managers, and portfolio specialists who are helping investors, designing these custom investment strategies, to kind of meet their personal preferences, they’re doing so to make sure that the portfolios will ultimately deliver proper diversification, risk management, and long-term growth potential. Investors make informed decisions by providing objective insights that go beyond personal biases or limited perspectives. So, to me, this approach can help investors get to a well-rounded and optimized investment experience that really maximizes the potential for long-term success for them.
Sean: Thanks, Manju. You certainly gave us a lot to consider on the podcast today. Thanks for joining us.
Manju: Thanks for having me, Sean.
Sean: For those of you listening in today, I’m Sean Burke. Until next time, thanks for listening to On the Trading Desk®.
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