23Apr2024
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Open Architecture in Investment: More than just a buzzword? 📈

Disclaimer: The views and opinions expressed in the vapa Swiss independent wealth management blog posts featured on this page are solely my own and do not necessarily represent the views of any institutions or organisations I may be associated with. These posts are intended to share personal insights and perspectives and should not be interpreted as official statements or positions of any affiliated entities.

Browsing through the websites of independent wealth managers, the term “Open Architecture” prominently stands out. But what’s behind it?

1️⃣ Popular yet risky: While Open Architecture offers vast investment opportunities, it also presents risks. A wise investor knows not all that glitters is gold.

2️⃣ Past ≠ Future: Don’t be solely dazzled by past performance results. Yesterday’s success doesn’t guarantee the future’s outcome.

3️⃣ Familiar ground: Due to lacking analytical skills and time to read the entire offering memorandum, many often opt for well-known, rather “mundane” UCITS funds, barely differentiating from traditional banking strategies.

4️⃣ Expertise matters: Larger independent wealth managers rely on specialised expert teams or separate companies to fully leverage Open Architecture.

5️⃣ Online Databases: Numerous online platforms are available, but many focus predominantly on fundamental data rooted in the past – an important, yet not the sole criterion.

6️⃣ Diversification & Allocation: Broadly diversified investment funds can offer the desired portfolio spread. An allocation of 10%+ isn’t unusual. However, many clients, influenced by private banking norms, expect more portfolio activity, contrary to fund investments’ primary purpose.

Conclusion: Open Architecture offers a highly intriguing opportunity which can distinguish an independent wealth manager from the standard offerings for HNWIs or UHNWIs. But like any tool, it’s all about how you use it. Care and expertise are the keys to success. 🗝️

Source: LinkedIn

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Open Architecture in Investment

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