vice president of strategy, SunGard’s wealth management business

Risk management for today’s advisor

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Financial professionals continually strive to mitigate risk by evaluating the financial health of counterparties and by employing risk management techniques to consistently stay ahead of any issues. As an advisor and financial professional, you manage risk every day — a position that gives you a unique perspective. High net worth clients in particular look for advisors and firms that can effectively manage both their asset class and counterparty risks, and they want their advisors to be able to consolidate their investment information from diverse sources.

The debate rages on as to whether counterparty risk is managed better by retaining a single custodian to handle all financial service needs, or by diversifying across counterparties and custodians. Both sides cite merits, as well as risks. In addition, it is commonly agreed that effective management of asset risk means achieving a level of transparency that includes both macro and micro views of client holdings — a state that can be facilitated through data aggregation.

What do you think are today’s most common and efficient approaches to diversification across asset classes and counterparties, and what risks have you come across in those approaches? As a financial advisor, what is your experience with risk management and data aggregation? How important do you think transparency and data aggregation are to both the financial services industry and the service provided to clients? Will it help renew or reinforce trust? Share your views, or comment on SunGard’s white paper, Managing Risk through Diversification, Perspective and Data Aggregation.

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