The Digital Divide: How Technology Can Catalyze the Growth of Unit Investment Trusts
In today's rapidly evolving financial landscape, technology stands as a game-changer, driving innovation, efficiency, and growth across various sectors. While mutual funds, ETFs, and Structured Products have thrived by embracing technological advancements, Unit Investment Trusts (UITs) have lagged behind, missing out on opportunities to modernize and engage new advisors. Recognizing this digital divide, Advis Network is stepping in to bridge the gap with tailored tech solutions designed to empower UITs.
The Tech Advantage: Why Technology Matters
In today's dynamic financial landscape, technology isn't just beneficial—it's indispensable. It's the catalyst driving innovation, boosting efficiency, and propelling growth.
- Elevate the Customer Experience: By embracing technology, financial institutions can expand their service offerings and elevate the quality of customer interactions, ultimately improving overall satisfaction.
- Advanced Data Analytics: Utilizing technology, financial firms can gather and analyze extensive datasets to glean valuable insights into investor behavior, market dynamics, and risk profiles. This analytical prowess facilitates smarter decision-making and enables personalized service offerings.
- Strategic Competitiveness: Companies that harness cutting-edge technologies can innovate and introduce novel products and services, setting themselves apart in the marketplace and appealing to a digitally savvy clientele.
Tech-Driven Triumphs: The Growth of Other Financial Giants
Look no further than the growth of mutual funds, ETFs (Exchange-Traded Funds), and Structured Products to see the transformative impact of technology. These financial powerhouses have harnessed tech advancements to broaden their horizons, diversify offerings, and meet the evolving needs of investors.
For mutual funds and ETFs, the development of turnkey asset management platforms (TAMPs) has made managing various investments simple through investment models and managed accounts.
In structured products, the development of all-in-one platforms by Halo Investing, Luma Financial Technology, and SIMON has democratized the use of SPs by offering in-depth education, analytics, and a range of structure offerings, making it easy for financial professionals to include SPs in their book of business.
Falling Behind the Digital Curve: UITs' Missed Opportunities
In stark contrast to the success stories of mutual funds, ETFs, and Structured Products, UITs have been slow off the mark in embracing technological innovation.
The problems are not entirely internal, but rather from external factors that are limiting the ability of the UIT structure to adopt new technology solutions. This technological inertia has left UITs struggling to resonate with new advisors, stay competitive, and expand their market footprint.
Today, we are seeing numerous competing product growth outpacing UITs. UITs have seen negative growth for five out of the past 10 years, in comparison to two and three years for mutual funds and ETFs. UITs have trailed ETFs every year, and trailed mutual funds seven out of 10 years.
This lack of competitive growth threatens the long-term sustainability of the structure.
“We believe that, rather than making incremental changes, winners will transform their distribution model with data and technology.”
Unlocking Growth for UITs Through Technology
UITs can begin to use technology in a variety of ways to help close the digital divide.
- Comprehensive Tech Platforms: UITs can elevate their offerings by leveraging all-in-one platforms similar to what Halo and SIMON have done for Structured Products. These platforms not only simplify the integration of structured products but also provide valuable education and analytics, empowering financial professionals to better incorporate UITs into diversified portfolios.
- Streamlined Portfolio Management with TAMPs: UITs can optimize portfolio management by embracing turnkey asset management platforms (TAMPs). These platforms streamline tasks, manage complex option strategies, and help reduce portfolio volatility, allowing advisors to focus on strategic decision-making and client engagement.
- Data-Driven Decision Making: Access to advanced analytics and data insights is crucial for UITs. Other products use sites like like Y-Charts, Magnifi, and Intrinio to offer free or low-cost analytics. Cost-effective access to comprehensive analytics would enable more informed decision-making.
- Adopting Digital Distribution Strategies: In the post-Covid landscape, platforms like Vettafi, TIFIN AMP, and FLX offer ETFs and mutual funds hybrid distribution models, combining wholesale and digital channels. UITs can use similar technologies to reach a wider audience, leveraging behavioral data for targeted marketing and expanding market reach.
Bridging the Digital Gap: Advis Network's Tech Solutions for UITs
Enter Advis Network—a trailblazer committed to propelling UITs into the digital age. We're not just offering tools; we're delivering game-changing tech solutions tailored for UITs.
- SIMON for UITs. Combining Advis technology with existing UIT applications provides an all-in-one centralized platform for the advisor and issuer.
- TAMP for UITs. Through our model building and management platform, asset managers can offer selected models to advisors and remove the portfolio management responsibility from the advisor.
- AdFi Score™. Advis has created a fiduciary score customized for UITs to address the upcoming DOL Fiduciary Rule requirements that require strict due diligence on investment product offerings.
- Digital Distribution Network. Advis provides a unique way to increase UIT distribution channels and increase advisor penetration through targeted marketing.
In summary, the digital revolution presents both challenges and golden opportunities for Unit Investment Trusts. While UITs may have been slow to embrace technology, the potential for transformative growth and innovation is boundless. With Advis Network's expertise and tech solutions, UITs can harness the digital wave, redefine their value proposition, and unlock unprecedented growth in today's fast-paced financial landscape.