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New Capitect Tools Promise to Scale Personalized Client Portfolios

The platform outwardly opposes how most advisors use model portfolios.

Capitect, a technology platform for financial advisors, rolled out new tools Wednesday that it says will enable investment managers to personalize and tend to every client portfolio.

The platform’s new Portfolio Architect and Rebalance Architect tools enable advisors to construct, using their strategies, a unique portfolio for each client and then automatically rebalance each one within set parameters.

Edwin Choi, the co-founder and CEO of Capitect, said advisors can now model an entire tree of asset classes and sub-asset classes which he dubbed the “infinite drill down.” As an example, an advisor wouldn’t be stuck choosing a model portfolio with an allocation to U.S. equities; they would be able to choose between U.S. small cap and large cap companies.

Advisors then create customizable “sliders” to define scenarios and factors specific to each client, but they can still rebalance investments across all of the client portfolios. They also maintain control and can review or override trades before submitting them to their custodian with just a few clicks, the company said.

“The greater the number of clients, obviously the bigger the benefit,” Choi said.

There are many portfolio construction and rebalancing tools out there but Capitect said their platform is the first that will allow the scalability of personalized portfolios. Until now, Choi said, current model portfolio rebalancing, limited technology and manual processes made it impossible for an advisor to construct individual portfolios for every client.

Most advisors use model portfolios to some degree or another. Clients are demanding more interaction and planning from advisors, and firms are nudging them in that direction, chewing up time that was previously spent managing investments. That has lead to a rise in the use of model portfolios, but Capitect is outwardly against them, or at least against how most advisors use them.

As low-cost robo advisors, hybrid robo advisors and discount brokerages continue to gain popularity, Choi said advisors cannot rely solely on financial planning as a value proposition to clients. He said they need a way to differentiate their investment management as well.

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