{"id":1099,"date":"2021-07-06T13:33:00","date_gmt":"2021-07-06T13:33:00","guid":{"rendered":"https:\/\/digiterrebestg.wpengine.com\/?p=1099"},"modified":"2024-05-29T15:36:16","modified_gmt":"2024-05-29T15:36:16","slug":"data-management-taps-vast-potential-of-esg-in-wealth-management","status":"publish","type":"post","link":"https:\/\/www.digiterre.com\/us\/2021\/07\/06\/data-management-taps-vast-potential-of-esg-in-wealth-management\/","title":{"rendered":"Data management taps vast potential of ESG in wealth management"},"content":{"rendered":"
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Data management taps vast potential of ESG in wealth management<\/h1>\n\n

ESG has moved to centre stage in the private wealth arena, but successful implementation of ESG requires effective data management. Digiterre hosted a webinar exploring the topic with client BITA Risk, the provider of the BITA Wealth platform for private wealth managers, investment advisors and quant teams to manage client portfolios.<\/p>\n \n <\/div>\n<\/section>\n\n\n

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The discussion focused on Digiterre\u2019s collaboration with BITA Risk to build the ESG functionality for the BITA Wealth platform.  This innovative management application allows ESG considerations to be incorporated into the construction, analysis, monitoring and reporting of private client portfolios.<\/p>\n\n\n\n

Ian Murrin, Founder and CEO of Digiterre, emphasized the importance of data to the implementation of ESG at scale in wealth management.\u00a0 He discussed the challenges of data management across data silos, volume, value, fidelity and timeliness.\u00a0 Data is the new water, he said, as without it no organization can survive. According to Ian, digital-enabled transformation equates to data-enabled transformation, and this in turn relies on having the right tools, processes and culture in place for\u00a0data management across the data maturity curve<\/a>.\u00a0 This approach was put to work on the BITA Risk project.<\/p>\n\n\n\n

BITA Risk\u2019s President and Global Head, Daryl Roxburgh, explained why data management is crucial to the effective incorporation of ESG into wealth management portfolios.  The first step is to select a data vendor which involves due diligence on the methodology used and the coverage of the data.  For example, managers may look at whether the data provider undertakes its own surveys, uses quantitative methods, or aggregates data from other providers to produce a consensus score.  Data sets often contain at least four tiers \u2013 a high-level score for a company, followed by three pillars for each of environmental, social and governance factors, and then various subfactors.  There could be upwards of 2,000 data points per company.<\/p>\n\n\n\n

Investment managers need to decide what data they will use in the investment process and at what level of granularity a client can express ESG preferences.\u00a0 A high degree of granularity can be provided for a large client, but replicating this in a mass-customized way at scale is challenging.\u00a0 Managers may choose to bias a portfolio towards clients\u2019 ESG preferences or remove conflicting assets from the portfolio.\u00a0 The chosen investment management approach drives the data management strategy that will be adopted.\u00a0 The framework created for BITA Wealth ESG Manager supports mass-customization with a data strategy that linked clients\u2019 ESG preferences, their mandates, investment strategy and the core data, and then mobilized that data to analyze, re-balance or monitor the client book.<\/p>\n\n\n\n

This was a highly complex data mission.\u00a0 It required the combining of data related to ESG factors, client portfolios, client preferences, risk management, investment strategy, and suitability assessment.\u00a0This in turn called for data ingestion, normalization and management, for example capturing client preferences at multiple levels in multiple data zones without losing data integrity.\u00a0 Digiterre and BITA Risk worked together to implement advanced software and data engineering capabilities across architecture, user-interface development, server-side development, and quality assurance.<\/p>\n\n\n\n

The project resulted in a unique ESG management application for the private wealth sector.\u00a0 BITA Wealth ESG Manager incorporates client preferences, portfolio modelling and screening and what-if scenarios, as well as portfolio and client reporting, and ESG and product preference monitoring and alerts.\u00a0 It features interactive visualizations that enable the assimilation of high-density complex data and a questionnaire framework that enables clients to express a wide variety of ESG preferences.\u00a0 It is supported by a data model that will act as a foundation to a firm\u2019s ESG proposition and enable that to evolve with data and market developments.<\/p>\n\n\n\n

Data management is a key enabler of the widespread adoption of ESG and sustainable investing.  By applying advanced data engineering approaches, wealth managers can effect a step change in ESG adoption.  This empowers them to accelerate their product and business development efforts in the ESG space and helps them unlock the vast potential of private wealth to power a more sustainable future.<\/p>\n\n\n\n

You can watch the full webinar he<\/a>re<\/a>.<\/p>\n<\/div>\n<\/div>\n\n\n\n

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About the Author<\/h3>\n
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Digiterre<\/h4>\n\n \n \n <\/div> \n <\/div>\n
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