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How trading technology is helping financial advisers navigate markets

In what is a good news story for investors, financial advisers have watched a range of stocks reach or near their 52-week highs in recent months. As the market now digests reporting season, many of their clients are asking them, should they sell or buy more?

One of the key questions is, will these stock price rises and the price earnings driving them continue?’ It’s a pertinent question after an earnings season in which winners and losers among the S&P/ASX 200 were evenly split and prices for individual companies were volatile when results came out.

These recent market movements are providing financial advisers with opportunities to communicate with their clients. For those conversations, data is becoming increasingly important.

Investors want on-demand facts and figures, comparisons, context and contrast to talk about, to assess what they should do next with respect to the advice being provided to them.

Advisers are seeking to be informed at all times about market movements and their impact on portfolio allocations and risk, identify new stocks or substitution alternatives, and to use fundamental and technical data to identify optimal entry and exit points for trades. At AUSIEX, we also see financial advisers wanting to be able to compare clients’ portfolios to that of ASX indices and other benchmarks to demonstrate their above-market performance, and subsequently, the value they add in uncertain markets.

Much of the information is increasingly available from modern adviser platforms and trading accounts. While it may appear to take just the push of a button to end-investors, there’s a lot of technology and functionality behind the scenes to provide these individual assessments. This technology can sometimes be easily overlooked by advisers, but it is important to leverage it effectively and consistently across clients and over time, as it can have a significant bottom line impact to the client and an adviser’s practice.

Use the tech to remain alert and ready to respond to market announcements


It’s important, of course, that advisers are prepared to inform their clients about price-sensitive announcements and to respond to queries when they arise to demonstrate to clients that they are on top of market movements.

Effective use of alerts and watchlists is a simple yet important part of the adviser’s monitoring toolkit, and with modern platforms they are simple, quick, and easy to implement.

For example, they can be used to alert advisers when individual stocks reach new highs or have risen above, or dropped below, certain adviser-defined levels, such as the price they purchased the stock or a specific stop-loss setting.

In addition, alerts can inform advisers who may want to sell stocks when they regain their entry price or buy into climbing stocks when they pull back temporarily. Organised watchlists allow advisers to track stocks with desirable characteristics to be ready to trade when entry conditions are met.

Improving adviser stock trading efficiency

With the cost of advice as an ongoing theme, advisers today are also increasingly appreciating the need to take their stock trading discipline and efficiency to a new level.

Some of the ways we see advisers doing this include multi-stock and/or multi-client orders and utilising more advanced order type functionality such as conditional orders. For example, if BHP shares rise above $50, a conditional order can be set to sell a set amount of the stock for those clients who would like to do so. This creates greater efficiency for advisers and their clients and allows them to achieve optimal entry and exit points on their trades, even when they are not actively monitoring the market.

Ensuring discipline in these areas and using the toolsets available in modern platforms can create bandwidth and help advisory practices that are under efficiency pressures to deliver lower cost advice, focus on service quality and more value-adding aspects of service (such as increased face-to-face meeting time).

Trading efficiency is and will continue to be critical and differentiate advisory practices from one another.

Leverage the time-saving technologies available in modern platforms

Features that advisers can use on their technology include:

  • Alerts – build and maintain a library of alerts to efficiently monitor the markets.
  • Company comparison tools – use direct comparison tools to compare substitute stocks and execute a switch when appropriate.
  • Research – integrate and compare research from providers such a Morningstar and MST Financial to gain conviction.
  • Leverage enhanced trading tools to drive efficiency:
    • Bulk execution solutions allow efficient single stock, multi-client and multi-stock, single client execution.
    • Reporting and order management tools ensure advisers are always aware and in control throughout the trade cycle.
    • Conditional orders allow advisers to leverage data to execute efficiently and with precision.
    • Stock and ETF screeners can significantly reduce the time associated with stock research.
    • Company search – use specific criteria for discovering investment opportunities (buy or swap) based on desirable characteristics.
  • Interactive charting allows for precise setting of target entry and exit points, for example, against indices or moving averages.
  • Leverage the managed trade services offered by your broker for high value or complex trades (e.g. blocks) with very specific price targets.

Other trading tips

Break it down – placing a large order when market liquidity is low should be a carefully considered process. Undertaking price discovery can be important in these situations. Similarly, it may be best not to place an entire order at once, but instead, trade in smaller increments to avoid driving the price up or down away from your targets.

Algorithmic trading – these strategies, which require particularly careful consideration and planning, use automated and pre-programmed trading instructions to account for variables such as price, timing, and volume.

Bulk orders – orders which aggregate the total number of shares across a client base might be treated as a single order for efficient processing, and then allocated post-trade and can avoid driving the price away from your own order when entering or exiting a position.

Execute when the time is right – whether utilising event-driven alerts, pre-set conditional orders or via designated trading representatives, the flexibility around execution timing is within the adviser’s control.

Brett Grant is head of product, marketing and customer experience at AUSIEX