Pros and Cons of Keeping Legacy Portfolio Management Software

For some, legacy systems work just fine, but will that always be the case?

Financial technology is rapidly advancing, and COVID-19 has only accelerated the digital trend.

For wealth and asset managers, can they afford to hold on to old portfolio management and accounting software?

Wealth and Asset Managers Go Digital

According to a survey of the largest global asset management firms, conducted by consulting firm Alpha FMC, 80% of firm respondents have made their digital transformation a priority.

But for those firms seeking digital improvements, 69% of them cited legacy technology as a primary obstacle; company culture and mindset (62%) and lack of resources and relevant skillsets (46%) are also digital transformation roadblocks.

The changes brought about by digital transformation are not insignificant. 40% of financial advisors say mobile apps will transform the wealth management industry, according to a survey from Financial Planning.

At Empaxis, we help wealth and asset managers make that digital transformation. Start the conversation and schedule a free consultation with us.

But Does Every Firm Need to Change Its Ways?

Every organization is different. Some firms have their own longstanding in-house tools to handle their portfolio management and reporting, including quality control systems.

What's more, a firm's client base may be small and/or advanced in age, thus an older clientele may be less demanding on the tech front.

Maybe the company is planning to wind down.

For those reasons, a digital transformation may not be necessary.

In any case, let's review the pros and cons of legacy systems.

Legacy System Advantages and Disadvantages


“If It Ain’t Broke, Why Fix It?”

You've made it this far with your business, and it continues to serve you well. You don't expect any radical changes that threaten your operation, so you'll stay the course.

Easy to Use

If the legacy system is convenient to use, well, who can argue that?

And if training new users on the system isn't a painstaking effort, then why change?

The Price Is Right

If the legacy system fits the budget, again, who can argue that?

Consider these points:

  • How much will it cost switching to a new setup?
  • How easy will it be to use?
  • Can you guarantee the same quality of reporting and ability to service clients on a new system?
Download our white paper: Making Outsourcing Work


The System Is Outdated

Such old technology will lead to the following problems:

  • heavy reliance on manual processes
  • limited reporting features and functions
  • data integration issues
  • no web-based or mobile access of the system
  • issues connecting remotely into the system

If you don't address these issues in the same way your competitors do, you will fall behind.

What you should consider instead:

  • Make it a priority to establish a digital-first strategy.
  • Migrate to a cloud-based, turnkey asset management platform, like TAMP1.
  • Implement robotic process automation to automate reconciliation, billing, and other reporting-based tasks.

Worried you lack the skills or resources to set up a new system?
Contact a managed services outsourcing provider like Empaxis that helps with investments managers go digital.

The Processes Are Inefficient

  • Gathering data from various systems to compile into a single spreadsheet?
  • Spending time manually reconciling cash and position breaks?

That is time wasted. The technology should be doing this for you instead.

A new wealth or asset management platform can handle these portfolio accounting-related functions for you.

This will free up your time to focus on clients, business development, research, and investing.

It’s Inconvenient

Ineffective legacy systems are, well, inconvenient.

And it’s not just inconvenient for you, but for your clients. The clients, especially younger ones, expect instant access to everything from their phones.

If they aren't getting up to date, accurate investment portfolio reports from their electronic devices, then clients will go to your competitors who have the technology that does what they want.

It’s Costly

The system is expensive. For how much you’re paying and how little you get, it’s time to switch.

Pay attention to when your current contracts expire, so you know not to renew and be locked in with a less-than-great system for another year.

Also, consider the costs of not making any changes.

The time wasted not automating tasks or leveraging technology may result  thousands of dollars each year in unnecessary expenses.

Tired of dealing with old technology?
Want to migrate to a new system without the hassle? Let's have a conversation.

Legacy System or New System? You Decide

Legacy systems can work, but at the same time, new technology is making those old systems more of a liability than an asset.

Outdated technology often leads to inefficient and costly business practices.

What’s more, the lack of convenience for clients (due to the lack of a digital platform) is an opportunity for your competitors to poach business away from you.

Those who want to switch but aren’t sure how to do it could always consult with an investment operations outsourcing provider or move to turnkey asset management (TAMP) service providers.

Whatever you do, always think about what’s good for the bottom line and your clients, as well as how to stave off the competition.

Chat with an Expert

Get the latest in automation, investment operations technology, & outsourcing

Our monthly newsletter features helpful resources, articles, and tips to implement at your investment firm. Enter your email below to subscribe: