Technology presents challenges, opportunities for acquisition marketers

Technology presents challenges, opportunities for acquisition marketers

David Lewis, SVP and Head of Global Equity Group Trading at Franklin Templeton, talks to Traders Magazine about the technological evolution and offers a framework for improving buy-side trading.

David Lewis, Franklin Templeton

What are the biggest challenges facing the asset management industry?

Technology has always been a challenge and an opportunity. Being able to make faster and better investment decisions has always been the driving force in the investment community, and AI has the potential to help the industry realize this potential. The issue is, of course, whose IP will the AI ​​be trained on and who will be able to understand the biases in each output? AI can help active management differentiate ALPHA even further, as systems will continue to evolve and benefit those at Scale. Being able to analyze research from 100 internal investment researchers and understand the drivers and risks will be a differentiator that will benefit the largest asset managers.

What issues can traders try to solve to improve asset management?

I believe that trading and dealers can provide differentiating value to institutional clients with a strong process, structure, oversight and industry representation with regulators and exchanges. Active management is not just investing and portfolio building, but actively helping clients meet their needs and goals. Trading is one leg of the three-legged stool of active management. Ensuring you have industry-leading practices allows the client to demand more from their other managers or employees. We do industry training with clients on a variety of topics, which provide education and share best practices that you typically don’t get in a passive structure. Second, liquidity always remains a challenge, and with retail order flow fragmented and wholesaled, it is estimated that almost a fifth of US daily volumes are inaccessible to the buy side. Having connections to multiple liquidity centers with traders who know how and when to use them is key to keeping opportunity cost and transaction costs low.

What are effective ways for marketers to engage with the industry in order to raise the profile and support change where it is needed?

Traders throughout Franklin Templeton participate in exchange and regulatory advisory committees, buy-side only groups and various industry organizations. A unified buying party is a formidable ally when faced with practices that may benefit only a select few versus creating a level playing field for all participants. Without discussing details, the industry came together this spring to address a data-sharing concern and through a united front was able to influence the provider to end the program. This would not have happened if the buying community was not united on the same issue. Traders should participate in these types of groups to understand their counterparty’s stressors and discuss ways to improve them. Everyone comes at an issue from different perspectives and, by communicating and sharing those perspectives, the industry ultimately arrives at a better place that benefits all involved.

What is your view on the use of technology in asset management?

The same as it has always been. The industry will never stop changing and technology can help us be more efficient with generating better ideas. You should be comfortable learning a new process every four to five years. I started in this industry checking paper tickets and keeping track of PM orders in excel, now we are engaging machine learning to suggest better providers and profile stocks. What you do today will not be the same in 2028. HE will make sure of that.

How can front office transformation build a platform for growth?

Having an efficient process that is always looking to improve will benefit all areas of the investment process from idea generation, stock screening, portfolio construction, execution and cleanup. Our industry never rests, you have to get used to reinventing yourself every few years. Creating a culture of accepting change, embracing new ways of solving a problem, and actively seeking the next opportunity for growth is the key to any success.

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