How One Small Investment Adviser Is Making Automation Work

For Winward Investment Management, success created its own problems. The Boston investment advisory firm's sudden expansion to over 300 accounts under management a few years ago was leading to serious issues in rebalancing client portfolios. "The company was growing very fast, and the way that we took outputs from our investing model to get into the trade model had a lot of manual process to it," says Winward President and Founder Steve Cucchiaro.

Winward, which primarily advises high-net-worth individuals, trusts, pension funds and endowments, worked with the software developer Greystone Solutions to build a system that cut its portfolio rebalancing process from three weeks or more down to four days, says Cucchiaro.

Winward historically managed portfolios by downloading client data from a large third-party brokerage house, manually entering data into spreadsheets, then using that to run Winward's Global Strategies Model, a custom-built investment-management tool. "At Winward, we used a very sophisticated investment management software that I spent about 25 years developing going back to my days at MIT and Wharton," says Cucchiaro, who studied at the two schools in the 1970s.

It needed an automated means of taking the output from that system, marrying it to individual client accounts and turning it into trading instructions that custodial firm traders could understand and use in their computer systems. Cucchiaro wanted to automate that process while still giving portfolio managers confidence the information was accurate.

Cucchiaro hired Greystone, which has clients including Thomson Financial and OneBeacon Insurance Group, to build a portfolio management system. The system based on Windows server software uses Microsoft Excel as the user interface and automates the portfolio rebalancing process. The new software downloads third-party data, routes the information into a Winward database, and uses a Web service to help deliver the information to Excel spreadsheets with built-in logic. Except for an initial application of appropriate rules and formulas, manual manipulation is no longer necessary. However, portfolio managers always have the option to manually edit the process.

The system has been running for about a year. Winward's next technological frontier will include a block trading system to layer on top of the portfolio management system. Cucchiaro hopes the project, now in conceptual design phase, will enable the firm to construct a single block trade, and the software will allocate the block trade across all the accounts. It hopes to test it by mid-2005.