2RSquared

PIMFA WealthTech Member Directory

2RSQUARED

About 2RSquared

2RSquared is a pioneering SaaS company that empowers wealth managers to use their knowledge of their clients’ unique financial objectives to tailor-make investment products, all within a cutting-edge digital framework.

The company’s overarching ambition is for “LAB”, its AI assisted, no-code, fully digital technology to be used to solve the financial advice gap and to unite client interactions and investment product design on a single platform, allowing clients to access products tailored 100% to their objectives.

2RSquared’s innovative technology has garnered industry recognition through various avenues, including participation in Cohort 6 of the IA’s Engine Innovator Accelerator program, achieving runner-up status in PIMFA/Morningstar’s WealthTech challenge in the summer of 2023, co-authoring a paper with BCG’s Expand on “Technology’s Role in ESG Integration in the Buy-side,” and obtaining ISO/IEC 27001 certification.

The team itself has led businesses or teams across portfolio management, quant, and technology at institutions such as Goldman Sachs, J.P. Morgan, and Brevan Howard.

Market Products and Solutions

Empowering Advisors with Controlled Product Design Capabilities
LAB empowers advisors to be able to walk into a client’s office, open a tablet, and, in live interaction, customise a model portfolio to be tailored to the unique needs and preferences of the client, including non-financial preferences such as ESG. This dialogue is made data-driven by on-demand full historical and current analysis of the differences in the portfolios along the lines of allocations, performance, risk, ESG and other metrics.

For higher net worth clients, the product design capability can be extended to creating bespoke portfolios of funds and securities, which can adapt dynamically according to internal data like buy ratings or external data like factor metrics (e.g., earning quality, earnings growth, value etc.).

On-Demand Interactive Pre- and Post-Investment Analytics
LAB equips wealth managers, advisors, and clients with the tools they need to make informed decisions. It offers users the choice of independent or guided analysis, enabling them to understand the investment story comprehensively. By providing real-time analytics, it allows on-demand assessment of the performance and impact of investments both before and after they are made, ensuring that decisions are rooted in data-driven insights.

These services are accessible as modular components, either through APIs or through a pre-built user interface for a user-friendly and intuitive experience.

Enhancing Model Portfolio Performance
To facilitate active management, shadow portfolios can be run alongside the core model portfolios on both a historical back test and real-time walk-forward basis. The shadow portfolios can provide analysis of various risk management techniques, the diversification benefits of different funds within the same allocation sleeve, the value of un-correlated diversifiers in different market conditions, and the consequences of varying under/overweight choices compared to the relevant benchmark.

Furthermore, wealth managers can gain a comprehensive understanding of the ESG characteristics of their portfolios, thereby instilling confidence in the overall ESG profile.

Relevance to the Wealth Sector

People increasingly demand digital services tailored to their preferences. Moreover, technology is blurring the lines between brokerage platforms, fund platforms, robo/cyborg advisors, and wealth management. 2RSquared’s wealth platform offers a solution to address both of these challenges, enabling the industry to accumulate long-term assets under management (AUM).

On the digital services side, LAB’s digital customisation and analytics capabilities allow wealth managers to differentiate themselves by providing clients with a unique and highly personalised experience in respect of designing investment content and engaging clients in that process. Beyond enhancing the customer experience, LAB’s technology makes mass customisation scalable and cost-effective while simultaneously improving customer satisfaction and loyalty.

On the investment front, LAB’s product development capabilities empower wealth managers to stand out by leveraging their extensive investment expertise to navigate evolving market conditions. This includes improving the model portfolio, tackling issues like high bond/equity correlation and delivering more suitable products for high-net-worth individuals (HNW), ultra-high-net-worth individuals (UHNW), and family offices. The needs of this latter client set often deviate from the traditional risk category 1-5 balanced portfolios.

In terms of ESG considerations, LAB empowers customers to express and witness the implementation of their ESG views, whether it’s pursuing a net-zero objective or deciding on the environmental impact of nuclear power. This addresses many of the challenges associated with labelling ESG investment products.

In essence, LAB provides the wealth management industry with a unique avenue to proactively adapt to the future, outpacing other players and technology providers. Importantly, it accomplishes this without the risk and lengthy lead time associated with expensive internal technology development by utilising an advanced SaaS stack.

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