R2Squared

PIMFA WealthTech Member Directory

R2SQUARED

2RSquared is a pioneering SaaS company that empowers wealth managers to translate their client’s unique financial objectives into tailor-made investment strategies, all within a cutting-edge digital framework.

Founded by Rajesh Amin and Razvan Moisa in 2018, who both previously worked at Brevan Howard, the company’s mission is to equip the industry with the capability to offer client-centric products. Their vision was grounded in a fundamental insight: the quality of service and functionality often plays a more critical role in attracting and retaining clients than investment performance alone.

As the company expanded, it brought together a team with decades of experience in various proprietary areas, including trading, portfolio management, quantitative analysis, and technology, gained from institutions like Goldman Sachs, J.P. Morgan, and Brevan Howard. This wealth of knowledge was harnessed to create “LAB,” an intuitive, no-code, fully digital, and visually engaging application designed to democratise financial expertise for the wealth management community.

For end clients, this democratisation of knowledge empowers investment advisors and product specialists to achieve more. The company’s overarching ambition is for LAB to be used to solve the financial advice gap and to unite client interactions and product design on a single platform, allowing clients to access products tailored 100% to their objectives, including the integration of Environmental, Social, and Governance (ESG) factors. This approach, e.g., enables the end investor to define what ESG means to them, solving many of the perceived greenwashing issues and opening up the flow of sustainable capital by increasing trust.

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 Wealth Tech 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 27001:2022 certification.

The leadership team’s extensive background includes the development of in-house front-office technologies for indices and systematic asset management in prior roles, which were used by the team in managing funds and index risk. Rajesh Amin, serving as CEO, has been responsible for managing over $10 billion in funds and $5 billion in indices, holding positions such as Head of Investment Management, Lead Portfolio Manager, Global Head of Fund Derivatives, and Co-head of Global Structured Credit Trading. Razvan Moisa, the CTO, has a track record of architecting front-office technologies and financial trading systems and serving as a Lead Technologist. Peter Hartley, as Head of Analytics and Data, has held roles such as EU Head of Equity Vol and Structured Products Strats, Global Co-head of Equity Risk Strats, Core Quant, Chief Risk Officer, and other Strat roles across FICC.

Market Products and Solutions

LAB is designed to assist wealth managers along three key aspects:

  1. Enhancing the performance of model portfolios.
  2. Empowering advisors with product design capabilities during live client interactions.
  3. Providing on-demand interactive pre- and post-investment analytics on products for both internal and external clients.

Enhancing Model Portfolio Performance.

To facilitate active management, shadow portfolios can be run alongside the core model portfolios on both a historical backtest and a real-time walk-forward basis.  The shadow portfolios can provide analysis of, e.g., 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 assessing the consequences of varying under/overweight choices compared to the relevant benchmark.

LAB also allows wealth managers to delve into the underlying security positions of funds, enabling them to identify idiosyncratic concentration risks.

Furthermore, wealth managers can gain a comprehensive understanding of the ESG (Environmental, Social, and Governance) characteristics of their portfolios, thereby instilling confidence in the overall ESG profile.

Empowering Advisors with 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.

The differences can be constrained by conditions set by compliance and the risk rating of the client. Changes in the model portfolio automatically ripple through to the customised children portfolio, and the trades generated can be fed to downstream systems.

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 ESG scores or factor metrics (like 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.

The infrastructure underpinning these three dimensions is seamlessly integrated, facilitating the smooth flow of information using consistent data. Furthermore, these services are accessible as modular components, either through APIs for those who wish to integrate them into existing systems or through a pre-built user interface for a user-friendly and intuitive experience.

LAB stands as a comprehensive solution, enhancing the capabilities of wealth managers and ultimately contributing to the delivery of highly customised, informed, and effective wealth management services.

Relevance to the Wealth Sector

Technology is advancing at a rapid pace, reshaping consumer behaviour and their expectations. 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. To thrive in this changing landscape, wealth management must excel at its core function—managing how people’s wealth is invested.

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 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 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. These needs often deviate from the traditional risk category 1-5 balanced portfolios.

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 with respect to 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. From a customer duty perspective, the four outcomes of the firm-consumer relationship, i.e., the governance of products and services, price and value, consumer understanding, and consumer support, are all enhanced.

In terms of Environmental, Social, and Governance (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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