UX Wealth Partners TAMP uses AI technology and investments

A company thinks it has the answer for independent advisors to stand out in an increasingly crowded market: artificial intelligence.

UX Wealth Partners provides RIAs with outsourced technology and AI-powered investment management. Its latest addition is the AI ​​Sentiment US Equities All Cap Model Portfolio, which uses an algorithm to select 30 out of 1,000 stocks based on favorable sentiment in media coverage. The portfolio is automatically rebalanced weekly based on the companies receiving the most positive sentiment, and no humans are involved in managing the portfolio.

“Real-time news sentiment analysis provides a clear signal of where prices are moving in the market and brings immense value to advisors on our platform,” said UX co-founder Kyle. Wiggs, in a statement.

The StockSnips Portfolio is just one of many AI-powered investment strategies available on the UX model market. In addition to a unique technology stack – which includes THOR Financial Technologies for investment research; Bridge Financial Technology for advisor and client dashboards; a model market powered by ETF Action; Stratifi for risk profiling and proposals; and FlyerFT for trading and portfolio management at all major custodians – UX offers something RIAs can’t get elsewhere.

At a time when many high tech companies are targeting corporate deals which provide software to thousands of advisers at once, access to unique technology and investment products can create a competitive advantage, Wiggs said.

“We have an internal phrase, ‘the self-destructive status quo cycle’,” he said. “Most advisors all use the same portfolios, which overall [clients] can now get directly. They use the same technology. And then they wonder why customers wonder why they pay for it. »

The strategy also seems to help the UX stand out in a crowded market for outsourcing providers. In 18 months, the turnkey asset management provider (TAMP) attracted $1 billion in assets.

While many expect advisors to increasingly adopt AI In 2022, there remains the question of whether or not advisors are ready to shift client assets to fully AI-managed model portfolios. While automated asset allocation is widely accepted these days, managing real funds is something else entirely.

The proof is in the pudding, said StockSnips CEO Ravi Koka, who cites his own research as well as independent published reports that indicate news sentiment can be a predictor of stock price behavior.

“This may not be true for all stocks in all cases, but on average, if the signal is good, you have [information] to generate alpha,” Koka said.

In backtests of the AI ​​Sentiment US Equities All Cap portfolio, cumulative returns were 169.2% versus the S&P 500, which returned 101% over the same period, Koka said. He acknowledged that the AI-powered fund is riskier than traditional indices and said this portfolio has a Sharpe ratio of 1.33.

“The whole use of AI to come up with investment strategies is brand new territory. We are one of the pioneers,” Koka said.

Some are not ready for computers to have full control over the investment selection process.

“I like picking my stocks, personally,” said Matt Bogart, sales and marketing manager at NexJ Systems, which provides CRM software to hookhouses and large brokers. However, he acknowledged that there are likely areas where algorithms can do a better job than humans when analyzing the market. “Just in volume, the number of products available and the number of publicly traded companies that are moving in value per second, having AI tools that can [track] this is a great advantage for you.

There’s more value in automating AI tasks that free up advisors’ time to focus on customer-facing tasks, Bogart said. Companies that do this can stand out in the market.

For RIAs or clients who might be reluctant to fully embrace AI-powered template portfolios, the UX template marketplace also offers more traditional products from household names like Vanguard and State Street, Wiggs said. The idea is that advisors can offer the same portfolios as everyone else, but can also offer something a client can’t find on their own. Integration with ETF Action allows advisors to compare the performance of traditional portfolios to those of the next generation, and some advisors end up doing a 50-50 shuffle to let AI models compete for assets over time, added Wiggs.

“We don’t want you to take our word for it,” he said. “The facts speak for themselves.”