Keeping up with the ever-changing economic landscape will make or break any company.
2019 is looking to be one of the most game-changing years ever. Technology is increasing in exponential rates. Global regulations are shifting the very rules of finances.
How will you stand in the face of the financial trends of 2019?
The Financial Trends of 2019
Discovering how 2019 will look from the financial perspective is not an easy task. There were many powerful developments across 2018 that will spark change far into 2019 and beyond.
Here are some of the major things to watch for in the new year.
MiFID II and Its Effects on Research Departments
MiFID II is a revision law from the European Union that took effect in early 2018. The law states that companies must state research costs in an explicit manner.
This means that companies can no longer link research costs to the volume and value of the transactions by brokers. This move aims to improve the transparency of broker deals.
The positive and negative effects of this law will continue late into 2018. There is no doubt it will continue well into 2019 and the future beyond.
The Industry Shifts
Many companies have already made sweeping changes to the way they structure research costs.
Many large firms have incorporated research in-house. This allows for better control of quality and direction.
Less money is being spent on research. This seems like a negative at first, but it comes with a more focused approach to research and development.
Sell-side brokers that offer research are becoming a lot more exacting in what and how they push their methods.
The focus is now on unique content and pinpoint perks. This helps to push things in the right areas, instead of a mass drive in any direction that is possible. There is a greater value placed on simple insightful analysis over mass appeal.
Where the Cost Lies
When the MiFID II first landed, many corporations pushed research costs onto the client.
This initial move has backfired to some degree. Many of the major firms have opted against it by footing the bill themselves. This will force the smaller firms to adopt the same stance or risk losing business.
How well the smaller chains handle this will depend on how much they wish to cut their own research costs.
The Overall Effect
You cannot wipe research away altogether. As such, all of this reduction to research spending will force companies to tighten what they must expect to gain from research costs.
So much of the previous iteration of research spending was, in essence, wasted. As time progresses, 2019 will be a year of pinpoint spending. This will only be an improvement in the long run. It will make efficiency a focus instead of an afterthought.
Blockchain Adoption by Prime Brokers
Prime brokers have had a troubling time in the past few years. Regulations have increased costs to a massive degree. This has reduced spending infrastructure across the board.
The major costs that have plagued the prime brokerage industry have been in the day to day management. Trying to keep collateral management costs in check can be a death knell for an unprepared firm.
Many prime brokers have found an advantage that may tip the scales.
What is Blockchain
For those who do not know, Blockchain is a technology developed to increase the speed and security of digital data transactions. Blockchain uses a server system of many interlinked computers over a singular, central server.
This makes a system that has a smoother transaction. It also creates a safer and more manageable setup for day to day structures.
Refining the Management Process
The process of shifting and dealing with collateral has been a hectic process. The increases in cost from year to year are due to the massive timelines needed to shift and process all of the collateral.
This is where Blockchain comes in. The new Blockchain systems allow for a huge increase in speed over the previous structures.
Over 15% of collateral sits idle, lost in the long transit from transaction to transaction. That costs billions of dollars every year! Blockchain speeds up this process. With it, next to no collateral goes to waste.
Cybersecurity for RIAs
RIAs have always needed to place the security of their client’s sensitive information high on their priority list. As RIAs need the use of technology to an absolute degree these days, cybersecurity is at an utmost high.
Cybersecurity isn’t a new thing. For years companies have fought with hackers to protect their valuable information.
Recent years have only tightened this resolve. 2019 will be a year of high alert security in the face of new technology and an ever-changing financial landscape.
The Do’s of Cybersecurity
The importance of trained staff is at the very top of any companies priority. This goes beyond well-trained security staff. Employees need to know how to identify suspicious emails and to report them immediately.
Anti-virus software is a simple solution to cybersecurity. Even the most minimal of software defense can save millions when the time comes.
Keep communication as an automatic reaction to a cyber threat. If employees know how and when to report any perceived threat, you can negate a lot of damage before it even happens.
Having a secure and well-organized flow of communication across the company can make a threat at any level immediately found and dealt with.
The Don’ts of Cybersecurity
Knowing where and how to send sensitive information is a key part of cybersecurity. Never send sensitive information to clients through simple email.
Wiring money is a huge pitfall for RIAs in regards to cybersecurity. Never accept wiring instructions through email. If possible, do everything in person. At the very least have a password protected, verbal communication with a client.
A major factor that will improve cybersecurity is to keep a close eye on all usage of secure servers. Never let an employee access any secure servers on a remote level.
VPNs are a needed part of letting employees be remote without risking the firm’s security.
Being Prepared for the Future
Having knowledge of the financial trends of the future should be the goal of every financial guru that works in today’s markets.
We at Financial Career Options have all the information you need. We have insider information to more great tips for securing your financial future. Looking to further your career in finance? Start today!