SlideShare a Scribd company logo
1 of 42
Download to read offline
WEALTH MANAGEMENT IN THE AGE OF DISRUPTION
April 15, 2016
Financial Network Analytics
Alan Laubsch
alan@fna.fi
2
Agenda
1. Adaptive Risk Management
2. Identifying Phase Transitions
3. Wealth Management Challenges
3
Market linkages
Asset price data
Clustering
Balance sheet data
Network Maps reveal connected risks and
hidden opportunities
Bilateral exposure data
Central nodes
4
Dynamic risk maps are ever more critical
While Qantas & CX rerouted, many continued business as usual: “We've
flown this route for many years, it's safe and that's the reason why we are
taking this route”
Source: BBC
5
How to manage systemic risk?
As in healthcare, our best chance lies is early detection
Source: MULTIPLE SCLEROSIS: ORIGIN OF ABNORMAL CELLS FOUND, UC
DAVIS (2011)
6
Diffusion of Disruptive Innovation
Source: Wikipedia; see Geoffrey Moore’s “Crossing the Chasm” (1999)
1.Macro: Scenarios from Innovators
2. Micro: Market signals from Early Adopters
U.S. Subprime Bond Early Warning Case Study
1. Robert Shiller warns of housing Bubble in 2005 (Macro)
99% VaR bands vs 2006-1 AAA spread changes
Source: Alan Laubsch “Subprime Risk Management Lessons”, RiskMetrics
Three stages of risk
9
US Housing Bubble: A Network View
View Interactive Animation
1
Implication of Complexity
From “Predict & Control” to “Sense and Respond”
with Dynamic Steering
11
Agenda
1. Adaptive Risk Management
2. Identifying Phase Transitions
3. Wealth Management Challenges
12
Dragon King
(Sornette 2009)
Black Swan
(Taleb 2001, 2007)
Two kinds of crises
What are you afraid of?
The future is already here. It’s just not very evenly distributed.
- William Gibson
13
Energy Disruption:
No escape for fossil fuels
14
Solar: Half way to 100%…
15
What precipitated Energy’s 24 June 2014 tipping
point?
View Video
16
24 June Risky Business Report
17
Divestment Tipping Point
18
Disruptive Energy “Dragon Kings”
The future is already here. It’s just not very evenly
distributed. - William Gibson
Alternatives
Divestment
Carbon Price
19
Tesla vs Model T trajectory
20
Media got Netflixed
21
Accelerating Rates of Adoption
22
Rise of the machines…
23
… and robo-advisors
The new generation of wealth owners:
● Born Digital
● Looking for intuitive, fast to learn, Apps for
every problem
25
Agenda
1. Adaptive Risk Management
2. Identifying Phase Transitions
3. Wealth Management Challenges
26
Wealth Management: Key Challenges
I. Trusted advisor
• Advanced diagnostics
II. Preserve wealth & capture opportunities
• Sense & respond to emerging themes
III. Enhance communication
• Maps amplify intelligence
27
1. Trusted advisor with advanced
diagnostics
Source: NIH/The Human Connectome Project
Network maps reveal systemic patterns
28
Systemic implications?
Amplifiers?
Highlight fragile assets, key pressure points
29
Uncover dynamic interconnections driving
systemic risk
Nov 28 2014 OPEC Black Friday “Surprise”
30
FNA Correlations China Case Study:
Traffic Light Signals: Bull Topping Bear
17 April negative outlier with subsequent clustering & imbalance
pointed to phase transition
1. Exponential
rise
2. Topping
process
3. Negative
spiral
Contagion
FNA Correlations Signals: Exit long China 17 April. Short China 6 June.
31
Signal: Reduce Global Equity Positions 29 June
Systematic risk
jumps
Increased
coupling
Broad outlier spike
(1yr+ max)
Clustered big outliers at
network core
(2.8σ+ for S&P 500 and other
broad indices)
Flight to safety
assets
FNA Correlation Map reveals global contagion
32
29 June Marked Global Contagion
Systematic risk spikes from 100 day low as Length of Tree shrinks
33
8 July Crescendo Confirms Contagion
Signal: Continue reduction of equities, move Aggressive Portfolio
clients to Conservative
Signal: Underweight Global Equities
34
II. Preserve Wealth & Seize
Opportunities: sense & respond to
emerging risk• Proactive risk management is critical given tipping point dynamics
Source: “Building A Reputation Risk Management Capability”, Diermeier & Loeb, 2011
Invisible/Potential
Visible & amplifying
35
Build robust portfolios using relevant
stress tests
Reverse Stress Testing Balanced Portfolios reveals increased risk
due to IR + Equity coupling
36
III. Enhance communication with dynamic maps
Rapid environmental awareness is critical for navigating challenging
terrain
“MIT scientists develop Prometheus like environment scanner”
Source: computerstories.net
FNA maps amplify human intelligence in the wealth
management ecosystem
● Asset managers can effectively sense and respond to emerging risks
and opportunities .
● Risk managers can detect portfolio concentrations and easily generate
relevant stress scenarios (including Reverse Stress Tests).
● Wealth Management Advisors can use FNA maps to discuss driving
themes in the macro investment landscape with clients.
● Private clients can visually monitor and explore the evolving
investment landscape with institutional quality analytics at their
fingertips. Importantly, FNA’s interactive visual analytics bridge the
gap with the emerging “born digital” generation who are transforming
the wealth landscape globally.
38
SUMMARY & CONCLUSIONS
The Power of Connected Data
Network Science is transforming industries
Fast growing companies base their businesses on connected
data
Network Science helps to detect patterns in complex data
Google’s graph based algorithm,
PageRank, replaced Altavista’s
disconnected page indexing
LinkedIn’s networking based model
is replacing Monster’s static unlinked
CV’s
FNA: A Financial GPS System to nagivate
global markets
Network Algorithms identify systemic pressure points
Graph Analytics use human visual intelligence for pattern recognition
41
Maps amplify human intelligence in the
entire wealth management ecosystem
I
Asset Manager Risk Manager
Wealth
Manager
Private Client
Identify and
discuss
systemic
patterns
Develop
visual
intuition
Build
Community
FNA
Alan Laubsch
alan@fna.fi
Thank You
Sign up for weekly updated FNA Maps blog at maps.fna.fi

More Related Content

Similar to Wealth management in the age of disruption

Innovations economics of branchless banking54
Innovations economics of branchless banking54Innovations economics of branchless banking54
Innovations economics of branchless banking54Ajay Alex
 
Cabot Wealth Management's Roadmap to Retirement
Cabot Wealth Management's Roadmap to RetirementCabot Wealth Management's Roadmap to Retirement
Cabot Wealth Management's Roadmap to RetirementCabot Wealth Management
 
Curing Cancer. In the Clouds. The Final Frontier
Curing Cancer. In the Clouds. The Final FrontierCuring Cancer. In the Clouds. The Final Frontier
Curing Cancer. In the Clouds. The Final FrontierCabot Wealth Management
 
REPORT Risk Nexus - Global Cyber Governance: Preparing for New Business Risks
REPORT Risk Nexus - Global Cyber Governance: Preparing for New Business Risks  REPORT Risk Nexus - Global Cyber Governance: Preparing for New Business Risks
REPORT Risk Nexus - Global Cyber Governance: Preparing for New Business Risks ESADE
 
Datashop Alchemy
Datashop  AlchemyDatashop  Alchemy
Datashop AlchemyInnovAccer
 
Financial Cartography - Center for Financial Research
Financial Cartography - Center for Financial ResearchFinancial Cartography - Center for Financial Research
Financial Cartography - Center for Financial ResearchKimmo Soramaki
 
Message to White House to take Cyber Security seriously - from MIT
Message to White House to take Cyber Security seriously - from MITMessage to White House to take Cyber Security seriously - from MIT
Message to White House to take Cyber Security seriously - from MITDavid Sweigert
 
The application of the ‘New Sciences’ to Risk and Project Management
The application of the ‘New Sciences’ to Risk and Project ManagementThe application of the ‘New Sciences’ to Risk and Project Management
The application of the ‘New Sciences’ to Risk and Project ManagementDr David Hancock
 
McGuinness Institute presentation to XRB
McGuinness Institute presentation to XRB McGuinness Institute presentation to XRB
McGuinness Institute presentation to XRB McGuinness Institute
 
McGuinness Institute presentation to XRB
McGuinness Institute presentation to XRB McGuinness Institute presentation to XRB
McGuinness Institute presentation to XRB Wendy McGuinness
 
Visualizing Financial Stress - Talk at European Central Bank
Visualizing Financial Stress - Talk at European Central BankVisualizing Financial Stress - Talk at European Central Bank
Visualizing Financial Stress - Talk at European Central BankKimmo Soramaki
 
Financial Network Analysis - Seminar at IBM Watson Labs 7 April 2011
Financial Network Analysis - Seminar at IBM Watson Labs 7 April 2011Financial Network Analysis - Seminar at IBM Watson Labs 7 April 2011
Financial Network Analysis - Seminar at IBM Watson Labs 7 April 2011Kimmo Soramaki
 
Blockchain Theory of Abundance Economics
Blockchain Theory of Abundance EconomicsBlockchain Theory of Abundance Economics
Blockchain Theory of Abundance EconomicsMelanie Swan
 
Understanding Systemic Cyber Risk
Understanding Systemic Cyber RiskUnderstanding Systemic Cyber Risk
Understanding Systemic Cyber RiskKirstjen Nielsen
 
Emperors without clothes
Emperors without clothesEmperors without clothes
Emperors without clothesJohannes Meier
 
MelissaJarquin_Portfolio extract_compressed
MelissaJarquin_Portfolio extract_compressedMelissaJarquin_Portfolio extract_compressed
MelissaJarquin_Portfolio extract_compressedMelissa Jarquin
 

Similar to Wealth management in the age of disruption (20)

Innovations economics of branchless banking54
Innovations economics of branchless banking54Innovations economics of branchless banking54
Innovations economics of branchless banking54
 
Cabot Wealth Management's Roadmap to Retirement
Cabot Wealth Management's Roadmap to RetirementCabot Wealth Management's Roadmap to Retirement
Cabot Wealth Management's Roadmap to Retirement
 
Curing Cancer. In the Clouds. The Final Frontier.
Curing Cancer. In the Clouds. The Final Frontier.Curing Cancer. In the Clouds. The Final Frontier.
Curing Cancer. In the Clouds. The Final Frontier.
 
Curing Cancer. In the Clouds. The Final Frontier
Curing Cancer. In the Clouds. The Final FrontierCuring Cancer. In the Clouds. The Final Frontier
Curing Cancer. In the Clouds. The Final Frontier
 
REPORT Risk Nexus - Global Cyber Governance: Preparing for New Business Risks
REPORT Risk Nexus - Global Cyber Governance: Preparing for New Business Risks  REPORT Risk Nexus - Global Cyber Governance: Preparing for New Business Risks
REPORT Risk Nexus - Global Cyber Governance: Preparing for New Business Risks
 
Datashop Alchemy
Datashop  AlchemyDatashop  Alchemy
Datashop Alchemy
 
Financial Cartography - Center for Financial Research
Financial Cartography - Center for Financial ResearchFinancial Cartography - Center for Financial Research
Financial Cartography - Center for Financial Research
 
Message to White House to take Cyber Security seriously - from MIT
Message to White House to take Cyber Security seriously - from MITMessage to White House to take Cyber Security seriously - from MIT
Message to White House to take Cyber Security seriously - from MIT
 
The application of the ‘New Sciences’ to Risk and Project Management
The application of the ‘New Sciences’ to Risk and Project ManagementThe application of the ‘New Sciences’ to Risk and Project Management
The application of the ‘New Sciences’ to Risk and Project Management
 
McGuinness Institute presentation to XRB
McGuinness Institute presentation to XRB McGuinness Institute presentation to XRB
McGuinness Institute presentation to XRB
 
McGuinness Institute presentation to XRB
McGuinness Institute presentation to XRB McGuinness Institute presentation to XRB
McGuinness Institute presentation to XRB
 
Data Problems, Requirements and Risk Management
Data Problems, Requirements and Risk ManagementData Problems, Requirements and Risk Management
Data Problems, Requirements and Risk Management
 
Visualizing Financial Stress - Talk at European Central Bank
Visualizing Financial Stress - Talk at European Central BankVisualizing Financial Stress - Talk at European Central Bank
Visualizing Financial Stress - Talk at European Central Bank
 
Financial Network Analysis - Seminar at IBM Watson Labs 7 April 2011
Financial Network Analysis - Seminar at IBM Watson Labs 7 April 2011Financial Network Analysis - Seminar at IBM Watson Labs 7 April 2011
Financial Network Analysis - Seminar at IBM Watson Labs 7 April 2011
 
Blockchain Theory of Abundance Economics
Blockchain Theory of Abundance EconomicsBlockchain Theory of Abundance Economics
Blockchain Theory of Abundance Economics
 
Understanding Systemic Cyber Risk
Understanding Systemic Cyber RiskUnderstanding Systemic Cyber Risk
Understanding Systemic Cyber Risk
 
Financial Cartography
Financial CartographyFinancial Cartography
Financial Cartography
 
Emperors without clothes
Emperors without clothesEmperors without clothes
Emperors without clothes
 
Risk governance deficits and emerging risks
Risk governance deficits and emerging risksRisk governance deficits and emerging risks
Risk governance deficits and emerging risks
 
MelissaJarquin_Portfolio extract_compressed
MelissaJarquin_Portfolio extract_compressedMelissaJarquin_Portfolio extract_compressed
MelissaJarquin_Portfolio extract_compressed
 

Recently uploaded

Gurley shaw Theory of Monetary Economics.
Gurley shaw Theory of Monetary Economics.Gurley shaw Theory of Monetary Economics.
Gurley shaw Theory of Monetary Economics.Vinodha Devi
 
VIP Independent Call Girls in Bandra West 🌹 9920725232 ( Call Me ) Mumbai Esc...
VIP Independent Call Girls in Bandra West 🌹 9920725232 ( Call Me ) Mumbai Esc...VIP Independent Call Girls in Bandra West 🌹 9920725232 ( Call Me ) Mumbai Esc...
VIP Independent Call Girls in Bandra West 🌹 9920725232 ( Call Me ) Mumbai Esc...dipikadinghjn ( Why You Choose Us? ) Escorts
 
Stock Market Brief Deck (Under Pressure).pdf
Stock Market Brief Deck (Under Pressure).pdfStock Market Brief Deck (Under Pressure).pdf
Stock Market Brief Deck (Under Pressure).pdfMichael Silva
 
VIP Call Girl in Mumbai 💧 9920725232 ( Call Me ) Get A New Crush Everyday Wit...
VIP Call Girl in Mumbai 💧 9920725232 ( Call Me ) Get A New Crush Everyday Wit...VIP Call Girl in Mumbai 💧 9920725232 ( Call Me ) Get A New Crush Everyday Wit...
VIP Call Girl in Mumbai 💧 9920725232 ( Call Me ) Get A New Crush Everyday Wit...dipikadinghjn ( Why You Choose Us? ) Escorts
 
Booking open Available Pune Call Girls Shivane 6297143586 Call Hot Indian Gi...
Booking open Available Pune Call Girls Shivane  6297143586 Call Hot Indian Gi...Booking open Available Pune Call Girls Shivane  6297143586 Call Hot Indian Gi...
Booking open Available Pune Call Girls Shivane 6297143586 Call Hot Indian Gi...Call Girls in Nagpur High Profile
 
Call Girls in New Friends Colony Delhi 💯 Call Us 🔝9205541914 🔝( Delhi) Escort...
Call Girls in New Friends Colony Delhi 💯 Call Us 🔝9205541914 🔝( Delhi) Escort...Call Girls in New Friends Colony Delhi 💯 Call Us 🔝9205541914 🔝( Delhi) Escort...
Call Girls in New Friends Colony Delhi 💯 Call Us 🔝9205541914 🔝( Delhi) Escort...Delhi Call girls
 
Top Rated Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...
Top Rated  Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...Top Rated  Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...
Top Rated Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...Call Girls in Nagpur High Profile
 
WhatsApp 📞 Call : 9892124323 ✅Call Girls In Chembur ( Mumbai ) secure service
WhatsApp 📞 Call : 9892124323  ✅Call Girls In Chembur ( Mumbai ) secure serviceWhatsApp 📞 Call : 9892124323  ✅Call Girls In Chembur ( Mumbai ) secure service
WhatsApp 📞 Call : 9892124323 ✅Call Girls In Chembur ( Mumbai ) secure servicePooja Nehwal
 
Mira Road Memorable Call Grls Number-9833754194-Bhayandar Speciallty Call Gir...
Mira Road Memorable Call Grls Number-9833754194-Bhayandar Speciallty Call Gir...Mira Road Memorable Call Grls Number-9833754194-Bhayandar Speciallty Call Gir...
Mira Road Memorable Call Grls Number-9833754194-Bhayandar Speciallty Call Gir...priyasharma62062
 
The Economic History of the U.S. Lecture 18.pdf
The Economic History of the U.S. Lecture 18.pdfThe Economic History of the U.S. Lecture 18.pdf
The Economic History of the U.S. Lecture 18.pdfGale Pooley
 
Indore Real Estate Market Trends Report.pdf
Indore Real Estate Market Trends Report.pdfIndore Real Estate Market Trends Report.pdf
Indore Real Estate Market Trends Report.pdfSaviRakhecha1
 
The Economic History of the U.S. Lecture 19.pdf
The Economic History of the U.S. Lecture 19.pdfThe Economic History of the U.S. Lecture 19.pdf
The Economic History of the U.S. Lecture 19.pdfGale Pooley
 
Vasai-Virar Fantastic Call Girls-9833754194-Call Girls MUmbai
Vasai-Virar Fantastic Call Girls-9833754194-Call Girls MUmbaiVasai-Virar Fantastic Call Girls-9833754194-Call Girls MUmbai
Vasai-Virar Fantastic Call Girls-9833754194-Call Girls MUmbaipriyasharma62062
 
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...dipikadinghjn ( Why You Choose Us? ) Escorts
 
Call Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance Booking
Call Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance BookingCall Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance Booking
Call Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance Bookingroncy bisnoi
 
The Economic History of the U.S. Lecture 25.pdf
The Economic History of the U.S. Lecture 25.pdfThe Economic History of the U.S. Lecture 25.pdf
The Economic History of the U.S. Lecture 25.pdfGale Pooley
 
The Economic History of the U.S. Lecture 20.pdf
The Economic History of the U.S. Lecture 20.pdfThe Economic History of the U.S. Lecture 20.pdf
The Economic History of the U.S. Lecture 20.pdfGale Pooley
 
03_Emmanuel Ndiaye_Degroof Petercam.pptx
03_Emmanuel Ndiaye_Degroof Petercam.pptx03_Emmanuel Ndiaye_Degroof Petercam.pptx
03_Emmanuel Ndiaye_Degroof Petercam.pptxFinTech Belgium
 
The Economic History of the U.S. Lecture 22.pdf
The Economic History of the U.S. Lecture 22.pdfThe Economic History of the U.S. Lecture 22.pdf
The Economic History of the U.S. Lecture 22.pdfGale Pooley
 

Recently uploaded (20)

Gurley shaw Theory of Monetary Economics.
Gurley shaw Theory of Monetary Economics.Gurley shaw Theory of Monetary Economics.
Gurley shaw Theory of Monetary Economics.
 
VIP Independent Call Girls in Bandra West 🌹 9920725232 ( Call Me ) Mumbai Esc...
VIP Independent Call Girls in Bandra West 🌹 9920725232 ( Call Me ) Mumbai Esc...VIP Independent Call Girls in Bandra West 🌹 9920725232 ( Call Me ) Mumbai Esc...
VIP Independent Call Girls in Bandra West 🌹 9920725232 ( Call Me ) Mumbai Esc...
 
Stock Market Brief Deck (Under Pressure).pdf
Stock Market Brief Deck (Under Pressure).pdfStock Market Brief Deck (Under Pressure).pdf
Stock Market Brief Deck (Under Pressure).pdf
 
VIP Call Girl in Mumbai 💧 9920725232 ( Call Me ) Get A New Crush Everyday Wit...
VIP Call Girl in Mumbai 💧 9920725232 ( Call Me ) Get A New Crush Everyday Wit...VIP Call Girl in Mumbai 💧 9920725232 ( Call Me ) Get A New Crush Everyday Wit...
VIP Call Girl in Mumbai 💧 9920725232 ( Call Me ) Get A New Crush Everyday Wit...
 
Booking open Available Pune Call Girls Shivane 6297143586 Call Hot Indian Gi...
Booking open Available Pune Call Girls Shivane  6297143586 Call Hot Indian Gi...Booking open Available Pune Call Girls Shivane  6297143586 Call Hot Indian Gi...
Booking open Available Pune Call Girls Shivane 6297143586 Call Hot Indian Gi...
 
Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7
Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7
Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7
 
Call Girls in New Friends Colony Delhi 💯 Call Us 🔝9205541914 🔝( Delhi) Escort...
Call Girls in New Friends Colony Delhi 💯 Call Us 🔝9205541914 🔝( Delhi) Escort...Call Girls in New Friends Colony Delhi 💯 Call Us 🔝9205541914 🔝( Delhi) Escort...
Call Girls in New Friends Colony Delhi 💯 Call Us 🔝9205541914 🔝( Delhi) Escort...
 
Top Rated Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...
Top Rated  Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...Top Rated  Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...
Top Rated Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...
 
WhatsApp 📞 Call : 9892124323 ✅Call Girls In Chembur ( Mumbai ) secure service
WhatsApp 📞 Call : 9892124323  ✅Call Girls In Chembur ( Mumbai ) secure serviceWhatsApp 📞 Call : 9892124323  ✅Call Girls In Chembur ( Mumbai ) secure service
WhatsApp 📞 Call : 9892124323 ✅Call Girls In Chembur ( Mumbai ) secure service
 
Mira Road Memorable Call Grls Number-9833754194-Bhayandar Speciallty Call Gir...
Mira Road Memorable Call Grls Number-9833754194-Bhayandar Speciallty Call Gir...Mira Road Memorable Call Grls Number-9833754194-Bhayandar Speciallty Call Gir...
Mira Road Memorable Call Grls Number-9833754194-Bhayandar Speciallty Call Gir...
 
The Economic History of the U.S. Lecture 18.pdf
The Economic History of the U.S. Lecture 18.pdfThe Economic History of the U.S. Lecture 18.pdf
The Economic History of the U.S. Lecture 18.pdf
 
Indore Real Estate Market Trends Report.pdf
Indore Real Estate Market Trends Report.pdfIndore Real Estate Market Trends Report.pdf
Indore Real Estate Market Trends Report.pdf
 
The Economic History of the U.S. Lecture 19.pdf
The Economic History of the U.S. Lecture 19.pdfThe Economic History of the U.S. Lecture 19.pdf
The Economic History of the U.S. Lecture 19.pdf
 
Vasai-Virar Fantastic Call Girls-9833754194-Call Girls MUmbai
Vasai-Virar Fantastic Call Girls-9833754194-Call Girls MUmbaiVasai-Virar Fantastic Call Girls-9833754194-Call Girls MUmbai
Vasai-Virar Fantastic Call Girls-9833754194-Call Girls MUmbai
 
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
 
Call Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance Booking
Call Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance BookingCall Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance Booking
Call Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance Booking
 
The Economic History of the U.S. Lecture 25.pdf
The Economic History of the U.S. Lecture 25.pdfThe Economic History of the U.S. Lecture 25.pdf
The Economic History of the U.S. Lecture 25.pdf
 
The Economic History of the U.S. Lecture 20.pdf
The Economic History of the U.S. Lecture 20.pdfThe Economic History of the U.S. Lecture 20.pdf
The Economic History of the U.S. Lecture 20.pdf
 
03_Emmanuel Ndiaye_Degroof Petercam.pptx
03_Emmanuel Ndiaye_Degroof Petercam.pptx03_Emmanuel Ndiaye_Degroof Petercam.pptx
03_Emmanuel Ndiaye_Degroof Petercam.pptx
 
The Economic History of the U.S. Lecture 22.pdf
The Economic History of the U.S. Lecture 22.pdfThe Economic History of the U.S. Lecture 22.pdf
The Economic History of the U.S. Lecture 22.pdf
 

Wealth management in the age of disruption

  • 1. WEALTH MANAGEMENT IN THE AGE OF DISRUPTION April 15, 2016 Financial Network Analytics Alan Laubsch alan@fna.fi
  • 2. 2 Agenda 1. Adaptive Risk Management 2. Identifying Phase Transitions 3. Wealth Management Challenges
  • 3. 3 Market linkages Asset price data Clustering Balance sheet data Network Maps reveal connected risks and hidden opportunities Bilateral exposure data Central nodes
  • 4. 4 Dynamic risk maps are ever more critical While Qantas & CX rerouted, many continued business as usual: “We've flown this route for many years, it's safe and that's the reason why we are taking this route” Source: BBC
  • 5. 5 How to manage systemic risk? As in healthcare, our best chance lies is early detection Source: MULTIPLE SCLEROSIS: ORIGIN OF ABNORMAL CELLS FOUND, UC DAVIS (2011)
  • 6. 6 Diffusion of Disruptive Innovation Source: Wikipedia; see Geoffrey Moore’s “Crossing the Chasm” (1999) 1.Macro: Scenarios from Innovators 2. Micro: Market signals from Early Adopters
  • 7. U.S. Subprime Bond Early Warning Case Study 1. Robert Shiller warns of housing Bubble in 2005 (Macro) 99% VaR bands vs 2006-1 AAA spread changes Source: Alan Laubsch “Subprime Risk Management Lessons”, RiskMetrics
  • 9. 9 US Housing Bubble: A Network View View Interactive Animation
  • 10. 1 Implication of Complexity From “Predict & Control” to “Sense and Respond” with Dynamic Steering
  • 11. 11 Agenda 1. Adaptive Risk Management 2. Identifying Phase Transitions 3. Wealth Management Challenges
  • 12. 12 Dragon King (Sornette 2009) Black Swan (Taleb 2001, 2007) Two kinds of crises What are you afraid of? The future is already here. It’s just not very evenly distributed. - William Gibson
  • 14. 14 Solar: Half way to 100%…
  • 15. 15 What precipitated Energy’s 24 June 2014 tipping point? View Video
  • 16. 16 24 June Risky Business Report
  • 18. 18 Disruptive Energy “Dragon Kings” The future is already here. It’s just not very evenly distributed. - William Gibson Alternatives Divestment Carbon Price
  • 19. 19 Tesla vs Model T trajectory
  • 22. 22 Rise of the machines…
  • 24. The new generation of wealth owners: ● Born Digital ● Looking for intuitive, fast to learn, Apps for every problem
  • 25. 25 Agenda 1. Adaptive Risk Management 2. Identifying Phase Transitions 3. Wealth Management Challenges
  • 26. 26 Wealth Management: Key Challenges I. Trusted advisor • Advanced diagnostics II. Preserve wealth & capture opportunities • Sense & respond to emerging themes III. Enhance communication • Maps amplify intelligence
  • 27. 27 1. Trusted advisor with advanced diagnostics Source: NIH/The Human Connectome Project Network maps reveal systemic patterns
  • 29. 29 Uncover dynamic interconnections driving systemic risk Nov 28 2014 OPEC Black Friday “Surprise”
  • 30. 30 FNA Correlations China Case Study: Traffic Light Signals: Bull Topping Bear 17 April negative outlier with subsequent clustering & imbalance pointed to phase transition 1. Exponential rise 2. Topping process 3. Negative spiral Contagion FNA Correlations Signals: Exit long China 17 April. Short China 6 June.
  • 31. 31 Signal: Reduce Global Equity Positions 29 June Systematic risk jumps Increased coupling Broad outlier spike (1yr+ max) Clustered big outliers at network core (2.8σ+ for S&P 500 and other broad indices) Flight to safety assets FNA Correlation Map reveals global contagion
  • 32. 32 29 June Marked Global Contagion Systematic risk spikes from 100 day low as Length of Tree shrinks
  • 33. 33 8 July Crescendo Confirms Contagion Signal: Continue reduction of equities, move Aggressive Portfolio clients to Conservative Signal: Underweight Global Equities
  • 34. 34 II. Preserve Wealth & Seize Opportunities: sense & respond to emerging risk• Proactive risk management is critical given tipping point dynamics Source: “Building A Reputation Risk Management Capability”, Diermeier & Loeb, 2011 Invisible/Potential Visible & amplifying
  • 35. 35 Build robust portfolios using relevant stress tests Reverse Stress Testing Balanced Portfolios reveals increased risk due to IR + Equity coupling
  • 36. 36 III. Enhance communication with dynamic maps Rapid environmental awareness is critical for navigating challenging terrain “MIT scientists develop Prometheus like environment scanner” Source: computerstories.net
  • 37. FNA maps amplify human intelligence in the wealth management ecosystem ● Asset managers can effectively sense and respond to emerging risks and opportunities . ● Risk managers can detect portfolio concentrations and easily generate relevant stress scenarios (including Reverse Stress Tests). ● Wealth Management Advisors can use FNA maps to discuss driving themes in the macro investment landscape with clients. ● Private clients can visually monitor and explore the evolving investment landscape with institutional quality analytics at their fingertips. Importantly, FNA’s interactive visual analytics bridge the gap with the emerging “born digital” generation who are transforming the wealth landscape globally.
  • 39. The Power of Connected Data Network Science is transforming industries Fast growing companies base their businesses on connected data Network Science helps to detect patterns in complex data Google’s graph based algorithm, PageRank, replaced Altavista’s disconnected page indexing LinkedIn’s networking based model is replacing Monster’s static unlinked CV’s
  • 40. FNA: A Financial GPS System to nagivate global markets Network Algorithms identify systemic pressure points Graph Analytics use human visual intelligence for pattern recognition
  • 41. 41 Maps amplify human intelligence in the entire wealth management ecosystem I Asset Manager Risk Manager Wealth Manager Private Client Identify and discuss systemic patterns Develop visual intuition Build Community
  • 42. FNA Alan Laubsch alan@fna.fi Thank You Sign up for weekly updated FNA Maps blog at maps.fna.fi