IQCIO: Empowering a Higher Financial IQ

Despite advances in technology, both traditional wealth managers and emerging robo-advisors continue to depend on Harry Markowitz’s Modern Portfolio Theory (MPT), obliging investors and advisors who may be concerned about today’s market conditions, to invest in diversified portfolios based on assumptions developed during the 1950s. Increasingly the flaws in the status quo, which were exposed during market downturns over the past 10 years, have raised concerns with risk averse investors about market volatility and the probability of losing money in their investment portfolios. Breaking free from MPT’s historical assumptions around return distribution, volatility, and correlations, IQCIO empowers today’s financial advisors with customizable, real-time digital investment advice by continuously analyzing current market conditions in a more modern, intelligent fashion.

Prioritizing the preservation of capital and enabling improved long-term returns, IQCIO is driven by a client’s risk tolerance, which they call “quantifiable volatility factors.” Taking a modern look at 21st century market data and investment opportunities—mathematically, statistically, and financially— IQCIO builds robust, more broadly diversified portfolios with its Intelligent Portfolio Optimizer algorithm and systematically rebalances/optimizes the client’s portfolio, simplifying the overall portfolio management process. By blending decades of combined human capital and investment expertise with computing power and a vast array of analytics, “IQCIO analyzes current market conditions and makes real-time judgments to construct and rebuild portfolios around well-defined quantitative risk disciplines,” explains Ed Ho, IQCIO’s CEO, CIO and co-founder.

IQCIO’s Intelligent Portfolio Optimizer’s approach is not as simplistic and homogeneous as universally suggesting a benchmark portfolio of 30 percent equities and 70 percent fixed income for more conservative investors. Rather, the portfolio optimizer works within a volatility limit, say 5 percent, assesses market conditions in the context of a client’s current portfolio, and provides an optimal investment solution within that risk tolerance. IQCIO combines broadly diversified investment options and sophisticated quantitative algorithms with adaptive forms of risk mitigation developed to leverage modern technology.

The algorithmic and quantitative nature of IQCIO’s portfolio advice benefits their clients by offering rigorously tested solutions that seek to avoid losses. In cases where bank and advisory clients provide their own inputs, IQCIO works within those inputs and redesigns the client’s portfolios on a risk managed basis to meet each client’s goals.

IQCIO’s futuristic capabilities are going to be launched into the bank broker/dealer channel in the early part of the 4Q for wealth management clients as this sector naturally embraced IQCIO’s understanding of the challenges facing banks who have expressed a need for more risk averse investment solutions to address a more conservative client base. Banks also want a fully functional investment platform for its clients into the future. Leveraging the IQCIO technology and the team’s experience, Ho’s plan is to partner with banks and help their clients with an advanced, efficient, improved client experience in terms of the complicated process of building and managing investment portfolios that yield superior long-term risk adjusted returns.

IQCIO’s technology was built by humans who understand the real needs of investors—generate returns while avoiding big losses. Embedding that essential DNA into a powerful technology platform increases the probability of meeting those needs by seeking to deliver a more consistent, reliable investment solution. The company tests, refines, and continually challenges its own assumptions about what works. “Mathematics, technology, and intelligent portfolio solutions will pave the way for the 21st century wealth management industry, and we intend to lead, not only in solutions, but also in developing a corporate culture that integrates intelligent design into meeting our clients’ needs,” says Ho.

Complementing the ongoing success, IQCIO plans to expand globally and also focus on other types of investible solutions—including traditional and alternative assets. The fundamental component of IQCIO’s business plan and future growth revolves around leading the utilization and optimization of the technology landscape, and providing investment solutions for wholesale financial advisors, wealthy individuals, and the retail investor.