Financial Data Visualization

“State-of-the-Art”

As an individual investor, I want the best information available to guide my decisions. What is my asset allocation, really? Should I buy this stock? Where is my portfolio headed? Do I need to rebalance? No tools surveyed to date adequately answer these questions for the individual investor. In the white-label retail space is MorningStar XRay. For the institutional investor, there is Morningstar Direct.

Many retail brokerage “portfolio check-ups” suffer from typical SaaS maladies: poor data visualization, UX disconnect, slow legacy technology, poor logic, and bad math.

Portfolio tools have additional challenges. Herein lies the opportunity for a new product.

Challenges Specific to the Portfolio Toolset

Holding Companies

Some securities specialize in owning other companies, making them difficult to classify. Certain of these are massively held juggernauts, such as Berkshire Hathaway. Holding companies are in turn owned by ETFs.

{
  "n": "Berkshire Hathaway Inc Class B(USD)",
  "t": "BRK.B",
  "perc": "34.723226",
  "sec": "Financials",
  "id": "0P000000RD",
  "Funds": {
    "securities": {
      "s": [
        {
          "n": "Berkshire Hathaway Inc Class B (USD)",
          "t": "BRK.B",
          "perc": "34.53",
          "Portfoliodate": null,
          "univ": "ST"
        },
        {
          "n": "Vanguard Total Stock Market ETF (USD)",
          "t": "VTI",
          "perc": "0.151236592",
          "Portfoliodate": "2014-01-31",
          "univ": "FE"
        },
        {
          "n": "iShares Core S&P 500 (USD)",
          "t": "IVV",
          "perc": "0.041989272",
          "Portfoliodate": "2014-03-03",
          "univ": "FE"
        }
      ]
    },
    "TotalRecords": "3"
  }
}

Investor Needs

Accurate Market Exposure Picture

Composite securities result in a complex multivariate relationship that no existing toolset addresses. MorningStar XRay addresses “Expected Allocation” of mutual funds, but not holding companies. Decision input provided to individual investors is inaccurate in two ways. The investor is typically presented with a table or chart containing allocation numbers.

Inaccurate Share Counts Numbers for stock XYZ are low, because the portions of XYZ inside holding companies and ETFs are ignored.
Inaccurate Exposure Holding companies often have an inadequate classification. Ameritrade categorizes Berkshire Hathaway B as “Financials : Diversified Financial Services”. Most allocation tools will reflect 100% in that Sector and industry. A recent snapshot of Berkshire shows five non-financial companies in its top ten holdings: Coca-Cola, IBM, Wal-Mart, Proctor & Gamble, DaVita Healthcare Partners, and DirecTV. Considering only the top 10, more than 40% of BRK.B’s total holdings are not in the Financial sector. An individual investor might consider purchasing more IBM and Coca-Cola, reasoning that her portfolio is heavy in Financials.

Task-Oriented Workflow, Not a Workaround

Brokerage sites are aggregations of disparate technologies, with a strong bias toward legacy. They are assembled by persons unskilled in User Experience design. A typical composition includes hierarchical navigation that acts as connective tissue without much integration.

Consider the main navigation for TD Ameritrade. It contains 194 links that fall under 6 major headings:

My Account
Trade
Research & Ideas
Planning & Retirement
Education
Client Services The headings are not consistently task-oriented.

User Story: Trading Task Workflow

Given a trading task, such as “buy $6,000 worth of a timely stock, so as to increase portfolio growth,” a user path is as follows.

Input: Scan for “gap down” deals using quick visual tools
- Marketwatch / Map of the Market - outside broker site
- Ameritrade / Account / Watchlists
- Ameritrade / Research / Screeners
Initial Clues
- Map Thumbnail - click on “red rectangle” companies in map for hints.
  - Company Name
  - Thumbnail chart
  - 1-2 headline links
Elimination Process : Identify reasons for price drop - and Disqualify most top movers
- Ameritrade / Quote Lookup / Overview
  - Charts
  - News
  - Profit Margins
Select the security “XYZ”
Time the trade
- Ameritrade / Quote Lookup
  - Charts (Intra-day / Intra-hour)
  - Snap Quotes

At this point the user has drilled down through two broker navigation paths, and cross-referenced external tools. The broker site logs him out a couple of times. He has no exposure to Allocation, Goals, and Balance. The User Experience is inferior to many free services in other subject domains!

I plan to provide better Investor Decision Support (next).