Building a system requires a design.
The basic tenants of good system design ensure your system has these traits:
Scalable: Able to handle increased load and growth without major re-architecting.
Reliable: Resistant to failures and able to recover quickly from them.
Performant: Responds quickly and efficiently to user requests.
Cost-effective: Balances performance and functionality with cost considerations.
My definition of a beautiful system is more rigorous. As a software engineer I build programs, tools and digital experiences. I’ve been fortunate to have millions of users across my code… and all of that weight and surface area means things break badly… unless they are built to operate gracefully.
System design involves creating comprehensive specifications and architectures for a software system, ensuring it meets user needs and integrates smoothly with existing systems and hardware.
A great system encompasses all of this:
Scalability: Designing systems that can scale to handle increasing load and complexity efficiently, without major changes or degradation in performance.
Reliability: Ensuring the system operates consistently under defined conditions, maintaining its service level even in the face of failures or errors.
Maintainability: Creating systems that are easy to maintain, update, and troubleshoot. This involves clear, modular architecture, and well-documented code and processes.
Flexibility: Designing systems with the ability to adapt to changing requirements or technologies without extensive redevelopment.
Performance: Optimizing systems to respond quickly and process data efficiently, meeting the performance expectations of users and the demands of associated systems.
Security: Safeguarding systems against unauthorized access and protecting data integrity and privacy throughout its lifecycle.
Usability: Designing systems that are easy to use and intuitive, enhancing user satisfaction and reducing errors.
Cost-effectiveness: Balancing performance and features with the cost of development, deployment, and maintenance to deliver value.
Interoperability: Ensuring the system can operate with and exchange data with other products or systems, often in various environments.
Testability: Building systems that can be easily tested to verify functionality, performance, and security, facilitating quality assurance processes.
It’s a lot, I know! Each of these tenets plays a crucial role in the overall success of a system, impacting not only the development phase but also long-term usage and adaptability.
Together these principles guide the design choices for the system's architecture, components, and interactions. They help to ensure the system is robust, adaptable, and meets the needs of its users and stakeholders.
To achieve these core tenants in your wealth system design, look to employ these strategies:
1) Modularity
Breaking down the system into smaller, independent components that can be developed and managed separately.
A wealth system could be broken down into modules like portfolio management, risk assessment, tax optimization, financial goal setting, and reporting.
Each module can be developed and maintained separately, allowing specialized teams to focus on their expertise (e.g., investment experts on the portfolio module).
A module like "asset allocation" could be used in both portfolio management and financial goal setting, avoiding redundant development. Meanwhile a bug in the reporting module won't necessarily impact the core functionality of portfolio management.
Your wealth system should be made of basic building blocks, and over time you enhance your system by layering in more complexity or capabilities.
2) Abstraction
Hiding unnecessary details and exposing only essential interfaces to simplify interactions between components is the key to user experience.
Example: The complexity of calculating returns on a diversified portfolio is hidden behind a simple interface that users can understand.
The underlying algorithms for calculating returns can be changed without affecting how the user interacts with the system. A "market data" abstraction layer can be used by multiple modules, providing a standardized way to access and interpret market information. Why feed market data into several places when you can build a centralized platform?
Your wealth system should keep things simple so you can focus on what matters.
3) Decoupling
Minimizing dependencies between components to reduce the impact of changes and failures — thats a major strategy all wealth systems should employ.
This way a failure in one module (e.g., an error in fetching market data) won't automatically cascade and impact other modules.
This decoupling adds tremendous flexibility. The system can switch from one provider of market data to another without affecting the core functionality of the wealth system.
4) Redundancy
Duplicating critical components or data to provide backup in case of failure.
Redundancy means you can trust that your data and the system's functionality is protected even in the face of unexpected failures.
Critical client financial data is replicated across multiple servers or storage systems to prevent data loss in case of a failure — a great system will have fallbacks and duplicates. Together we call this a “failover system”. If the primary system for portfolio management goes down, a secondary system automatically takes over to ensure continuous service.
By following these core principles and employing these strategies, system designers can create systems that are well-suited to meet the challenges of today's complex and dynamic environments.
Building your wealth system with these concepts in mind will optimize your buildout for performance and efficiency — the two most important things!
👋 Thank you for reading Wealth Systems. I started this in November 2023 to share the systems, technology, and mindsets that I encountered on Wall Street.
💡The BIG IDEA is share practical knowledge that can be applied toward the development and refinement of wealth building systems.
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