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How Technology Lets Wealth Management Firms Do More With Data

By Adrian Johnstone
 PRESIDENT & Co-Founder, Practifi

What can financial firms do with data? This question is more complex than it seems. All organizations in the financial sector have to think about keeping client data safe from a compliance and governance perspective, but that shouldn’t be the extent of their information use.

With the right technology and strategy, a financial firm can turn data into the “silent member of the team.” Just like a consultant, data analysis can provide insights into market conditions, business opportunities and client relationships.

In order to glean these kinds of insights, organizations need to consider the entire data lifecycle — starting with how data is captured through to how it’s analyzed. When a firm figures out how to do this effectively, it gains a competitive advantage over others struggling with inefficient legacy processes. Upgrading technology and processes now is a way to seize this edge and step into the future.

The 3 critical data lifecycle stages

When firms aren’t actively using their data, it’s simply a liability — something to be stored and protected. Becoming more intentional about data management means focusing on three separate steps in the data lifecycle. These are:

  • Capture: Every interaction between a client and a firm is a chance to collect data. The organization needs to ensure the content is being captured in an automated way and sent to a secure, organized and central storage solution. Data cleansing at the time of capture pays dividends down the line when the firm has access to up-to-date, accurate and comprehensive client data.
  • Storage/maintenance: Financial advisory firms that are still using legacy technology may have trouble keeping their records accessible, comprehensive and updated. Modern platforms designed for the wealth industry can store complete client profiles in a secure and compliant way. Older, less specialized tools could be home to inaccurate or outdated records (unbeknownst to your staff). 
  • Utilization: The difference between simply having data and really using it comes from the analytics process. Firms that derive patterns and insights from their data are able to make confident decisions and spot hidden trends. Client outreach also becomes easier when every customer or prospect account is associated with a complete digital record.

The exact path to better data use may differ, depending on a firm’s size. Larger, enterprise-scale organizations may have whole departments devoted to technology implementation and upkeep. Smaller firms tend to involve fewer specialized employees and more multitasking. Firm size will determine who is responsible for implementing and maintaining data systems, however — the need to solve for these data lifecycle stages is universal.

For large and small organizations alike, the ultimate role of data is the same. Data holds great potential to empower financial firms’ operations, and businesses can’t afford to let it go untapped.

Micro and macro advantages of analyzing data

One of the most exciting outcomes associated with better data use is the ability to power both smaller, day-to-day interactions and big-picture decision-making.

Small-scale: Enabling a better client experience

With comprehensive and up-to-date client records, a financial advisory firm can deliver a smoother, more-personalized client experience that’s powered by automation. This could mean sending a message on a client’s birthday or anniversary with no direct action by staff, boosting engagement. When firms have complete, accurate data, they’ll also find it easier to take action such as setting up a new account for a client without having to delay and ask for more information.

Large-scale: Making strategic decisions

Financial firms that take in large amounts of data can perform trend analyses that will help them and their clients thrive in the months ahead. Discerning patterns from the masses of information allows an advisory organization to take action based on highly accurate insights rather than speculation or guesswork. Which investments should clients prioritize? What will yield the best returns in the next year or beyond? Modern analytics tools such as machine learning — algorithms that become better with repeated use — are delivering improved outcomes for companies of all kinds.

The right platform for wealth management firms

Achieving better data use is greatly dependent on the people, processes and overall data management culture within firms, but it also requires the right technology. The chosen solutions (whether new or existing) should be specifically designed for the financial sector — this ensures it’s been built with the industry’s unique workflows and compliance requirements in mind.

The ideal platform should also span all departments, ensuring the whole business is working from a single source of data truth. A great technology tool will be scalable, so as the firm grows and changes over time, the system can remain in place without requiring replacement.

Here at Practifi, we understand the complexities of the wealth management industry and design our technology to meet its specific needs. We also understand the crucial role data plays in helping firms provide better client experience and make more-informed decisions. That’s why we recently an advanced analytics solution to help first gain deeper insights.

To discover how Practifi can help your firm harness and leverage your data for greater insights, grab some time with a member of our team today.

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