The Data Management Advantage for Wealth Managers

By Valuefy

March 13, 2023


Data management is under the spotlight for wealth managers, as clients expect increasingly personalised, digital, and data-driven services. Advisors who master data management can drive value right across their business and achieve a competitive advantage over their rivals. But what are the key challenges in data management and how can wealth managers excel in this area?

Data Management is a Journey in Wealth Management

Wealth management lags behind other sectors, both within financial services and beyond, in its progress along the data management journey.

The journey normally begins when an advisor recognises the essential role of data management in digitising operations and generating insights for organisational and investment decision-making. So the business embarks on a process of improving the value, fidelity, and timeliness of its data.

The process typically progresses from data aggregation and consolidation – where advisors need to connect to data sources, custodians, and other solution providers – to analytics and insights, where they can deliver powerful reporting and investment performance analytics using their data. It culminates when data is fully embedded in business processes and the entire business model is predicated on analytical models.

Challenges Along the Wealth Management Way

Progress along the data management journey can be costly and slow for wealth managers, EAMs, and family offices alike, if not managed correctly. Data used in the investment management solutions must be accurate, complete, and consistent in order to make informed decisions. But complex and fragmented data often straddle a wide range of internal and external sources and span different formats or systems. This can make it difficult to ensure data quality and integrate data into a single, comprehensive view.

Additionally, wealth managers must implement robust data security measures, such as encryption, firewalls, and data backup systems, to protect against cyber-attacks and data breaches and comply with regulations. Data management policies and procedures must be in place to govern who has access to data, how it is stored and used, and how it is protected against theft or misuse. This is essential for maintaining trust and accountability in investment management solutions and ensuring that data is used in an ethical and responsible manner.

Taking the Right Steps

Typically, wealth managers will connect to banks to perform the extract, transform and load (ETL) data integration process – either by connecting directly to the custodian or doing so via a data aggregator. But they need to deploy the right technology and tools to be effective.

At the extract stage, data is gathered from a variety of sources, including internal databases, external providers and client information. This is achieved by using data extraction tools such as APIs or database queries.

Extracted data is then cleaned, formatted, and transformed so it’s consistent and usable for investment analysis and portfolio management. This may involve removing duplicates, dealing with missing or incorrect values, and converting data into a common format. Data transformation tools, including scripting languages, data quality tools, and data mapping tools, can be deployed to accomplish this.

The transformed data is then loaded into a central repository, such as a data warehouse or data lake, for easy access and investment analysis. This part of the process can be managed using data-loading tools like database management systems, cloud-based storage solutions, and data integration platforms.

The end goal is to empower wealth managers to make critical investment and business decisions based on data. It also enables them to reduce time spent on manual tasks, increase client-facing time and improve the overall client experience. In addition, robust data management can help advisors streamline their KYC process, ensure smooth onboarding, and deploy advanced CRM and workplace collaboration tools.

Differentiation through Data Management

Managing data as an asset is now a crucial aspect of operating strategy for advisors. It enables them to drive global expansion, improve marketing and sales enablement, offer an exceptional digital experience to clients and leverage high-quality data for better investment decision-making. Faced with growing compliance mandates, advisors are also actively seeking ways to improve data transparency for client and regulatory reporting. 

With the right technology and tools for data management, advisors can boost their business performance and competitive advantage in the market and deliver enhanced digital services and superior investment outcomes for clients.

About Valuefy:

Valuefy is a premier investment technology lab with cutting-edge solutions serving leading financial institutions across the globe. Its Wealth Management Solutions has enabled Wealth Managers globally by providing production-grade investment technology for an uberized customer experience.

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