F2 Strategy’s Executives in Residence bring years of high-level experience to our clients and with that comes unique perspectives and powerful insights that wealth management firms can use to make critical decisions. Our “What I’ve Seen” series gives the executives an outlet to share their insights with the industry in three categories: driving change, marketing and sales, or customer-centric business.
Mark Eaton speaks to growing personalization in the wealth management experience through better use of data.
There is real opportunity in today’s marketplace for wealth management firms to take better advantage of the data they collect to offer better advice. In order to build insights and drive toward better personalization of advice, firms need to own their own data. This means that firms collect and utilize diverse sets of data beyond the investor profile when building their insights. A benefit of doing this is establishing a brand differentiator as data-enabled.
How Much of Your Data Are You Actually Using?
For most firms, it’s only a tiny fraction of what they collect. Many firms collect large amounts of data only to have it sit in a data lake or the proverbial data swamp untouched. Firms could find big advantages in investing in using that data to build personalized insights. A key challenge in getting there is going beyond collecting and storing it. Owning it involves normalization of data—taking the data collected from different sources and formatting it to use it with other data in a meaningful way. This makes you better able to correlate it and make it usable in a business context. Without normalization, you have a data swamp (not combined disparate data).
Personalization of Advice Beyond the Investor Profile
Many firms use basic investor profiles and risk tolerances and not much more to build portfolios. They don’t take into account or understand at a detailed level other information such as what social causes someone cares about, or their personality traits to complete the picture to align specific investments with the personality or behavior of the client. Brands that have taken time to understand clients’ life goals and feed that into investments to go beyond asset allocation to tailor and personalize specific investments stand to gain the most.
In addition, data can be used to improve the experience clients have with your brand. Data can be used to create a client investor portal experience, similar to what most business to consumer companies already do. In particular, this strategy can be targeted to younger investors who are used to the portal universe and may indeed already be asking “why is my shoe-buying experience more personalized than my investor experience?”
Going from Good to Great with Data
To grow in this arena, you’ll need to first identify which stage of data architecture fits your firm. We define the following four:
- Stage Zero—you’re thinking about collecting and owning your own data.
- Data Warehouse—you have the ability to collect this data, normalize it and put in a data warehouse for your dimensional reporting.
- Data Lake—you can do more sophisticated analytics but likely you still have data warehouse for business-oriented analytics and reporting solutions
- Data Lakehouse—processing directly on structured insights and you don’t need a data warehouse; you build all of the curated business analytics and consume it directly within the data lake. Few companies are here. They are mature teams who want to do a lot with data personalization.
Next, look at other industries for inspiration, travel and leisure or insurance, for example. Remember, you’re competing against every other digital experience your clients have during their day, not just those in wealth management.
Finally, decide what you want, how much you want to build out in house and what partners you’ll need to accomplish your goals. It also helps to figure out the experience you want in the initial stages, so you don’t spend money unnecessarily.
The Future of Business Is Built on the Foundation of Data
Of any tool, data perhaps holds the most potential for driving positive impacts on your business. Take advantage of what you are collecting to truly personalize your client experience and propel your brand forward.
Get in touch to have an experienced partner help you navigate building stronger experiences with data.