The advantage of this approach is that firms can read across their data sources and use business intelligence tools to interrogate the data they hold in innumerable ways.
In contrast, the older ‘data warehouse’ approach required information to be sorted and filed away, which in turn limited the ways it could be used.
Firms with larger scale currently have an advantage in the form of the ability to invest in data lakes and the tools to make best use of them, as well as the scale of data to draw useful conclusions.
However, as with all new technologies, this approach will become more and more accessible to firms of all sizes.
As a result of these technological advances, firms are increasingly in a position to benefit from accurate data, joined up across their tech stacks, and to identify patterns that are important to the customer, the adviser and the firm.
That could mean firms looking at the breadth of risk profiles across the client base, to see which portfolios are being matched to which clients, which fund providers are being used and where the outliers fall. It could mean individual advisers doing the same for their own client base.
Firms can look at the distribution of outcomes and marry them to risk. They can evaluate the importance of sustainability to their clients, or track demographics and shifts in behaviour as well as outliers in advice cases. They can create target markets and assess the solutions being recommended to those target markets, then monitor their fitness for purpose.
As a result, firms are beginning to understand the value of data – not as something to sell, which numerous high-profile scandals have shown us damages trust, but as something with which to build better propositions, deeper client relationships and, as a result, stronger businesses.
Ben Goss is chief executive of Dynamic Planner
