Power in owning your data

The stage was set for an electrifying NBA Finals as the Denver Nuggets compete with the Miami Heat in their quest for the NBA Title As I immersed myself in the pre-game and post-game analysis, a striking realization dawned upon me the landscape of basketball analysis has undergone a remarkable transformation, placing a greater emphasis on quantifiable statistics Cast your mind back to the early 90s, when analysis revolved around basic qualitative insights We were cautioned about the shooting prowess of Reggie Miller, the sharpshooting guard of the India Pacers, emphasizing the need to prevent his 3-point attempts Fast forward to the present day, and we are enthralled by a new era of understanding where data can provide profound insights Now, the focus shifts to players like Jamal Murray of the Denver Nuggets, with the detailed statics revealing his remarkable 87% efficiency from beyond the arc and the significant drop to 37% efficiency on his midrange jumpers. Data truly dictates that a team “plays by the numbers. 


How Data is Changing Sports 

Firstly, it’s essential to make finance more accessible in education. Incorporating finance modules into curriculums early on can spark interest and break down misconceptions. As Annamaria Lusardi, Director of the Global Financial Literacy Excellence Center (GFLEC), says, “Financial literacy is like a language; the earlier you learn, the more proficient you will become.”  

An article by Wealth Management presents astonishing statistics stating that only 16.4% of US students have requirements to take a finance course and over three-quarters of millennials lack even the basic understanding and knowledge of finance. The misrepresentation and apprehension towards the finance industry lies in the issue that the younger generation lacks the exposure for them to have a true view on it. Increasing financial literacy within academic institutions would inherently manifest increased participation and boost in the field of finance. 



How Data Will Change the Financial Services Industry 

I currently see the financial advisory spectrum as being very similar positioned as teams in the NBA in the early 2000s where not all teams realized the importance of owning your data.  When I use the term ‘owning your data’, I mean that you integrated all the tools that have your client data in one cohesive database.  Effectively combining the data from source, A to Z to create a complete, comprehensive profile of your client. 

Data provides the ability to clearly, and quantifiably demonstrate the correct decision even if goes against current conventions.  Data is not a mere collection of facts and figures.  It’s a tool for unlocking insights, catalyzing innovation, enhancing client experience, and driving your firm’s growth.  In basketball, the data shows that an open 3-point shot from the corner is worth more than a layup attempt.  20 years ago in the NBA, it would have been sacrosanct to propose that passing up a layup or a dunk would be a good idea. 

In the NBA, the data allows teams to game plan and understand players’ tendenciesDoes Kobe go left or right more oftenFor advisors, understanding your clients has always been the cornerstone of a successful advisory practiceData analytics can uncover invaluable insights into client behavior, preferences, and future financial aspirationsStated simpler, uncover your clients’ tendencies, and be better able to anticipate their needs resulting in higher client retention, increased net flows, and client referrals. 

Beyond the Numbers: Revolutionize Your Practice

The power of data goes beyond client interactions.  It can also make a difference in managing internal operations.  Data can highlight workflow inefficiencies, training needs, and resource allocation.  Data in the NBA highlighted the underutilization of the 3-point shot.  For example, by analyzing workload data, you might discover that certain tasks are monopolizing your advisors’ time, affecting their ability to focus on high-value interactions or tasks.  This insight could lead to automating the time-depleting tasks, again freeing up advisors to engage more effectively with clients.  Utilizing data properly will increase an advisory’s efficiency and free up more time to focus on what is most important to you: your clients. 

Risk management in financial advisory practice is another area where data can make a significant difference.  This is the part where having data collected by different systems seamlessly integrated with data from other platforms to present a cohesive picture is important.  One basic example is monitoring the risk level of the portfolio with the client’s risk tolerance.  If there is a mismatch between the two, most portfolio risk monitoring software will provide an alert.  However, not incorporating data from the CRM system could leave a firm exposed to risk.  The portfolio risk is in line with the risk tolerance questionnaire, but what about the notes from the last meeting where the client expressed concern about the risk of the portfolio? 

Advanced analytics can help you identify patterns and correlations that might not be readily apparent, enabling you to spot potential risks and take proactive measures.  Every person in the financial advisory world has had a client unexpectedly leave.  What if the unexpected part could be anticipated?  Using the data available, it might be possible to anticipate this and preemptively begin outreach to retain the client.  Is a client logging in less or more frequently to the client portal than in the past? 

Innovation Driven By Data 

Data also holds the key to innovation in your practice. It can guide your technology investments by highlighting areas where digital tools can offer the most value. Perhaps you’ll find that an AI-based chatbot can enhance client engagement, or a sophisticated portfolio management tool can streamline your advisors’ work. By making data-driven decisions, you ensure that your technology investments yield optimal returns. 

In an era where transparency is a critical demand from investors, data can be utilized to satisfy this need. Through data visualization tools, RIAs can provide clients with a clear, visual representation of their financial situation, portfolio performance, and market trends.  The visualization part is one of the leading reasons that clients are unhappy with their advisors and advisors are unhappy with their reporting system.  Owning your data and having it organized allows for the freedom to import this data into a more visually appealing format. This means your own advisor experience, your client reporting and your end client experience become proprietary to your firm and your operations.  

Transforming The Future of Financial Advisors 

The aim of data is not to replace human judgment and experience but to augment it.  It is not always the prudent decision to pass up a layup for a 3, there are circumstances where this would be a suboptimal play.  Data is a tool, and like any tool, its efficacy depends on how it’s used. Training your team to interpret and apply data effectively is as important as investing in the right technology. 

The modern era of financial advising is here: data-centric driven practices.  The outlook of a financial advisory practice’s future will be dependent upon the ability and effectiveness of incorporating this potent tool.  The wise management of data can offer a firm a competitive edge, enhanced client satisfaction, and, ultimately, a trajectory of sustainable growth.  Will the corner 3 always be the best shot in basketball?  I am pretty sure that will change at some point as teams evolve to limit the value of this shot; however, I am more than certain that data will drive this change. 



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