Wealth management: big data, better relationships

Helen Avery
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Technology has given wealth managers the ability to collect more data than ever before. How they use that information is now critical to their future success. So why aren’t more private banks embracing the opportunity?

Big Data Better Relationships

This is an era of fundamental challenges and opportunities for banking. We need to attract top data scientists, partner with leading players in the advanced analytics space and build a new data infrastructure able to cope with the challenge not only to manage the size of data but also its complexity, veracity and velocity of change," says Brian Bachmann, head of perception development and centre of excellence in digital private banking at Credit Suisse.

How to collect data, how to store data, and above all how to use data – these are the questions on the mind of every private bank chief technology officer. Better data means better relationships with clients, better relationships with advisers and, indirectly, better relationships with shareholders. Yet only a handful of the large wealth managers are making strides to fully embrace the big data movement.

Where the wealth management industry seems united is in the belief that the collection and analysis of client data leads to better relationships with clients. "The wealth management industry used to rely on two pieces of client information – client demographics and investable assets. Now, however, they realize the use of knowing that the client’s mother is in an assisted living centre, or whether their daughter just graduated, or that they are concerned about Syria," says Kendra Thompson, head of Accenture’s wealth and asset management practice in North America.

It may once have taken advisers many years to find out this information about their clients, but now they are able to use social media and the internet to bring together data. "Much of the information needed to on-board new clients is available from public sources," says Dirk Klee, chief operating officer at UBS Wealth Management.

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It leads to deeper, richer conversations with clients and more opportunities to provide better individually tailored solutions such as managing cash flow to ensure an elderly parent is taken care of, or knowing that cash flow is now freed up as a child has graduated. For years advisers have claimed that they treat each client as an individual and that they are not just putting their money into one of seven bucketed risk profiles, but with the move to more data, that claim will actually become true. Bachmann says: "This is the beginning of a new kind of wealth management, individual to each and every client’s life and goals."

That a deeper client profile can lead to better wealth management solutions is obvious. However the use of digital customer-relationship management (CRM) tools allows the aggregation of the feedback from those solutions; that information is valuable.

"All this data on a client is well and good but its real value is when it leaves the adviser’s head and is input into a bank’s CRM platform," says Thompson. "If thousands of advisers are now starting to input more details about their clients, alongside what investment solutions they are providing, then before long you can drill down into knowing that dentists who live in rural areas and enjoy cycling have been interested in investing in X." That means advisers can start to make informed suggestions to clients based on a client’s peers’ decisions with greater accuracy.

It is not just personal information that is useful. Data collection on clients’ interactions with the bank outside the adviser is also providing helpful insights. Chris Randazzo, chief information officer at Morgan Stanley Global Wealth Management and Investment Management, explains: "As an organization we can learn from our clients’ activities to enhance our most popular features and to better inform our advisers. For example, the adviser could be alerted that the client ordered cheques and it could lead to a follow-up call with the client to ensure that they received the cheques. It makes the adviser more connected to the client."

'Big change'

The big data revolution does not necessarily mean that more data is being collected on clients, but it does mean that data is being collected faster and that it is collected centrally on digital CRM platforms. That is powerful, but only if advisers are using those CRM platforms. "It’s been an opt-in tool for advisers among many firms, but it makes sense to enforce use, and that is going to be a big change for many wealth managers," says Accenture’s Thompson.

Morgan Stanley has been a leader in upgrading its platforms to be much more user-friendly and accessible to their advisers. Last year it launched 3D Insights, which analyzes the hundreds of research reports and product information emails that advisers were receiving each day. 3D Insights ensures that advisers only receive information relevant to their clients. Morgan Stanley also launched a client reporting capability that allows advisers to customize data around clients at the touch of a button rather than having to sort data manually. It has a simple interface that advisers can navigate more easily.