Controversy Alert – Is Harvesting Client Data Vital For Your Investment Management Company?

Published: 20 June, 2017

Your answer to this is probably ‘no’.

But, in my view, it should be ‘yes’ but underpinned with compliance.

Let me explain:

The investment and wealth management sector typically groups clients according to their attitude to risk. But this is too generalised to deliver a truly personalised service. For that, you need to dig deeper – you need to know more about a person’s preferences across a range of factors, not just risk.

This could include their attitude to spending, saving, schooling, retirement and philanthropy – all things that could affect their future financial needs.

Gathering this sort of information can be as simple as sending out a questionnaire, although that does not always give a true picture. You can also analyse the investment decisions your clients make, as well as how they interact with your marketing emails to see which are opened, the links that are clicked on etc. This gives you powerful insight into what your customers actually do, rather than what they say they do.

By using technology to analyse all the data you receive, you can create investment portfolios that are tailored to individual characteristics, rather than those associated with the broad groups of conservative, moderate and aggressive risk appetites.

Using this approach could also create what is known as a ‘network effect’, which in simple terms means the value of a product or service rising with increased use.

Google provides a good example of a network effect, because the more people that use a particular search term, the easier it is to improve the relevance of search results for other users – as results are analysed to assess which are most popular.

Harvesting client data and using it effectively could lead to a similar effect in the wealth management industry, because the success you have with one client could improve outcomes for other clients with similar profiles and requirements.

So, technology can give you a clear advantage in terms of analytical power.

But firstly, you need to have the necessary raw material to analyse, which is why harvesting client data is so important. When you have relevant data you can truly customise a portfolio and make it work much harder – and more profitably – for every single one of your clients.


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