Refining Data for Purpose-Driven Wealth Management

In the world of wealth management, data isn't just an asset, it's a raw material, much like crude oil. The difference between a successful data strategy and an inefficient one often lies in how well firms can refine this raw material to meet their various, specific needs.

Imagine this: You wouldn’t pour crude oil directly into a car and expect it to run smoothly. Similarly, trying to use unrefined or poorly matched refined data for every operational or analytical use case won’t get your business where it needs to go.

?Here’s how to ensure your data is ready to fuel your firm’s engines effectively:

1. Understand Your Data Sources

Wealth management companies have a multitude of options for sourcing data—ranging from data aggregators and performance accounting systems to custodians and direct product manufacturers. Some of these data sources come pre-refined, meaning they’ve been tailored in some way – and it’s critical to recognize what level of refinement each source has undergone before you start working with it. Attempting to use a single, “one-size-fits-all” source for diverse use cases is a recipe for inefficiency and inaccurate results. For example, a performance accounting system is specifically refined to display the performance of individual accounts. Relying on it as a primary data source for compliance or enterprise-level FP&A reporting is not suitable.

2. Get as Close to the Source as Possible

One strategic approach to data quality is to cut out intermediaries and get as close to the data’s point of origin as possible. This unrefined “crude oil” data gives your firm the flexibility to process and tailor it to your specific use cases. If you rely on data that’s already been refined to the attributes and specifications someone else has chosen, this can be like fueling your car with diesel or kerosene. Controlling the refinement process allows you to optimize your data for compliance, performance analysis, client reporting, and more.

3. Start with Compliance to Build Your Foundation

Compliance data use cases often require the most granular level of data attribution and the broadest data coverage, so prioritizing this area is often the best place to start. ?Once you’ve set a robust foundation with compliance data, it becomes easier to create purpose-fit datasets for other use cases, such as investment performance, client insights, and risk management.

4. Consider Your Firm’s Specific Needs

For firms that have a relatively uniform set of offerings, such as Registered Investment Advisors (RIAs) operating “on-platform,” your data may already be quite clean. However, if your firm deals in a variety of direct business—like direct mutual funds, alternative investments, insurance products, or external Turnkey Asset Management Programs (TAMPs)—you’re likely facing data challenges. These can include delays and incomplete data attribution that hinder accuracy.

Taking the Next Step

As a longtime data expert and consultant specializing in data strategies for wealth management, I help business leaders and CTOs solve these challenges every day.

What specific use cases aren’t well served by your current approach to data refinement?? Feel free to reach out by DM or book a call with me for an initial conversation. Together, we can develop a strategic plan to improve your firm’s data quality, tailored to your unique business requirements.