Big Data: Why It's Important and How It's Changing the Industry

Big Data: Why It's Important and How It's Changing the Industry

The most successful advisors of the future will crack the code to combining digital solutions with human capital to provide a more comprehensive offering to clients — and achieve greater scale in their practice.

In fact, in the 2015 Advisor Authority Study conducted by Jefferson National and Harris Poll, we learned that the most successful advisors are truly tech-obsessed. Advisors who manage more assets and generate more revenue spend substantially more on technology and adopt technology into their practice at twice the rate of the average advisor.

When it comes to technology, there are those in the financial advisory industry who would say that 2015 was the year of the robo. Robo advisors dominated the headlines as major online brokerages such as Schwab and Vanguard launched their own versions, and asset managers such as BlackRock and Invesco started following suit. Aite Group estimated that digitally-driven investments would reach $53 billion by year-end 2015, up from $2 billion in 2013. Cerulli Associates estimates that the market for robo platforms used by advisors will be close to $500 billion by 2020.

But robo advisors aren’t advisors at all. They are digital solutions to provide low cost portfolio allocations. And perhaps the most lasting effect that the “rise of robos” will have on our industry is helping to create the bionic advisor — a term coined by Michael Kitces to describe the advisor who understands that technology can actually magnify the power of human capital — not diminish it or take its place.

Just as 2015 was the year when robos pushed more advisors to confront the inflection point between human capital and technology, 2016 will be the year when more advisors will use technology to capitalize on the vast range of data available in their practice to serve their clients better. Welcome to the year of big data in wealth management.


To define big data in the context of wealth management, consider all the diverse sources available for an advisor to understand a client, a client’s family and their estate. Everything from spending and investing, assets and liabilities, business interests and financial goals. And, beyond the financial to the personal: specific biographical and demographic details, unique preferences and important life goals. In practice, big data is a transformation of this disparate information and disaggregated data, using computing power to efficiently identify patterns and trends. This can help you understand your clients’ needs and wants — and allow you to serve your clients and their families more holistically and retain them more effectively.  

Advisors’ shift toward big data is already in progress. It has fundamentally transformed the industry, and has given a competitive edge to the early adopters. But it has been a long secular journey of learning how advisors can best leverage big data to advance their approach to prospecting, engaging and serving clients. Through the power of big data, advisors can understand the power of demographics, understand the power of segmentation, make more informed decisions around marketing and prospecting — and ultimately attract new clients.

By leveraging big data, advisors can make more insightful decisions to enhance relationships with existing clients, create the opportunity for using more sophisticated strategies, create room for more in-depth discussions about long-term financial goals — and, ultimately, gain a greater share of wallet. Using big data in these ways, we see advisors innovate, creating a better user experience on the front end and a more scalable and cost-effective process on the back end to ultimately grow their practice and expand their franchise.

This requires partnering with technology providers that can enhance the traditional approach to planning and practice management with comprehensive data-mining capabilities. As more advisors seek to harness the power of big data, it has increased the demand for data analytics and account aggregation platforms like Quovo. It has led to several prominent transactions, from Morningstar’s acquisition of ByAllAccounts, to Envestnet’s acquisition of Yodlee last summer, to TD Ameritrade’s recent acquisition of FA Insight earlier this year.


Now, a piece of advice: Don't miss the forest for the trees. Big data is not data for data’s sake. But it is a tool to magnify value for clients — and a more efficient and effective way to workYou may be inclined to look at an individual client or a specific point in time. But the real power of big data is the big picture view that it can provide. One client and one data point is one tree. Many clients and many data points make a forest. By viewing clients and data in aggregate you can identify the actionable trends in a way that allows you to see the whole forest, so you can help it grow and prosper — and protect it from going down in flames.

So don’t be left behind in this year of big data. Learn from the early adopters. Use it to your advantage. You can better understand and manage the market. You can better manage and grow your clients’ wealth. You can better manage and grow your practice. And this much is crystal clear: You won’t be replaced by technology. You won’t be eliminated by big data. Because, as your clients accumulate more wealth, as their financial lives becomes more complex, nothing can replace the value of guided advice. Clients need that human touch to guide them through periods of growth and periods of volatility. They need the human capital that can survey all the inputs and reach the right conclusion. And the last thing they want is to call a robo — and get a busy signal. 

Mitchell H Caplan
Investing Insights
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Mr. Caplan has more than 25 years of experience in the financial services industry, running both public and private companies.  As CEO, Mr. Caplan is focused on developin ... Click for full bio

I Have A Brand And It Haunts Me

I Have A Brand And It Haunts Me

I was talking to my pal “Jonas” who recently decided to freelance (vs building a multi-consultant business) when he left a bigger firm to do his own thing.

Jonas is a global talent guy who works across the planet for some of the world’s most well known companies. He decided his best play—the one that would allow him to focus on what he loves most and live the life he’s planned—is to freelance for other firms.

His plan got off to a bit of a rocky start because—get this—none of the firms he approached believed he’d actually want to “just” freelance. He’d earned his rep by steadily building deep, brand name client relationships, practices and business, not by going off by himself as a solo.

Or as he put it “I have a brand and it haunts me.”

We both had a good belly laugh because he was already rolling in new projects, thrilled with his choice to freelance.

And yet, isn’t that the truth?

Good, bad, indifferent—our brands DO haunt us.

They whisper messages to those in our circle “trust him, he’s the bomb”, “hire her for anything creative as long as your deadline isn’t critical”, “steer clear—he talks a good game but doesn’t deliver”.

And thanks to social media, those messages—good and bad—can accelerate faster than you can imagine. One client, one reader, one buyer can be the pivot point that takes your consulting business to new territory.

So how do you deal with it?

You double-down.

Yep—you go for more of what comes naturally. In Jonas’ case, he stuck with what he’s known for—his work, his relationships, his track record for integrity—and won over any lingering skepticism about his move.

We weather the bumps in the road by staying true to who we are at our core.

So when a potential client says “Sorry, you’re just too expensive for me”, you don’t run out and change your prices. Instead, you listen carefully and realize they aren’t the right fit for your particular brand of expertise and service.

When a social media troll chooses you to lash out at, you ignore them and stay with your true audience—your sweet-spot clients and buyers.

And when your most challenging client tells you it’s time to change your business model to serve them better, you listen closely (there may be some learning here) and—if it doesn’t suit your strengths—you kiss them good-bye.

If your brand isn’t haunting you, is it really much of a brand?

Rochelle Moulton
Brand Strategy
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I am here to make you unforgettable. Which is NOT about fitting in. It IS about spreading ideas that make your clients think, moving hearts and doing work that matters. I’m ... Click for full bio