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.

UNDERSTAND THE SHIFT


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.

BIG DATA ADVANTAGE


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

NBA Player Carl Landry Demonstrates the Value of Persistence in Life and Work

NBA Player Carl Landry Demonstrates the Value of Persistence in Life and Work

Written by: Jon Sabes

When you meet Carl Landry, stand-out college basketball player and nine-year NBA player, you imagine that becoming a professional basketball star was a straight forward run for the 6-foot-nine-inch power forward. 


However, when you go deeper into Carl’s background, becoming a NBA professional was less than certain and little came easily to the 33-year-old from Milwaukee:

  • He was cut from his high school team as a freshman and averaged less than ten points a game when he did play as a senior.
  • He started his college career not at Purdue, but a junior college where it was not clear he would play.
  • When he finally got to Purdue, he tore his ACL in his knee his first year and reinjured it the next year.
  • While his family held a party for him the night of the NBA draft, he slept in the Philadelphia airport after missing a flight following a workout for the 76ers.
  • In the NBA playoffs, Carl had a tooth knocked out, but came back in the same game to make a game-winning blocked shot as the Rockets beat the Utah Jazz 94-92.
     

Landry, who I interviewed on my podcast, Innovating Life with Jon Sabes (www.jonsabes.com), is a remarkable example of the value of “persistence.” In a time where technology creates the image that anything is possible at the touch of a button, persistence is an under-appreciated trait. When I spoke with Carl, I clearly saw someone for whom success has only come through a force of will that made him a NBA player, but it also made him a better player every year he played. That’s the kind of personality that has produced greatness in business as well as sports.

Carl was, in fact, drafted that night he spent in the airport. The Seattle Supersonics chose him as the 31st overall pick and then traded him to the Houston Rockets where he rode the bench for much of the first half of the season. When All-Star teammate Yao Ming was injured, he stepped in and played a key role in the Rockets astonishing 22-game winning streak (the third longest streak in NBA history). And, that season, after sitting on the bench for 33 of the first 36 games, he was named to the All-Rookie second team.

Carl was the first in his family to go to college. “I told myself that this was my ticket out, so I did everything I possibly could to be the best person in school and also on the court,” he said.

His family life in Milwaukee showed him what he didn’t want to do. “Just being honest with you, seeing some my cousins, peers, they went to work for jobs paying six, seven dollars an hour or they didn’t go to work at all and then living off welfare. I didn’t want that.”

When he was first injured, he had to contemplate the end of a career before it even got started. “When you have an ACL tear, it’s over…no more basketball,” he told me. “I said, God, give me health again and I’ll do everything I can to leave it all out on the line and be a successful individual.”

On my podcast, Carl pointed out another interesting lesson he learned in the NBA: Not doing things just to fit in.

“Fitting in was easy,” he said. “Doing everything that everybody else does was easy. If I stood out in some type of way, I’m going to have different results. I’m going to have stand-out results.”


That’s called the “Law of Contrast” and it produces that exact effect of changing the outcomes that everyone else is experiencing.  Carl is smart, he recognized that differences make a difference, and doing whatever it takes is what is required to make real, meaningful differences.

Every off-season for the last 11 years, he has run a camp for kids in Milwaukee where he tells youth his story of hard work and persistence. “I always tell the kids to apply themselves and always be persistent,” he said. “If you dream, apply yourself and be persistent. With hard work, man, the sky’s the limit.”

When Carl says the sky’s the limit he means it.  He is smart to recognize that it’s important to dream big, because if we don’t – we may be selling ourselves short. “You have to dream bigger than your mind could ever imagine,” he said. “I wanted a nice house. I wanted a nice car. I said, and I got all of that. So, what do I do, do I stop now? Maybe I didn’t dream big enough.” That’s a big statement coming from a kid who grew up to be the first in his family to graduate college and go on to be not only a top NBA basketball start, but a good businessman, father and someone who gives back to the community.

I’m convinced that in whatever he takes on as a basketball player or in his post-hoops career, Carl Landry is not going to stop getting better at whatever he does, and in the process of doing so, make the world a better place.

GWG Holdings, Inc.
Investing in Life
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GWG Holdings, Inc. (Nasdaq:GWGH) the parent company of GWG Life, is a financial services company committed to transforming the life insurance industry through disruptive and i ... Click for full bio