Page 41 - Investment Advisor May 2021
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THE FAST TRACK
By Angie Herbers
The Pros and Cons of Being a Data-Driven Advisor
Relying too much on data can make you miss what is really relevant in
your business.
e live in a big data world. ity as it gets everyone following the same
Advancements in ana- workflows and taking consistent actions.
W lytics help advisory firm As employee productivity increas-
leaders make faster, more informed deci- es and the client experience becomes
sions about what to prioritize and where smoother, increased revenue and
to focus. The introduction of “business decreased expenses are ultimately the
intelligence” has made it easy to spot result. As your firm enters this new
patterns, trends and client behaviors. It phase of growth, it can achieve a com-
gives advisors a snapshot of what their petitive advantage over other firms
clients are and aren’t doing. struggling to spot their weak areas. In
Big data is good — except when it isn’t. addition, your firm can onboard clients
With so much data at our finger- faster, serve them better and keep them
tips, advisory firm leaders can become happier over the long term.
dependent on it. For all the good it can The results are simply good business
do to show an advisor what has hap- outcomes. Employees enjoy their job, so
For all the good that pened or is happening in their business, turnover is low; and clients enjoy their
data can do to show it cannot by itself create true innovation. service, so retention is high.
If you understand the limitations of
With potential results like that, where
an advisor what data, you can use it to your benefit. Here, could data possibly steer you wrong? It’s
not so hard to see when you know where
we’ll look at the pros and cons of being a
has happened or is data-driven advisory firm owner. to look.
happening in their PROS OF DATA-DRIVEN CONS OF DATA-DRIVEN
business, it cannot ADVISORY FIRMS ADVISORY FIRMS
by itself create true When a firm has good data, it can find Data tells us only about the past or the
easier ways to improve both its client
current moment. On its own, it cannot
innovation. and advisor experience. That is, you can innovate or create change in an advi-
improve how you serve clients and in
sory firm. It can fix only what is wrong
doing so improve how an advisor feels in the moment.
serving a client. It will measure client This repetitive cycle — looking at the
satisfaction and employee satisfaction. data, fixing what’s wrong, looking at the
On the client side, capturing data on data, fixing what’s wrong — doesn’t tell
how they interact with their advisor or us where the industry might be chang-
advisor-provided technology solutions ing or where a firm may need a deeper
can show what clients really want, what strategy to enhance growth in the future.
they’re not getting and what problems In other words, data is data. The
they’re having that you need to solve. creativity found in being blissfully igno-
For employees, data can help increase rant of data often fuels some of the most
productivity. When processes are being innovative (and perhaps disruptive)
tracked, a leader can more readily spot advances in industries. It also allows
issues in systems and processes that us to think outside what is happening
break down. If those processes are cor- today and find new ways to evolve as
rected, a firm can quickly expand capac- a firm.
MAY 2021 INVESTMENT ADVISOR 39
