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Why Wealth Management Needs Business Intelligence

Terry Mullen
Nov 27, 2017

Wealth management firms that understand the inner workings of their practices are better able to operate efficiently, comply with regulations, mitigate risk, and make smarter business decisions. The big question is how do you gain that deep understanding? By digging into data. Data analysis is crucial, but it's also overwhelming. Fortunately, business intelligence (BI) software exists specifically for this purpose, tailored to the unique needs of wealth management firm owners and executives. Though the software performs complex functions, well thought out tools provide a user-friendly environment which is vital in ensuring the software gets used to its fullest potential.

Benefits of Business Intelligence Software

Business intelligence software, in general, offers businesses several important benefits. According to BI-Survey.com, which surveyed over 2,600 business intelligence software users, the top benefits of using BI include the following:

  • Faster reporting, analysis or planning -- 64 percent reported that they had received good results in this area with another 27 percent achieving moderate results.
  • More accurate reporting, analysis or planning -- 56 percent and 32 percent reported good and moderate results in this area respectively.
  • Better business decisions -- 49 percent and 35 percent reported good and moderate results in this area respectively.
  • Improved data quality -- 43 percent reported good results in this area and another 35 percent had moderate results.
  • Improved employee satisfaction -- 43 percent reported good results in this area and another 36 percent had moderate results.
  • Improved operational efficiency -- 35 percent reported good results in this area and another 39 percent had moderate results.
  • Improved customer satisfaction -- 31 percent reported good results in improving customer satisfaction with another 35 percent reporting moderate results.

Other benefits analyzed in the BI-Survey.com survey, to a lesser degree, include: increased competitive advantage, reduced costs, increased revenues, and saved headcount.

Wealth management firms using business intelligence software can tap into those same benefits. BI solutions developed specifically for the wealth management industry such as Truelytics, offer even more benefits to advisory firms including:

  • Improved visibility across various practice areas such as: business stability, client stability and market stability
  • Improved reporting for both large OSJs, RIAs, or broker-dealers to independent financial advisory practices.
  • Optimized wealth management businesses leading to increased valuations.

Business intelligence software is a flexible tool that can be used across the firm. The following examples illustrate the many possible use cases for business intelligence in a financial advisory setting:

  • Performing investment research -- Which investment strategies are delivering the intended results? Which aren't? Are there any winners hiding within the data which, if discovered, would present your firm with opportunities to leverage? The data tells a story, but only if you take the time to dig through and find it. Business intelligence software helps you to do just that.
  • Quick insights -- Dashboards and scorecards provide at-a-glance visibility into important performance metrics. For example, Truelytics' Business Stability, Client Stability, and Market Stability scores reflect the current status of each measure. A quick review of these scores and the potential impact in dollar figures can help you to better understand strengths and weaknesses in comparison to benchmark data and discover areas for improvement.
  • Tapping into diverse datasets -- Data about clients often comes from multiple sources, both internal and external. Bringing all that information together provides you with a holistic view of each customer, allowing you to better understand your clients and identify opportunities. Offering relevant solutions to your clients shows you understand them and can help boost revenues and retention rates.
  • Performance reporting -- Not only does your firm want to know how the business as a whole is performing, your clients want to know how their investments are performing -- that's the bottom line. Business intelligence software allows you to provide that information and more. For example, business intelligence tools are commonly used to identify sales trends and opportunities.
  • Risk management and monitoring -- Business intelligence software can help you to stay on top of ever-changing financial disclosure and reporting regulations. Discovering potential legal or compliance violations early serves as an early warning system, giving you time to take corrective actions and mitigate risk.

The Ideal Candidates for Business Intelligence Software

Business intelligence software is a tool, that when used appropriately, can deliver a host of benefits to financial advisory firms. However, not all firms will be a good fit for such a solution. The ideal candidates for BI software are wealth management firms that value and want the following:

  • Improved operational efficiency
  • Deeper insights
  • Increased flexibility
  • Increased interoperability
  • Better decision making
  • Improved risk management
  • Increased transparency
  • Improved management reporting

In a nutshell, a good candidate for BI is a firm that believes investing in improving the business's foundation is critical to its success.

Key Considerations in Getting Started

What could go wrong when choosing a business intelligence solution? As with any type of software to be deployed across an organization, there's more involved than simply downloading a program and running with it. By its nature, business intelligence software is complex. Some programs are incredibly powerful, but also incredibility difficult to use. With that in mind, here are some key considerations to keep in mind as you start your search for a business intelligence solution for your wealth management firm.

  • Ease of use -- Who is the business intelligence software designed for -- IT or business users? While you may have a brilliant IT team, it's your management team and financial advisors who need to understand the data. If they can't quickly navigate the software and easily use it, they probably won't. Investing in software that no one uses is a waste of money. Look for BI software that is designed for end-users with limited technical skills. The interface should be both appealing and easy to use with self-service options that do not require intervention from IT.
  • Real-time, or near real-time, reporting -- How quickly are reports compiled and delivered? If there's a delay, your end users will likely become frustrated and adoption will suffer as a result. The sooner you can get reports into their hands, the better.
  • Mobility -- Is the business intelligence solution mobile-friendly? Your team needs insights throughout the workday, and chances are, they aren't sitting at their desks all day long. Make sure to evaluate the entire BI experience on mobile devices. Truelytics, for example, is an online self-service platform that puts business intelligence at your fingertips whether you're accessing it on a desktop, tablet, or smartphone. With just a few taps, firm owners can better understand the value of the entire practice and monitor its financial, demographic, and practice management characteristics.
  • Relevance -- A business intelligence solution could be gorgeous to look at, easy to use on all devices, and provide amazing real-time reports, but what if those reports aren't actually relevant to your users? Before looking for a BI solution for your firm, it's smart to find out exactly what type of data and insights your team needs to take it to the next level and make the best business decisions.
  • Training and support -- After finding the perfect BI solution for your firm, how will your advisors find out about it? What type of training will they receive? A tool is only useful if it's actually used and used appropriately.

Even with an intuitive, self-service business intelligence platform designed for financial advisors, you'll want to make sure your team knows it's available, how it will benefit them and their clients, and how to use it. You may encounter resistance to adopting a new technology, making it smart to manage change from the beginning.

This starts at the executive level. You senior team must agree that gaining accurate and timely insights into the business is mission critical and a top priority. They should know that:

  • Business intelligence software can facilitate improvements in operational efficiency, compliance, and decision making.
  • The quality of source data is an essential ingredient in successful business intelligence implementations.
  • Business intelligence programs can address a specific need or the firm as a whole.

After getting buy-in from the executive team, assign data stewards to take ownership of your firm's data. These stewards will also be involved in developing a data dictionary that identifies authoritative data sources and provides consistent data definitions as well as in identifying tools to maintain the integrity of the data.

Let your users know that a new BI solution is in the works and how it will benefit them. This gives them time to get used to and embrace the idea. Leading up to the implementation, provide appropriate training, again, reinforcing the benefits by showing them how it will make their jobs easier, their clients better informed and more loyal, and the practice more successful.

Where to Go From Here

If your firm is a good candidate business intelligence software, it's time to start exploring your options and evaluate BI software for the wealth management industry such as Truelytics.

Truelytics is the only online self-service platform in the wealth management industry that helps you understand the value of your entire practice based on its unique characteristics and make objective, informed decisions to advance your business without the need for expensive, outside consultants.

The competitively priced paid service provides you with: Truelytics scores, advisor and firm eValuations, scorecards, over 40 KPIs, continuity planning features, a personalized dashboard, benchmarking against industry peers, and more. Schedule a demo today.

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