Why data is your practice’s secret weapon

Data is one of the essential ingredients in a successful advice business. Here’s how technology have given advisers an edge when it comes to managing their data and proving their practice’s worth.

Financial advisers deal with data on a daily basis, but in our experience, there are still a lot of misconceptions about how powerful it is.

When managed properly, data can help practices to grow, uncover new business opportunities, prepare for M&A and deliver better outcomes for clients. Without reliable data, firms may struggle to demonstrate growth, understand their clients or prove their value and readiness for acquisition.

 

Why data can be an advice blind spot

Many advice practices are already sitting on rich client and business data, but don’t realise its potential. Despite spending countless hours compiling spreadsheets and generating reports, many firms still struggle to gain clear, actionable insights.

As ensombl CEO Clayton Daniel told an intelliflo roundtable, which formed the basis of our Advice, Evolved whitepaper, “Very few companies have mastery of their data. It’s pandemonium out there. Some advice firms are like Jenga towers—held together by fragile, outdated data structures that could collapse at any time.”

As other professions, such as law and accounting, recognise the potential of data to increase business value and differentiate their service, the financial advice sector is just beginning to realise this potential.

 

The power of data insights

In the past, practices haven’t wanted to put time and resources into managing legacy data, at the cost of time with their clients. However, new technology can help – provided advisers are willing to engage with their data. For businesses who want to scale up and offer more targeted advice, cleaning up data becomes essential. We still see advisers spending a lot of time manually gathering data to give them a picture of their business, when technology can automate this process and deliver insights instantly.

For clean data, tools such as business intelligence (BI) dashboards can turn raw information into actionable insights that can quickly tell an adviser essential information about their clients and business. These insights allow advisers to break down their client base into segments and find new opportunities to tailor advice and achieve growth. For example, income provider analysis and income received dashboards let advisers to quickly zoom in on income-related metrics – including year-on-year performance, income by client and product, and ongoing revenue – while task dashboards offer practices the ability to track workflows to improve efficiency and on-time delivery.

 

Using data for M&A

If you’re looking at M&A – either now or in the future – clean data has a significant impact on perception and valuation. Acquiring firms now look at more than a practice’s profit and loss; they want an inside view of the practice’s client base and their demographics, the firm’s key strengths, its strategy, and its history of growth. Data underpins all of that – and can be the key to a seamless transaction.