Why Every Wealth Management Firm Needs A Chief Data Officer

“You can have data without information, but you cannot have information without data.”
― Daniel Keys Moran, American computer programmer and science fiction writer

In Moran’s book The Long Run (1989), he presciently described the civilization-changing impact that a ubiquitously available Internet would bring to society. He introduced the concept of Internet addiction disorder, which has been formally recognized by the American Psychological Association and Moran referred to the forced withdrawal as “data-starve”.

There certainly is no shortage of data among wealth management firms or their many technology vendors.  The amount of data being captured by the many systems and applications used by RIAs and broker-dealers is expanding exponentially.  CRMs capture millions of emails, notes and text messages, financial planning software creates millions of detailed plans and data aggregation systems can pull in credit card transactions, consumer loans, insurance policies and other financial data.

Where is all of this data going and how are firms managing it and are they using it efficiently?  Ezra Group evaluates the Data-as-an-Asset strategy of our wealth management clients based on these four foundational objectives:

  • Aggregation – Is the process of collecting and processing data reliable, trustable and scalable?
  • Patterning – Do the current tools and processes create layers of relevant data patterns and insights that teams can easily consume?
  • Action – Do the data and insights support targeted decisions for both internal and external constituents?
  • Evolution – Can new data be ingested and converted into business insights at a pace that’s consistent with the rate of change in the market?

We’ve been producing a series of webinars to bring leading industry experts in data strategy, data architecture and systems implementation to share their experiences and best practices around leverage Data-as-an-Asset for enterprise wealth management firms.

Our most recent webinar, called The Data Engines Powering Wealth Management, included panelist Anthony Stich, Chief Operating Officer, Naviplan, now part of InvestCloud, who shared some best practices when working with vast amounts of client data and offered advice on how to deal with it effectively.

In case you missed this webinar, click here to unlock your access to the full recording.

Advisor Dashboards

Data is a powerful driver of the advice delivery process. Advicent is seeing more enterprise clients launch advisor dashboards to create meaningful connections.
Anthony Stichchief data officer for wealth management

The combination of all software migrating into the cloud plus the expansion of APIs has given rise to the next wave of critical financial advisor tool — the centralized dashboard.  This movement started around 2015 and has been growing as more vendors either see the need for a centralized workspace or are pushed by their clients to build one.

As I noted in my blog post, The Battle for the RIA Technology Integration Hub, there is a strong demand from advisors for “one screen to rule them all” where they can access everything they need to manage their practice.

The Big 3 data sources for advisors have always been CRM, financial planning and portfolio management and comprehensive advisor dashboards are able to consolidate and present information from all three sources.  Of course, there are some all-in-one platforms that have tried to bring these applications under one roof, which makes managing a dashboard much easier.

According to a report from Deloitte, driving sales effectiveness and organic growth is one of the data challenges facing the wealth management industry with a 360 degree view of the client as a key delivery mechanism. “With an increased focus on productivity, both in the intermediary sales space as well as direct to client sales, it is imperative that advisors have all relevant data points about a customer at their fingertips.” Integrated Dashboards are the window into this world for advisors. They must integrate both portfolio data and sales interactions to determine the most productive actions in real-time.

Envestnet | Tamarac built their own CRM on top of Microsoft Dynamics over a decade ago and their parent company added financial planning with their acquisitions of FinanceLogix (2015) and MoneyGuidePro (2019).  They have been working diligently to combine this data with held away assets and consumer finance data from Yodlee and wrap it up with analytics by leveraging the business intelligence (BI) toolset from their purchase of Wheelhouse Analytics.

Last year, Envestnet quietly acquired Advisor Innovation Labs, one of the most innovative providers of advisor and client dashboards and data integration experts in our space.  Their platform is architected around the household and delivers out-of-the-box integrations to many of the most popular advisor applications including bi-directional data exchange, multi-custodian support and the ability to import insurance accounts.  We expect their tools to be leveraged across both Tamarac and Envestnet’s enterprise platform to improve the user experience.

Orion Advisor Tech launched a Salesforce native application called Orion Connect back in 2012 which provided an advisor dashboard that was cutting edge at the time (but required a Salesforce subscription).  They have since replaced this with a more robust solution called Advisor Portal that is native to their platform and brings together a wide range of information from across their platform including client account, financial planning, reporting and billing.

Of course, we can’t forget Investcloud, which recently acquired Advicent and their financial planning platform, Naviplan. While they currently lack a true CRM application, they do have one of the most scalable portfolio management systems from Tegra118 (formerly Fiserv Investment Services) on their team which brings a tremendous amount of data that can be integrated with Investcloud’s existing advisor and client dashboards.

Investcloud is one of the industry leaders in providing advisor and client portal software, which they have branded as their InvestCloud Blue product line. It comprises a suite of apps (which they have sold to firms in the UK) that enable digital client communication, client onboarding, engagement and advice, as well as financial planning and reporting, which can provide a comprehensive view of all clients, when implemented as part of a well-defined data strategy.

As Riskalyze CEO Aaron Klein noted in his monthly fintech report card, “InvestCloud has transformed itself from a ‘really cool advisor and client dashboard / data integration play’ into a hardcore contender for ‘unified wealth management platform of the future.’”

Advisor Peer Comparisons Drive Improvement

“Peer comparisons enable financial advisors to continually drive improvement & is a major benefit for firms with comprehensive data strategy”
Anthony Stichchief data officer for wealth management

Up until relatively recently, the best way to compare advisors against their peers was through surveys either by third parties such as industry groups, media, custodians or technology vendors or internally by RIAs and broker-dealers.

The reasons that these surveys were valuable can be summarized by some comments from Michael Kitces on a recent Schwab Advisor Benchmarking Survey:

The typical view of financial advisor benchmarking studies is that they’re a way to “keep score” for advisory firms, comparing firm size by revenue and assets under management, and perhaps which firms have the best growth rates. But the reality is that benchmarking studies also provide the opportunity to compare an advisory firm on a wide range of Key Performance Indicators (KPIs), to determine whether the firm has the right staff infrastructure, pricing, and whether it is over- or under-staffing its client service team.

Now that the major RIA technology platform vendors have been acquiring applications with significant data and building out integrations with other key vendors, they have the ability to analyze advisor behaviors and activities to provide more objective results than surveys.  The data can also be displayed in near real-time to provide advisors with recommendations based on recent changes or adjustments in their practice management.

As the top vendors like Envestnet, Orion Advisor, Morningstar and SS&C Black Diamond reach the levels of 2,000+ RIA firms they have enough raw data to process these peer comparisons completely on their own, which they can use as a differentiating factor.  These real-time analytics will go beyond what’s available from research firms such as Cerulli Associates or Javelin Strategy since all of the data will be in-house and immediately accessible.  We expect more advanced and more useful recommendations for underperforming advisors that help them grow their practices and increase operational efficiencies.

Vendors will also have more robust data than is gathered by custodian research such as Schwab’s Annual RIA Benchmarking Study, since they will be multi-custodial. For example, Schwab’s study found that 75% of top performing RIAs had defined their client value proposition compared to just 50% of underperforming firms. Firms with both a documented ideal client persona and a client value proposition attracted 45% more assets than those without. How will this compare outside of Schwab’s universe?

Why Your Firm Needs A Chief Data Officer

Treat your company’s data like a separate P&L, hire a Chief Data Officer (CDO) to avoid multi-department debates on data strategy.
Anthony Stich

An integral member of the C-suite, the CDO (not to be confused with Chief Digital Officer) has many data-related functions as defined in an article by BMC Software, including:

  • Overseeing data management, data analytics, and data governance
  • Ensuring data quality
  • Spearheading data and information strategy

The CDO leads the utilization and governance of data across an organization. As CDO, you’re an executive that understands strategy as well as how to use data to drive a business in the desired direction. The best CDOs are then able to justify that direction to investors and stakeholders.

Breaking down an organization’s data silos is another key deliverable of the CDO, according to Sarah Thomas, Account Director at ASG Group. “Companies that don’t share information between departments and individuals are less productive. This has always been an issue, especially in larger organizations, but is increasingly the case as data is now a commodity. CDOs can help break down the data silos between departments by having full visibility over internal and customer data and helping to make it available to those that can make best use of it.”

According to a report by Gartner, the CDO role is still new, untested, and amorphous. To achieve clarity of role and purpose CDOs need to act quickly and decisively to determine the data-driven ambitions of the enterprise, set their scope, and actively communicate their role:

  • Establish clarity for the CDO’s role and purpose by defining and advocating the role’s vision, priorities and scope
  • Transform their enterprise by prioritizing cultural change and fostering a data-driven orientation
  • Apply asset management disciplines to select information assets and borrow ideas from other industries and competitors to monetize their data



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at craig@ezragroupllc.com