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Big data and automation are driving the evolution of fund distribution

Posted by on 27 October 2016
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The below article is a session write-up from a panel discussion that took place at FundForum NextGen Distribution in Boston, October 2016. Panellists included:

Loren Fox, Director of Research, Ignites Research (Moderator)
Geraldine Gibson, CEO, AQMetrics
Richard Garland, Managing Director, Investec Asset Management
Con Way Ling, Marketing and Business Development, Artivest
Robert Behan, President and Head of Global Distribution, Calamos Investments

 Join in the conversation on Twitter via #FFNextGenDist.

This panel evaluated trends in technology, the nature of the advisor-client relationship, and factors in sales force behavior that influence the adoption of new tools for managing processes and data in the financial services environment. While technological change has been rapid, the panelists did not believe, on the whole, that human advisors will be replaced by machines any time soon. Instead, better faster and smarter machines will simply assist in the work flows and leverage the time of their flesh and blood counterparts.

The Foundation of Big Data

At the root of any CRM system is the core data – it may be what you enter in yourself, what you can find on the web, what may be purchased commercially, or what has been imported from other databases within or outside of the firm. The key to data management is that repositories must have good connectivity to the CRM system and the schema, types of data and how they are presented will be compatible or at least require minimal adjustment.

With the proper setup, the data will be linked in useful ways and can lead to greater productivity and enhanced ability for segmentation, resulting in a higher level of client service and increased sales. As one panelist put it, “That’s what we all want as distributors.”

Who is in charge? – the Chief Data Officer

In the modern data management and analytics scene, the ideal structure is to have one data czar who oversees everything. However, in financial services, many firms are still not there yet.  Many firms have multiple executives involved and precise lines of responsibility are not clear. If we ask, “Who own the data analytics strategy?,” it might be marketing, performance, or finance. In some organizations, people are reticent to claim the territory, but they do have a data center and will have to reach a decision someday. “We are just not focused enough this it in the asset management industry,” said one panelist. “We are not, in our essence, technology firms.”

Communication or Obfuscation?

The uses of data, large and small, not only encompass what is needed for the firm for reasons of strategic analysis, day to day operations and reporting. The data also should inform sales and marketing in clear and compelling way. One focal point is the corporate website. Often designed and driven by the marketing team (and its subcontractors), the corporate website  may be the point of first contact with potential clients. And yet, is the information there arranged in an attractive and useful manner? If a prospect chooses to supply his or her email address, what kind of materials will they receive? Is it relevant and the best use of such resources? “We bombard clients and prospects with far too much stuff that they don’t want and can’t use,” said one panelist, “And we can even see who has opened it, but we don’t always change our ways.” It is amazing in the process of targeting how unrefined it is, even today. There are simply not that many studies or that much reflection on who is trying to get in front of whom and what kind of messages they are trying to convey?

Sales Force Dynamics with New Technology

Where salesforce CRM is concerned, there is a problem of “Garbage In, Garbage Out.” As driven as they are by calls and meetings, salespeople are typically not enthralled by the challenge of getting the right data into the right place. Since they are heavily focused on relationships, the

CRM system may be viewed as a glorified address book, though clearly it can be much more than that. In order to help pave the way for smooth adoption, a fair amount of internal legwork may be required. Getting the salesforce to be receptive to change can be a huge hurdle, so it is important to get managers on board first, then gradually seek out internal buy in. Eventually the adoption may take on a life of its own. It is critically important that the system works efficiently. One panelists noted the short attention span factor: a salesperson may have the patience to try the new process one time – if it works, it will seep into their consciousness quickly, and everyone will be happier. But if it does not, they will quickly go back to the old way of doing things. We have to take an extremely functional and practical approach; sales is not into learning for sake of learning; tools have to work for them, not the other way around, noted one panelist.

Going Robo and Customer Education

These days, studies show that more sophisticated investors are online as opposed to going through an advisor. Although robo or digital advising is quite likely to grow, the advisory role is not going away any time soon. For one thing, there remain some tangible and intangible benefits to the human aspect of the client relationship, particularly in times of market stress or unusual events. In addition, as intelligent as they are becoming, machines still tend to excel at the repetitive tech aspects of work in financial services. The nuances, empathy and “touch” aspects of the work are still properly in the human domain.

To that point, one recent study showed that 67% of investment advisors would like to spend more time with their clients and prospects. The data suggested that if they were able to increase their consultative/facetime by about half, then they could make three times the revenues, on average. Spending time on the human side is precisely about how to create value.

Even so-called sophisticated institutional investors often have no idea what they are buying, observed one panelist. This is evidenced by the number of lawsuits currently winding their way through the system, pushed by local cities, fireman’s pension funds and the like. The advisory process might be fine if salespeople had perfect ethics or truly understood what they are selling, but sadly, this is not always the case.

Thus there are so many opportunities for deeper, richer, client engagement where the goal is to educate and share information for the betterment of both sides. And data is part of that equation, but it is still a work in process. As an industry, we want to be working with big data, but right now, we only have small data, said one panelist.  However, like the nature of the investment advisory business itself, this is one facet that is sure to evolve over time.

For more information about FundForum NextGen Distribution click here.

Join in the conversation on Twitter via #FFNextGenDist.

Watch exclusive video insights from the event via FundForumTV.

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