The Data is the Client Experience

By Scott R. Graflund, Partner, FallLine Strategic Advisors on Wednesday, October 24th, 2012

In today’s new era of wealth management, where choice, independence and objectivity are the new value proposition, the ability for firms to control the client experience can be daunting. An unprecedented amount of advisor transitions are being enabled through new business models and advances in data accessibility and transferability. This new landscape consists of multiple custodians and platforms that create an even more disruptive challenge for controlling and managing data, much less the client experience. The impact is challenging traditional models of how applications and data work together. Market forces that are driving independence and open architecture are taking a data challenge once unique to sophisticated clients downstream to less sophisticated clients now operating in a more complex environment.

Is something significant unfolding? Will the world of data eventually become flat or will new platforms that help address and contain the challenge prevail? One thing is clear - the data challenge facing today’s wealth management firms is more significant than ever and, for some, the “challenge” may be an “opportunity.”

In wealth management, few things are more important than a properly segmented and seamless client experience. There are many variables that contribute to the client experience, such as the timeliness in which you respond to a client inquiry, the way an advisor or the advisor’s team interacts with a client and how you address or anticipate your clients’ needs, just to name a few. One item in particular that tends to be a hot topic with clients is client reporting and the client online experience. In this area, clients quickly form impressions from the outside in. Are the reports they receive timely, organized and informative? Are the charts and graphs descriptive and easy to follow? Is the information comprehensive and accurate? Is navigating to relevant information quick and intuitive? Clients are quick to judge firms based on these surface level characteristics; however, as important as these first impression drivers are in promoting a strong brand and client experience, the client data and reference data that lies beneath the surface is of equal and potentially greater importance. As clients seek simplified reporting for all of their assets, and as providers of wealth management services strive to see all of a client’s wealth to provide comprehensive advice, the bar for providing a seamless client experience is being significantly raised. At the heart of this challenge is data management.

We’re constantly astounded by how truly challenging the data management problem really is. To make matters worse, as clients’ wealth levels increase they have the ability to utilize products and services that are not easily priced or tracked. This added complexity exponentially increases the challenge of data management. The problem originates from the level of control a firm has over their data. For example, pulling together a simple collection of listed equities and pricing them is a relatively easy exercise. Add a few bonds and the problem gets incrementally harder. Layer in more illiquid assets like private equity and hedge funds and now the problem starts to multiply. Throw in assets that are priced in multiple currencies and the challenge grows further. If assets aren’t valued on a regular basis, finding an accurate price on a periodic basis can be a challenge. For products where the residual value may differ from the principal value, the process of accounting for these changes can be complicated. If assets are held away, aggregating data across multiple custodians leads to increased risk of maintaining data integrity. In summary, more sophisticated clients frequently use products that are more complex and with less available data, which means the data management problem becomes more acute and important to solve. In this new world of open architecture business models, the data challenge once unique to larger more sophisticated clients is moving downstream.

What future solutions will eventually emerge to this growing dilemma is still to be determined. Will platforms that provide bundled service models of integrating applications with fully reconciled data rule the day? Or, will data eventually divorce itself from specific firms and applications and become a platform of its own that multiple applications and service providers pay to share? Will other solutions emerge based on new technological capabilities or entirely new business models? The answer ultimately lies between what are firms willing to pay for a solution versus the effort of trying to manage the problem themselves. How much room is left in some of the current AUM-based pricing models to support existing turnkey solutions is an open question. If advisory fees face pricing pressure, will AUM-based service offerings make a firm remaining competitive a challenge? What new solutions exist or are under development that could disrupt the status quo? Like most markets, pricing pressure and new technological capabilities will eventually define the future landscape.

End-game winners in wealth management will be the firms that take a holistic view to their clients’ wealth and consistently have access to all the appropriate data. How firms implement alternative approaches to dealing with these issues can positively impact their long-term profitability, despite the added cost. At the dawn of the internet, Scott McNealy prophesized “the network is the computer”. Is a new dawn approaching where “the data is the application” or, in wealth management terms, “the data is the client experience”?

FallLine Strategic Advisors is a management consulting firm providing strategic, transaction and technology/operational advisory services to principals, intermediaries, service providers and investors exclusively in the wealth management industry. For more information regarding their market views and services, please contact Scott Graflund (203-621-6211x803 or, John Straus (203-621-6211x801 or j.straus@falllineadvisors), or Peter Ruhlin (203-621-6211x802 or, or visit

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