One of the most extensive conversations recently with the current drop in the stock market is regarding big data and how managers in the financial industry are profiting from using big data systems. This has created a buzzword in many sectors, but aside from it having a lot of influence, there are a lot of interesting points that can be used from big data.
Current Challenges for Wealth Managers and Why It Can Be Addressed with Big Data
A large majority of wealth management companies utilize legacy systems for their fund management reporting. This results in more time spent trying to understand and create traditional data measuring equations in software such as Excel, which can show new levels of error or a longer amount of time concentrated on developing an answer. This ultimately creates a lot of accuracy issues with large amounts of data in these systems, which can create bad solutions or errors from integrating multiple data layers and sources.
While big data teamed up with big data software can eliminate a lot of these issues since they are housed on a large scale, they are primarily creating more accurate information that can be delivered promptly. This allows wealth managers to serve clients seeking more digitalization of their knowledge and show data visualizations that appear closer to a client’s vision, and cut back time for data analysts at these firms.
There are two main things, though, that advanced analytics can do when applied to big data:
- Adjust costs for clients based on a flat rate fee due to the decrease in the time allocated to adjusting and creating formulas with big data composed in systems that cannot hold this large amount of data (Excel). Utilizing big data, managers can even adjust these fees based on investment size and operating efficiencies created from using big data to be more productive and ultimately spend more time with clients.
- The ability to encirclement customer life stages to their goals of financial investing is drastically increased when applying historical big data to portfolio investments. The biggest complaint from modern investors is the one size fits all mentality which is mainly shown in a 401k. Customers want to see their portfolio differently from others based on their needs in life and where they are currently at. Since this has become a new increasing issue with investors, wealth managers now need to see many different aspects when working with a client. When using big data, running these timetables needed for life-stage investing is quicker and more accessible due to the historical data load implemented when running certain equations.
How Can Big Data Create More Accurate Trend Analysis?
When big data pull over multiple levels from different strands of data, it can create a trend analysis to either compare areas of investing to others or even to break down and see where there are more opportunities to grow. When big data is dropped into software that can handle this type of graph configuration, it becomes vital for wealth managers as they can cut back their time building out tables to create graphs and instead adjust precisely what they want in minutes.
This also allows for adjustments based on client needs to be simpler and quicker. Again, big data is so important because it saves time for an individual based on computing and addresses issues at face value. Utilizing our software can adjust just that as well. The main focus for any firm should be to cut back time when it comes to analysis to add that towards time with clients.
Does Big Data Play an Effect Towards Emerging Markets?
The short answer is yes. With the vast amount of information that has been placed in the investment world, there are always outstanding questions that need to be addressed, which big data does. With the new transitions in emerging markets, there are always a lot of exceptional questions, but having the correct data set in place for a market comparison addresses the presented issues. While there are a lot of challenges that are placed for new markets, investors can see a lot of other mispricing or data uncertainty with big data that will present itself relatively early on for emerging markets. However, applying experience and skills with the results from big data can create a foot ahead for firms and place massive profit gains down the road for investors.
Lastly, we have discussed the impact of big data and why it is important, but the biggest takeaway is simple. The ability to create more time for clients. We can go into depth with big data for days, but the ability to utilize system software that brings big data in a digestible piece is more beneficial than developing another equation that might ultimately show errors due to the limitations of certain programs. This is why big data truly needs to be utilized to benefit more than a client but a wealth manager.