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Making Data Wealth Management’s Technology Hub



Technology has grown to be an essential component of the wealth management industry. At first it evolved around portfolios and investing. Later it helped financial services companies manage their clients, and firms began constructing technology stacks for their client relationship management platforms.


Today, growing wealth management firms will have to shift the focus of their technology again from the clients to the data, says Chris Zuczek, chief product officer at Skience, a wealth management fintech provider.


“There are problems, though, and one is that data is not sexy,” he says. “You don’t see it when you make a sale or when you go to buy something—you don’t look at the data, you look at all the bells and whistles, right? You think about the speed of the car, or how it looked, but not the engine when you bought a new car.


“Over time, the industry has been recipients of data from outside sources—from the custodian, from the client—so infrastructure was built to bring data in, but not to process it, or share it.”


As a result, firms have layered on technologies that don’t talk to one another. That’s led to what Zuczek calls the “frankenstack”—an amalgamation of systems that may or may not work well in isolation but has little ability to pass information along. As a result, firms have had to buy layers of redundant software, hire extra staff and spend extra time entering and re-entering information.


Isolated data leads to inconsistencies, Zuczek says.


“For the same account, you might get two different answers in two different systems—so account No. 1 might have $4 in system one and $5 in system two—are they both wrong? Which one is right?” he asks. “It’s not an easy problem to solve.”


There’s another reckoning coming for financial firms playing catch-up. Many industries have been built or redesigned around data—today, the way people shop, the way they date and socialize, the way they eat, the movies and television they watch, even their web-browsing can be harnessed by businesses to create data points, and these can then be used or monetized.


Because it has to collect so much data to serve clients effectively, to invest and to comply with regulations, the financial industry has already been collecting useful and valuable data for decades on portfolios, markets, client demographics and behavioral information—but it hasn’t been doing so with much thought about how that data might be used by the tech.


Make It Useful           

“The wealth management industry is awash with data but starved of insight,” says Adrian Johnstone, co-founder of Practifi, a business management platform for the wealth management industry. “We have so much information but little clarity on how to manage it and what to do with it.”


The industry’s problems with this started early—because data hasn’t been part of the discussion in most firms, most financial advisors don’t have the ability to create a strong culture around collecting or maintaining it.


As a result, firms are not only dealing with data isolated in different technological silos, says Johnstone, but also incomplete and erroneous information. Because data isn’t sexy, firms often think about analysis and use cases before they confront the crucial issues of how data is collected, processed and stored. As a result, they continue to accumulate more information that is of little use. Some of this is because business leaders put the cart ahead of the horse—they focus more on how data is going to enhance their business or grow their revenue without spending enough time thinking about how they get accurate, useful and portable figures.



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