Alpha FMC

Messy client data costs investment managers $1bn a year and rising

Greg Glass, Executive Director, Luke Tones, Head of Product

Managers are squeezed in a data vice; on one side data sources and data volumes are exploding, whilst on the demand-side, a broader range of data consumers are insistent about seeing improvements to quality, granularity and frequency of analytical outputs and management insights.

The ‘Excel Era’ is over, eclipsed by the Cloud and Cloud-based Data Management Solutions as managers scramble to bring new capability to market and become the hunter not the prey in the ongoing industry consolidation. However, data transformation requires patient investment in foundational capabilities – including in governance, dev ops, enterprise data models and business change management. Some, impatient for quick results, have skipped a few steps and reached for eye-catching analytics.

The cost of this under-investment is stacking up:

  • USD 2.5 Million of avoidable cost each year for a mid-sized manager in the Top 400.

  • 64% of managers claim to have no embedded capability to visualise data (source: Alpha FMC Data & operating models survey, 2020)

  • just 17% claim to have defined an enterprise data model (source: Alpha FMC Data & operating models survey, 2020)

  • Most are wrestling with fragmented data and no single source of truth

  • On top of this, managers are spending large sums on regulatory reporting & compliance (including penalties and fines) all of which are alleviated or improved by better data

However, the true cost to managers is not just the operational & regulatory costs but the missed opportunity to create a lower cost, data-driven business. Managers know that to survive the ongoing industry consolidation and fee compression, they must provide clients with a differentiated experience. This requires the provision of carefully curated data and information combined with a coherent engagement strategy that allows interaction across physical and digital channels.

In tandem, COOs & CEOs are demanding a better information picture to run the business at a higher tempo – more decisions at higher cadence with higher stakes for slow or bad decisions.

At the root of these problems is data quality or, more specifically, the lack of it. In particular the quality of the foundational data set of economic data describing client value, the Client Book of Record (CBOR). Much of the value of any business is created by a small fraction of clients.  This pareto effect is particularly acute for Investment Managers but is often not acted on because the data to drive different decisions is not to hand.

So where to go from here?

Historically the data has not been available but now it is. Accurate high-quality data describing client economic value will change the way you run your business and, when sponsored and embedded properly, can drive transformation across a range of enterprise business processes.

For example, Distribution Heads are thinking how to create Sales Alpha – the incremental revenue that flows from an out-performing Distribution function – by investing in more data, analytics and tools to share knowledge and create insight

Schedule a demo to find out more about how Alpha Data Solutions supports clients on this journey

About the Authors

Greg Glass, Executive Director

Leads the commercial and solution teams at ADS responsible for client success, revenue, partnerships and propositions

Luke Tones, Head of Product

Passionate about user experience, design and delivering solutions that add true customer value. Responsible for Product Management across our product suite