Investment brands - whether in Funds, Private Wealth or Alternatives - measure success and growth through Assets under Management (AuM). But as the industry is facing disruption, companies are beginning to realise that Data is so valuable that a new metric is called for.
What is Data under Management (DuM)?
Every firm requires data to operate - from markets, but also internal databases like investment systems or CRMs. It also constantly generates data - portfolios, administration, communications and interactions between teams, clients and suppliers.
Data under Management (DuM) is the volume of records a firm consumes and creates in the course of its operations. AuM is only a subset of these records, so arguably DuM is a more accurate measure of size and growth.
How is Data “Managed”?
In very much the same way that you manage Assets: acquire it, protect it and take well-calculated actions to grow it. Like Assets, it is cheaper to acquire it from existing sources, so loyalty and advocacy are primary concerns.
Data can be acquired from all available systems, so long as they are integrated and connected. In fact, the value of data increases exponentially once it is combined. This is the domain of Advanced Analytics and Customer Intelligence, a key aspect of the Invessed platform.
How do you calculate your DuM?
At the most basic level, data volume is measured in bytes, however this is of limited use. A more useful measure is based on value i.e. the sum of potential value that can be extracted from a given data set.
For example, a large pool of behavioural data has much greater value than risk profiling questionnaires. The former will give you the fuller picture of what customers want but can’t articulate; the latter is limited to a specific context and influenced by the language questions.
The sum of all data
Like all service companies, investment companies are the sum of the data they consumes and generates. As technology is beginning to reshape the fundamentals of the industry, it is time to make Data under Management a key metric, and concentrate resources to growing it and deploying it to generate value.
Scaling up - but not dumbing down
Increasing advisor productivity while not compromising on service standards is an increasingly achievable goal. In fact, new sources of client insight can make their experience exponentially better even as firms scale up.
A looming communications crisis for wealth managers
The last financial crisis highlighted just how important proactive client communications are in troubled times. Tolerance for unresponsiveness was low then and will be even more so now.