Cerulli Associates Sees Data Usage Coming Up Short

Think the financial services industry has tamed or fully leveraged the myriad data sources to which it has access? Think again, says Cerulli Associates.

A new report from the financial research and analytics firm suggests data segmentation is still a struggle even for top-performing asset managers and financial services providers. Pamela DeBolt, associate director at Cerulli, notes that “segmentation and predictive analytics projects” are very important to the firms with which Cerulli regularly speaks, “but many are still trying to determine the best strategies for turning their efforts into new business.”

“Segmentation is an important initiative in which firms continue to add resources,” DeBolt says. “However, firms are making varying degrees of progress in their attempts to get their arms around big data and implement actionable results. During the past decade, there has been a focus on ‘big data,’ with firms taking on huge data-mining projects to reap benefits from the data they have collected.”

While almost half of large firms with greater than $100 billion in assets under management report that they are finished with their data segmentation efforts, “these accomplishments are different for medium and small-sized firms,” DeBolt explains. “More than half of medium and small-sized asset managers report they are still cleaning up and trying to understand their big data sets.”

While the path to get there remains challenging, the potential benefits of skilled usage of data are already clear in the minds of asset management firms. Citing a recent survey of national sales managers, Cerulli says “nearly half revealed that enhancing predictive analytics capabilities to better identify distribution opportunities is a high priority.” The firms see it as a win-win for themselves and for clients—in that financial services of all stripes will become both more highly tailored and also more efficient/inexpensive to deliver.

NEXT: What it means on the ground for advisers 

Cerulli goes on to explain that asset managers are turning serious attention and resources to building or enhancing their institutional and consultant services, leveraging big data and greater connectivity to steer potential clients to the right human touch-points. For example, “managers are embedding links in targeted digital advertisements and social media posts to drive traffic to their websites, no longer waiting for visitors to find them.”

On the client side, data-based predictive analytics will allow for a better user experience, Cerulli says, “while providing marketing and sales with metrics for better intelligence.”

“It is important to profile customers based on a variety of variables—this is where segmentation is critical,” DeBolt adds. “While the ultimate success is securing new clients through engagement tactics, it is also vital for firms to have a retention strategy in place.”

One strategy firms are already putting into place is asking clients to share information about their children, spouses, and what type of a financial future they envision for their families. “Providers must treat the children of clients within their practice as prospects that must be persuaded to keep their assets within the firm,” DeBolt suggests.

Cerulli stresses the importance of including internal data—from website traffic to flash-polling at client events—for big data projects, “because some of the most valuable information can be hidden within the firm.” Further, the reporting warns there are an “exorbitant number of technology tools available for consumption in the marketplace today.”

“We urge firms to implement a data strategy before purchasing any third-party tools, to ensure needs are cross referenced with capabilities,” DeBolt concludes.

Information on how to obtain the latest edition of “The Cerulli Edge – U.S. Edition,” and other Cerulli research, is here.