Data analytics offer investment managers secret sauce for success and future growth

By Paul Bebber
30 May 2018


Data make up the raw ingredients. Analytics are what enable firms to turn those ingredients into a world class meal.

With high quality data analytics, investment managers can tap into the potent value to be found within their stores of market, client and enterprise data. Armed with these insights, firms can improve their investment modelling, make more reasoned and incisive trading decisions, enhance performance and manage risks. They can also better understand, support and respond to their clients’ needs and demands, helping boost client acquisition and servicing, and optimise product development.


  • Take better investment decisions

Knowledge is power. But while market participants have more information available than ever before, the sheer volume and speed of flows brings its own problems.

Advanced data filtering and analytics help firms comb through the mass of structured and unstructured data with which they are bombarded to spot patterns and unearth investment opportunities.


  • Identify and counter risks

Investment performance is as much about minimizing losses as it is achieving big wins. As Warren Buffett put it: “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1.”

The evolving breed of risk analytics capabilities, fed by reliable and timely data inputs, are increasingly central to investment managers’ efforts to identify and mitigate investment risks, and thereby enhance performance.


  • Deliver personalised client experiences

The digital age is all about immediacy, convenience and personalisation. Asset and wealth managers need to offer the same if they are to compete in today’s marketplace.

Service personalisation depends on customised portfolio construction and investment solutions that match clients’ evolving risk profiles and financial objectives. For example, the growing popularity of goals-based investing, when done well, provides investment managers with a way to promote client engagement and loyalty, and capture a greater wallet share.

Underpinning this personalisation is improved client segmentation.

Breaking down your target market into segments based on age, wealth, risk profile, service demands, investment objectives, etc. will allow you to better understand their product and service preferences, and what it will take to meet them. From there, you can assess clients’ potential profitability and growth, identify your client sweet spot, and tailor products and services accordingly.

Intelligent analytics have a vital role to play in extracting useful and usable information that can help firms make both their client service and sales and marketing activities more effective. But while there is considerable interest in using social media patterns to profile prospects and deepen existing relationships, firms should focus first on optimising and analysing the data they already have, not least in their CRM systems.


  • Improve communications

Generating alpha or meeting clients’ financial goals is one side of the equation. But that also needs to be communicated properly. By leveraging sophisticated performance attribution and analytics in your reporting, you will be more able to tell clients a compelling story about the effectiveness of your investment strategy and how it chimes with their objectives.


  • “Garbage In, Garbage Out”

For the evolving suite of analytics to do their job, and deliver the actionable insights firms want, accurate, comprehensive and timely data inputs are also essential. That requires four key elements:

  1. Extensive data collection
  2. Normalisation
  3. Enrichment
  4. Efficient distribution

Armed with a clean, collated pool of relevant data and the right analytics capabilities, firms then have an opportunity to enhance their customer journeys, increase sales levels, both new and existing, and ultimately boost their competitiveness and profitability.