Technology impacts our daily lives. The evolution and expansion of Artificial Intelligence (AI) into mundane tasks have raised investors' expectations. The days of personal meetings and paper statements are long gone. According to a survey, 30% of investors want to view all their investments from various sources in a single application.
Today, wealth management is defined by real-time access, excellent digital experiences, and instant bespoke financial insights. Acquiring, maintaining, and presenting vast financial information is challenging and risky for an industry that has always been data-driven. Investors’ financial data is fragmented, as their investment options are spread across multiple custodians and alternative assets. Compiling and presenting the data in real-time is a significant challenge, thus impacting investors' decision-making, reporting, and overall satisfaction.
In this blog, we’ll explore the data challenges wealth management firms encounter, discuss how technology addresses those challenges, and lastly, discuss how PCR Insight can assist firms in streamlining data aggregation.
Data Aggregation Challenges:
Wealth management institutions are responsible for regularly providing their clients with accurate information about their investments to assist them in making well-informed decisions. However, this is never as easy as it sounds. They are faced with significant challenges, such as data beyond expectations, a lack of well-defined presentation, multiple sources, and irregular deployment of the data. Let’s understand these challenges in detail before discussing technology's solutions.
1: Data Overload:
Today, every wealth management firm deals with an unprecedented scale of data year after year. Thanks to the involvement and emergence of the latest technologies, such as IoT, AI, and blockchain, the data continuously expands in volume and complexity and extends to various dimensions. The complex data is becoming challenging and costly to accumulate and manage.
This implies that wealth management firms are spending time and money to support the inflexible data infrastructure and accommodate investors' increasing data. Nonetheless, this doesn’t guarantee seamless accessibility or integration. With data from various sources in huge numbers, there may remain a disparity, leading to an additional effort to re-analyze, unify, and arrange.
2. Technology Limitation:
When it comes to data accessibility, its security always takes the forefront. Many financial institutions refuse to share the direct link of the data with data aggregation institutions for security reasons. Thus, these wealth management companies have no option but to log in to the clients manually and extract the information from there. The process is tedious, filled with endless hurdles and access.
Bank servers are always busy, with multiple account holders accessing their information at various times during the day. Excessive usage often overwhelms them, making it difficult for wealth management companies to operate investors’ accounts and prevent them from conducting business.
Additionally, banking security services must distinguish between hackers and data aggregators. To prevent fraudulent activity from entering banking servers, customers who make too many failed attempts can experience account lockouts, damaging client relationships.
3. Multiple Custodians:
Investors have their funds spread across various places, and different financial institutions usually maintain their assets. Thus, it becomes challenging for a wealth management firm to aggregate data from multiple sources. One of the primary challenges they face is data access. They must gather and present all the data from various sources into one platform. The accumulated data is not always in the preferred formats, leading to additional arranging tasks.
Secondly, the challenges arise from the quality and completeness of the data. Since information flows from various sources and through many hands, there is a high risk of inaccurate, incomplete, and uninformed data. It’s excruciatingly painful for advisors to re-arrange and validate the data before presenting it to their clients.
Thirdly, once these data are gathered and made presentable, the challenge is arranging them according to their client's needs. Every advisor has a specific requirement and wishes to see their wealth management report in a certain way. Ensuring that requirements are met and delivered to the client on their preferred platform begins the vicious cycle of ensuring that the data presented is accurate and appropriate.
4. Alternative Investments:
Investors hold their funds in various investments, such as hedge funds, private equity, and real estate. These investments are held outside of traditional financial institutes. Accumulating and tracking this information becomes challenging for any wealth management company.
These investments are not synchronized due to the lack of a standardized reporting format. Furthermore, they’re not reported on pre-defined schedules. With reports coming to the wealth management institutes at random periods in unsynchronized formats, it creates a challenge in data aggregation. The time individuals take to extract and place the data in a defined manner further delays reporting, thus affecting the investors' decision-making.
Technology as the Solution
It is established by now that wealth advisors play a prominent role in investors' investment decisions. Investors heavily rely on the information they provide before making any decision. The slightest error can lead to serious consequences affecting the overall investments. Thus, they ought to be thorough with their data collection and presentation. While all these were done manually, technology interference in data aggregation benefits wealth advisors. Let’s look at how technology is emerging as a perfect solution for data aggregation.
Artificial Intelligence (AI) -
AI has boomed in recent years, penetrating every industry with revolutionary results. Wealth advisors can seek its assistance to process and analyze massive financial data, locate trends, and anomalies to smoothen decision-making. AI will only help wealth management institutions enhance their deeper insights into market trends and client portfolios, giving them the power to provide proactive, well-defined recommendations. Additionally, machine learning models can assist in refinding data accuracy over time by identifying inconsistencies and eliminating redundant information that might hamper decision-making.
APIs or Application Programming Interfaces -
Wealth management institutes must explore APIs to seamlessly integrate various financial platforms. APIs provide smooth access to real-time data from custodians, banks, and investments to wealth managers or advisors. The API eliminates manual entries, ensuring the data aggregation is error-free and accurate. The API also automatically provides a continuous flow of data from all sources. This empowers wealth management firms to create a centralized dashboard, providing a unified view of investors’ diversified portfolios, eliminating fragmented data and enhancing decision-making.
RPA or Automation and Robotic Process Automation -
Automation, including RPA, banishes repetitive and time-consuming tasks, such as data entry, data aggregation, reconciliation, and report generation, to a considerable extent. It improves the efficiency of wealth advisors, reducing all the possible human errors that are a byproduct of manual entries and providing enough time to advisors for strategies and planning. Automation also enhances compliance by reporting updated data consistently per the regulatory requirements.
Cloud-based Solutions -
Cloud-based solutions offer secure access to clients' real-time information from any location. This further encourages collaboration among financial professionals by giving them access to updated reports, transaction histories, and investment performance analytics. Cloud-based solutions also promote data scalability, empowering firms to handle massive financial data without compromising system performance or security.
Blockchain for Data Security & Transparency -
Various sectors use blockchain technology to share critical information without worrying about data security. It has changed how data are shared across the line without giving anyone the authority to tamper with them during the process. By including technology in data aggregation, wealth management firms can quickly improve the accuracy and security of critical financial data by reducing the risk of fraud or data breaches. Additionally, it can streamline the reconciliation process, adhering to transparency and verifying records of transactions and investments made.
The PCR Insights Advantage in Wealth Management
PCR Insights comprehends all the challenges wealth management firms go through daily. To address all the roadblocks, we offer a platform that efficiently consolidates all the financial data from various sources. Our AI-driven analytics, smoothened API integration, and seamless automation capabilities make creating financial data reports easy. Listed below are some of the advantages PCR Insights has to offer.
1. Seamless Data Integration:
Wealth managers are responsible for aggregating data from various sources, such as custodians, banks, and alternative investment platforms, arranging them, reconciling them and presenting them to clients. PCR Insights helps them connect them to disparate data sources into one unified dashboard. This process aims to eliminate data fragmentation and ensure a complete financial picture.
2. Eliminating Human Error:
It is understood that handling vast financial data manually leads to human errors, affecting the overall reporting process. PCR Insights aims to eliminate it through its robust data aggregation and reporting process. It eliminates manual data entry, ensuring accurate and consistent reporting. An error-free report is achieved through automated validation checks that detect and correct discrepancies, maintaining data integrity.
3. Bespoke Reporting:
Since investors have specific financial goals, they want to see their financial reporting in a particular manner. Addressing this bespoke reporting manually was time-consuming and risky. To get rid of this, PCR Insights offers an advanced reporting solution that generated personalized reports tailored to meet each clients’ needs. This advanced feature also helps them generate a detailed, visually appealing report that helps clients get a clear picture easily and smoothly.
Taking Utmost Advantage of the Advanced Technology
The financial landscape is evolving forcing wealth management firms to seek advanced solutions to meet their clients’ expectations. Firm that can leverage advanced data aggregation technologies stand the chance to grow and evolve in the competitive world. By integrating AI, APIs, and automation, wealth mangers can easily provide a holistic, real-time insights, helping their clients to make a better and well-informed decision. It eventually strengthens and enhance their relationship with clients.
PCR Insights is helping wealth management firms to overcome data aggregation and reporting challenges. It is assisting them eliminate data fragmentation, improve operational efficiency, and deliver superior client experience. With the continuous evolution of technology, those who embrace these innovations will be able to achieve success in the future of wealth management.
