You use data such as market performance, demographics and tax projections to make investment recommendations for your clients. But are you using data to make decisions for your business?
Data is the foundation of strong business decisions. The wealth management industry is changing quickly, and firms can’t afford to stay stagnant or make decisions on a whim. Data-driven decisions can put firms on a path to strong, sustained growth.
Here’s how to make informed business decisions.
Where Will You Focus?
First, define the question or decision you want to make. Data and metrics can easily become overwhelming, but having a clear view of what you want to accomplish can help you narrow down the data.
For example, if you decide to increase client satisfaction, you’ll know to track data like referrals and satisfaction surveys and not metrics like average profitability. However, if you’re trying to decide whether to expand into a new location, you’ll want to track metrics like client demographics and operational costs, not client satisfaction. Understand your Key Performance Indicators (KPIs) and other metrics your firm tracks so you know what data you have available.
Collect and Analyze Data
Once you know where you want to focus, you can tailor your data approach to that area. Data comes from a huge variety of sources, so be sure to consider all of your available options before jumping in. If, for example, you want to increase client satisfaction, you can gather data from surveys, client behavior, social media feedback, customer longevity and more. You likely already collect a vast amount of data in your CRM, client intake and investment portfolios, as well as external sources, which can offer a richer understanding of clients. This step requires connecting your question to the correct data.
You can then bring that data together to identify patterns and connections. You might notice that client satisfaction scores dip after clients have been with you for a year. Going deeper, you might realize that’s when clients are trying to schedule an annual check-in but are having trouble getting in contact. Or you may find a common theme in client comments, such as a preference for a specific product or marketing campaign.
Data analysis can seem daunting, especially for advisors who don’t have the time or resources to dedicate to it full-time. This is an area where artificial intelligence can work wonders. Plugging your data into an AI-powered system or other chatbot can produce connections quickly. Try different prompts to highlight different aspects of the data. Data analysis isn’t a quick process; it can take time to track data, watch trends and make connections.
Create an Action Plan
Data analysis is interesting, but it doesn’t mean much if it doesn’t impact your decision-making. Use your analysis to draw conclusions and answer your initial questions. What is the data telling you about the decision you want to make? It might not be what you initially expected. But in a data-driven world, firms can’t afford to ignore the data. One recent study found that 62% of financial organizations are already using AI and data analytics to make decisions. And the number is only expected to grow.
Use those insights to create an action plan. If the data showed that client satisfaction drops after a year, create a plan of how to remedy the situation. Client feedback may say that they prefer video meetings or want an online scheduling system. Create a plan to make that happen.
Fine-Tune and Evaluate
The beauty of data-driven decision-making is that it isn’t a one-time process. As you put your plan into action, continue to monitor the data to see if it is effective. You may get results you can expand to other areas of your business. Or, you might not see much success and have to go back to the data to make a new plan. Your data analysis may highlight a problem you didn’t know you had or showcase a potential solution. Use those insights as a starting point for more data-informed decisions.
Continue going through this process with different decisions and data sources. Eventually, it will become part of your firm’s culture and the normal way you make decisions.
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