Here, Robert Leaper, head of business development at DST
Global Solutions, outlines the challenges wealth management firms face in
executing and achieving an integrated service model.

Within the wealth management industry, there has been
increased interest in building out integrated service models to attract new
clients and capture new streams of wealth from existing clients to accelerate
and expand business growth.  

It is clear that executing and achieving this business model
presents significant challenges. We believe that two major blocking issues are:
a fragmented technology infrastructure and immature investment data management
practices.

Recently, DST Global Solutions and Aite Group teamed to
uncover these challenges in a report titled Right Time, Right Content: Business
Drivers for Smarter Investment Decision Making. Managing data for smart
investment decision-making is a perennial challenge for wealth managers, as it
tends to be siloed and used on disparate systems, the study found. 

This is even more prevalent today with the growth in
alternative investment strategies and resulting platforms needed to support
those strategies. In fact, a recent study released by DST Global Solutions and
Aite Group says that one fifth of asset and wealth management firms do not have
a system in place to manage investment data and 29 per cent manage it on
systems that are more than ten years old.

As internal and external demands for transparency continue
to grow, wealth managers must be able to access a holistic view of their
clients’ investment data across the investment life cycle to provide the level
of transparency required by key stakeholders. This will require a shift in
strategy, structure and practices in place for managing and leveraging
investment data.

Data aggregation

As private banks roll out high-touch banking services to
capture a greater share of wallet from high net worth clients and the mass
affluent, the ability to bridge data sets from held away accounts and from
pockets of existing legacy systems data aggregation becomes imperative for
improved client service (in the form of reporting), improved client acquisition
and retention.  In fact, 90 per cent of
firms that participated in the study identified data aggregation as a major
challenge. 

The majority of firms surveyed also reported that they
believe that there is room to improve their support for data aggregation to
enable a more cohesive operational infrastructure that supports business
growth.

Internal business strategy

Many business heads are beginning to recognize the strategic
importance of data management in an environment where decision-making relies on
accurate and transparent data. Wealth managers must efficiently use data to
support expansion into new markets and regions. 

This requires technology that offers operational scale to
cope with a higher volume of data complexity. In addition, they must also use
data management strategies to link multiple outsourced providers and improve
analytics and risk management for internal business users. Integrated data,
removed from siloes, opens opportunities to diversify investment activity and
improve operational efficiency.

Putting data to work

Many firms today have begun evaluating ways to attack their
data management needs with the latest technology. In fact, the study shows that
more than half of the firms studied are planning to invest in vendor technology
to improve their management of investment data in the next year.

Properly managing investment data can provide a sustainable
competitive advantage to wealth managers.  
By investing in this area, wealth management firms will finally be able
to overcome key challenges associated with accessing, aggregating and
distributing data for greater transparency and improved investment
decision-making.