Sep 29, 2023

The True Cost Of Messy Client Data

Luke Tones
The True Cost Of Messy Client Data

Messy client data is costing investment managers $1 billion each year — and this figure is only rising.

Managers are squeezed in a data vice. On one side, data sources and data volumes are exploding, whilst on the demand side, a broader range of data consumers are keen to see improvements to quality, granularity and frequency of analytical outputs.

The ‘Excel Era’ is over, eclipsed by the cloud and cloud-based data management solutions as managers scramble to bring new capabilities to market in the ongoing industry consolidation. However, data transformation does require patient investment in foundational capabilities, including in governance, dev ops, enterprise data models and business change management.

Some have grown impatient and, in a bid to seek quick results, have skipped vital steps whilst reaching for eye-catching analytics.

A missed opportunity

The cost of under-investing stacks up rapidly.

Mid-sized investment managers in the Top 400 are incurring $2.5 million of avoidable costs each year. And, based on a 2020 AIVIQ survey on operating models, 64% of managers claim to have no embedded capability to visualise data. What’s more, just 17% claim to have defined an enterprise data model.

Most managers are struggling to stay on top of this fragmented data as it becomes impossible to identify a single source of truth. To add to the costs, managers are also spending extortionate sums on regulatory reporting and compliance (including penalties and fines) — all of which would be unnecessary or greatly improved with better data.

Unfortunately, the true impact on managers is not just the operational and regulatory costs, but more so the missed opportunity to create a lower-cost, data-driven business. Managers know that to survive the industry’s ongoing consolidation and fee compression, they must provide clients with a differentiated experience, requiring carefully curated data and information blended with a coherent engagement strategy. Following the proper steps allows interaction across physical and digital channels.

Rectifying data quality

COOs and CEOs are demanding a better information picture to run their business at a higher tempo, taking action quickly with raised stakes for bad or slow decisions.

At the root of the problem is a lack of high-quality data, particularly around the foundational dataset of economic data describing client value, or the Client Book of Record. Much of any business’ value is created by a small fraction of clients. This pareto effect is acute for investment managers, but is often not acted on due to the unavailability of data that drives different decisions.

Historically, this data has not been available. Now, managers should be able to access accurate, high-quality data describing client economic value that will change the way their business is run. When sponsored and embedded properly, this data can drive transformation across a range of enterprise business processes.

To find out more about how Aiviq supports clients on their data management journey.

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