Envestnet: Why Rely on a Data Specialist?

The Wealth Advisor Contributor

November 20, 2022

(Envestnet) So you’ve decided to scale up your wealth management firm’s data capabilities. Maybe you’re looking to bolster your organization’s personalization capabilities ahead of the great wealth transfer. Maybe you’re concerned about your firm’s health and curious about how you stack up (or whether you’re missing opportunities) compared with your competition. Whatever your reason, it all begins with answering one key question: will you build your own solution, or will you buy one–that is, partner with a technology provider?

Rome wasn’t built in a day, as the saying goes, and neither is any proprietary data analytics solution. Choosing to build one internally is a major investment–money-wise, time-wise, and resources-wise. Before you go the DIY route, it’s well worth it to consider your organization’s unique needs, as well as your client’s financial wellness. Your answer may determine the trajectory of your firm for years to come.

Considerations of building

Building your own data analytics solution puts a lot of power–and a lot of responsibility–in your hands. You’ll likely split your time between making development decisions and running your wealth management firm as usual, which can be a risky move depending on your advisors’ capabilities and your clients’ tolerance for service interruptions.

Remember, cutting-edge services are cutting-edge because they are literally “on the edge” of the latest developments. To offer the most modern experience for investors, you’ll need to be ready to pivot at a moment’s notice in addition to offering your normal menu of advising services (and all they entail).

Costs. The upfront costs of building a proprietary solution are considerable, whether you choose to build it yourself or trust it to an outside contractor. Also consider future expenses like ongoing maintenance, new features, and security measures.
Speed. Depending on your firm’s needs, building a proprietary solution could take months or years. It almost always means developing science and analytics capabilities from the ground-up, and according to your firm’s service offerings and approach to work. You may need to search for and retain a data science specialist for this process.
Updates. Cutting-edge solutions don’t stay cutting-edge without dedicated updates. If you build your own solution, you’ll be responsible for researching and implementing new features in the wealth management technology arena as new data becomes available. That may also mean creating and hiring for a dedicated role, or enlisting the vendor from which you bought your custom solution–a potentially time-consuming process.
Security. Wealth management advisors have unique responsibilities toward their clients. When custom software comes into play, you’ll need to ensure all your i’s are dotted and all your t’s are crossed to keep investors’ data safe and secure while also remaining compliant with the industry’s governing bodies. Otherwise, your firm and its clients could fall victim to cyberattacks and data theft–common issues in the realm of financial technology.

Considerations of buying

Buying a data analytics solution is frequently the preferred approach for wealth management firms. Why? Because partnering with a specialist lets firms focus on what matters most: their clients. Whereas building requires considerable investments of time, energy, and resources, buying enables each party to do what they do best, without gaps in service or service quality.

Costs. Buying or subscribing to a technology solution almost always means fewer upfront costs. The earlier your firm adopts the right product, the sooner your advisors can use it to compete. Envestnet’s Wealth Data Platform comes with financial domain expertise, advanced analytics, and data science capabilities that are passed on to advisors in the form of time savings, conversion opportunities, and proactive conversation-starters.
Speed. After the initial onboarding process, a bought solution begins working for you right away. At Envestnet, our improved data management protocols and always-on data analytics make daily deployment fast and easy. Plus, we scale with organizations automatically to reduce friction and minimize interruptions to your advisors’ everyday processes.
Updates. Unlike built solutions, which require careful custom updates (once they’re identified by your dedicated professional or vendor), updates for bought solutions are made automatically by your provider. For example, the Envestnet ecosystem, including exchanges, financial wellness tools, client portals, and new data sources, is improved and updated constantly as your needs emerge.
Security. The responsibility of researching and implementing security and compliance updates falls on your service provider. Be sure to choose one that is both established and trusted by organizations like yours. Envestnet has experience with financial data governance and compliance, helping us help you deliver future data-driven innovations and tackle data and analytics challenges head-on.

Many firms successfully applying data analytics are using Envestnet Insights Engine to surface next best actions spanning financial planning, taxes, wealth, and non-managed wealth categories. Efficient, data-driven firms are using Truelytics by Envestnet to uncover where unrealized value may exist and conduct valuations quickly and economically.