Asset management relies on information. When distributing, investing or otherwise handling a client’s financial assets, one must be aware of many things, from economic theory to best practices to trends in relevant industries to sudden market changes. There is no substitute for expertise and experience, but in today’s rapidly changing tech-driven business world, the ability of data and analytics software to provide massive amounts of information (or focus in one specific data point) has become invaluable to asset managers around the world.
Today, the asset management field is approaching the levels we saw before the 2008 financial crisis. If the sector is to continue to grow, professionals in this industry must learn to take advantage of the benefits and tools offered by big data and analytics.
The Clear Advantage of Data
The data analysis field has grown so swiftly in power and versatility that only 14% of asset managers are confident in their ability to parse useful information from large amounts of data. Furthermore, many asset managers don’t have access to flexible reporting software that considers regulations from multiple jurisdictions. Integrated analytics are also necessary to help managers understand risks and prepare advanced investment solutions.
To remedy this, many asset management firms are now considering updating their analytics capabilities to be a high priority. As the industry becomes more and more fast-paced, having access to reliable data enables firms to invest decisively. Investment groups with clear advantages in data and analytics are called “data leaders,” and are likely to outpace their competitors in the market thanks to faster and more accurate analysis.
5 Steps for Harnessing Data
As data becomes indispensable, today’s asset managers have developed various best practices for integrating analytics into their day-to-day investing. Here are a few tips to help make this a reality:
- Act decisively: Data is meant to keep track of such things as high-frequency trading and swiftly evolving market trends, sometimes influenced by computers buying and selling at the speed of digital thought. As such, companies should act on information quickly to avoid being left behind.
- Invest in storage: Analytics are stored in bulk and should be quickly accessible so as to enable decisive action. Data managers hoping to stay competitive should invest in data warehouses that make information easier to deliver and analyze, as well as a holistic plan for managing all of this information.
- Stay flexible: Data managers need to create streamlined and versatile systems for analyzing data – rather than relying on grandfathered systems developed internally – out of habit. If they are unable to consolidate and simplify data management in-house, companies should outsource their data needs to a trusted third party.
- Integrate risk and performance analytics: Before investing, it is necessary to track the performance and calculate the risks of similar investments. Many firms are investing in both performance-tracking and risk-prediction software, but it is important to ensure access to a model that integrates both these features.
- Keep up with regulations: Different jurisdictions have different rules governing investment. Data reports should take into account all relevant codes and laws and report the effects of each clearly and efficiently within the data. It is also necessary to keep abreast of changes to regulations so that data reporting is never out of date.
What It All Means
Data is rapidly transforming the field of asset management. Increasing reliance on analytics means firms are constantly developing more robust, versatile and comprehensive tools to store, parse and manage data. To maintain transparency, regulatory bodies are demanding that companies collect and report on a wider variety of data. Companies hoping to keep pace have already begun the retrofit and overhaul of their systems to better manage and analyze this information.
The data leaders who have made progress along this path are already reaping the rewards because they are able to predict trends, spot risks and see nuances earlier (and more clearly) than their competitors. The firms that can keep pace with trends in data analytics will be able to keep ahead of their peers, enabling them to attract and satisfy more clients.
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