For wealth management firms, data is foundational — but it’s also complex. Advisors rely on a wide range of information to create accurate financial plans, maintain compliance, and deliver personalized service. From income and retirement plans to liabilities, goals, and more, there’s a lot to collect, organize, and maintain. But what exactly should firms be gathering? And how can that data be structured in a way that supports both efficiency and deeper client understanding? Let’s break down the types of data every advisory firm should be working with — and how to use them strategically.
Firms Can’t Compete Without Data
To start, let’s answer the most basic question: Why is data so important? Data provides insights that advisors can’t gather on their own. It combines information about a client’s demographics, preferences, and finances with industry trends and transactions to show how a client fits into the larger financial picture.
Data and its corresponding insights are invaluable to wealth management firms and help complete a wide range of tasks, including:
- Client segmentation for customized marketing and product recommendations
- Fraud detection and compliance to protect clients and the firm
- Risk management to provide personalized and accurate recommendations
- Financial performance tracking to generate reports, measure effectiveness, and track finances against a client’s goals
Simply put, modern wealth management firms likely can’t stay in business without a strong data strategy. Data-driven personalization matters to clients, with saying they consider highly personalized service a key when choosing an advisor. Data provides the foundation for high-quality client services and makes it possible for firms and advisors to perform at a high level.
Collecting Data
It’s one thing to understand the importance of data; it’s another to actually gather it and create a comprehensive data strategy. Many firms know they need to prioritize data but aren’t sure where to start.
The first step is gathering data. Data can come from numerous sources. Some of the most valuable data comes from clients themselves, especially in the lead generation or new account opening process. Using personalized digital forms (such as those easily available through PreciseFP), advisors can collect basic information about clients, including their income, age, and family status.
Other client data will come over time, such as notes on a client’s preferences after each meeting with them. Advisors can also make notes of a client’s risk tolerance, values, timeline, and important milestones.
External data is also crucial. Tracking overall market trends and each account individually provides data on how funds are performing. Even data from accounts the client doesn’t have can help create customized recommendations. Successful firms look at past data (such as how funds have performed in the past), current data (such as how markets are performing now), and future projections (such as how funds will look when a client retires).
In short, any data that can impact and improve the client experience is valuable. The key is to focus on the most valuable data (which will become evident over time) and store it in a useful and accessible way.
tify, disclose, and mitigate conflicts of interest. Conflict management needs to extend beyond basic disclosure. Advisors must actively work to limit conflicts.
Storing Data
Collecting data is just the first half of the process — the true value comes in storing and analyzing data. Set your firm up for success with a robust and connected data system that can organize and combine data and identify patterns and trends.
Most back office employees don’t have a background in data science, so trusting the data can be challenging. Advisors say disconnected data is a major barrier to innovation, and say improving access to siloed data is a top data initiative.
However, when used properly, data can create a personalized experience that boosts client satisfaction. A single, cloud-based storage system like Docupace creates one source of truth and ensures all information is accurate and secure. When client information is updated in one place, those changes are reflected across all appropriate channels.
Compliance Matters
One of the biggest challenges with client data is staying compliant. Firms must follow regulations around how data is stored and how clients are notified. Most data compliance regulations fall under these rules:
- The SEC’s Regulations S-P require firms to notify affected clients within 30 days of a data breach. The rule was recently updated to improve customer data protection. It requires firms to create written incident response policies and procedures to protect and properly dispose of client information and recover it from cyber attacks.
- SEC require firms to maintain digital customer and financial records for six years and trade confirmation documentation and communications for three years.
Ready to turn data into action?
With PreciseFP, you can collect accurate client data efficiently—either by having clients enter it themselves or by entering it on their behalf. Build financial plans and CRM records faster, and personalize every form to gather meaningful details like alma mater or pet’s name to deepen client relationships.
Start your free trial of PreciseFP today and see how better data drives better outcomes.
