Data is so valuable to Asset and Wealth Managers, that a new metric is called for
Investment brands - whether in Funds, Private Wealth, or Alternatives - measure success and growth through Assets under Management (AuM). But as the industry is facing disruption, companies are beginning to realize that Data is so valuable that a new metric is called for.
What is Data under Management (DuM)?
Every firm requires data to operate - from markets, but also internal databases like investment systems or CRMs. It also constantly generates data - portfolios, administration, communications and interactions between teams, clients and suppliers.
Data under Management (DuM) is the volume of records a firm consumes and creates in the course of its operations. AuM is only a subset of these records, so arguably DuM is a more accurate measure of size and growth.
How is Data “Managed”?
In very much the same way that you manage Assets: acquire it, protect it and take well-calculated actions to grow it. Like Assets, it is cheaper to acquire it from existing sources, so loyalty and advocacy are primary concerns.
Data can be acquired from all available systems, so long as they are integrated and connected. In fact, the value of data increases exponentially once it is combined. This is the domain of Advanced Analytics and Customer Intelligence, a key aspect of the Invessed platform.
How do you calculate your DuM?
At the most basic level, data volume is measured in bytes, however, this is of limited use. A more useful measure is based on value i.e. the sum of potential values that can be extracted from a given data set.
For example, a large pool of behavioral data has much greater value than risk profiling questionnaires. The former will give you a fuller picture of what customers want but can’t articulate; the latter is limited to a specific context and influenced by the language questions.
The sum of all data
Like all service companies, investment companies are the sum of the data they consumes and generate. As technology is beginning to reshape the fundamentals of the industry, it is time to make Data under Management a key metric, and concentrate resources to growing it and deploying it to generate value.
