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From social media giants to your local grocery store, these days everyone is looking to gather and use client data to run their businesses better— and your RIA should be no exception.  Any RIA not incorporating analytics into the development of its business processes and client experience will be quickly left behind.  However, for you to make any business sense of the client information you have gathered, you need to ensure that your database is clean and accurate first— that is where RIAs can leverage the full suite of services a data analyst offers.

When most people hear the term data analyst, they think about Business Intelligence platforms and any number of colorful charts and graphs.  While these data visualizations and dashboards are a vital piece of the role, reporting on data is the last step in any proper workflow.  Reports are only useful if the underlying data has been scrubbed and confirmed as accurate, and true data analysts are trained to inspect, clean, and verify datasets before they apply any statistical analysis to them.  That is why we at PFI Advisors often recommend firms have a dedicated data analyst overseeing the data flow connecting their back-office systems and infrastructure.

It is inevitable that there will be breaks in this stream — improper assignment of account numbers, missing and/or duplicated positions, or any other unforeseen complication that can cause misleading dashboard readouts and graphs; which, if acted on, would be potentially damaging to both the client and the business.  For RIAs, especially when it comes to performance reporting, data accuracy isn’t just a business need—it’s a compliance necessity.  While obvious errors can be caught easily (cash returns per quarter should never be 200%), smaller miscalibrations can be harder to catch by staff when preparing quarterly reports, and sometimes will take years to detect and correct.  By having a dedicated team member proactively monitor and audit this vital data stream instead of reactively attempting to repair it, a firm can ensure that their clients’ reported portfolio balances are always accurate and the data being used for core business functions such as billing, revenue planning, and investment strategy analysis truly reflect the current state of the business.

Many might view the hiring of an additional team member for this purpose as excessive, especially for smaller RIAs.  But as anyone who has had the misfortune of dealing with issues regarding billing or adjustments to reporting provider information will tell you, having to liaise between the custodian, reporting provider, and billing personnel can be extremely time consuming.  By consolidating detection and correction into one role, the workflow becomes organized, simple, and efficient.  Furthermore, by having someone educated and trained on the leading edge of analytics overseeing the data stream most vital to your business’s health, you will ensure not only a more vigilant protection and higher degree of data integrity (as opposed to a cross-trained, non-specialized administrative team member), but also will have the positive externality of being able to spread data collection and cleaning best practices across the firm.

Data analytics/science is one of the fastest growing college majors in the U.S.  As discussed in my previous article, Gen Z, those just graduating college, are skilled and excited to join firms they believe in and are some of the few who have a bachelor’s degree in this recently emerged field.  The fact of the matter is not that RIAs can’t afford to hire a data analyst, it’s that they can’t afford not to.