You can probably tell when your customers are drowning in too much information. Daily bombardment of intraday trading figures, doom predictions from TV pundits who have no vested interest in the client's success, recommendations from anyone they find on TikTok. …
…you know you can experience this yourself.
It's the same reason doctors see other doctors when they're sick. I would imagine the financial advisors I talk to have their own advisors. It doesn't matter how smart you are; even the most intelligent and financially astute investor will benefit from an outside perspective filtering the data and weighing it against their goals.
Like your customers, you need data to make the best financial decisions and provide clear guidance. Advisors deal with two broad categories of information: aggregated data, the sum of financial trends, market fluctuations and analytics, and firm-specific data tailored to your clients' unique lives. You must absorb and process both types of data to succeed as a consultant. However, more data does not necessarily lead to better advice.
That feels a little counterintuitive, doesn't it? Especially at the present time, when financial institutions cannot get enough data to train large language models. But volume is not the same as quality. AI people call it “model collapse” when an LLM makes inferences with a lot of low-quality data. The human version of this might look like a manila folder full of uncurated customer data or a CRM that has never been cleaned and updated.
The counselors I see who are particularly good at avoiding information overload have learned to filter out static data, that is, information that focuses on past events. You will need some of this information to understand who your customers are as people. But let's say there is another period of market volatility. What information is most useful to you as a counselor? Archived notes from a conversation you had 15 1/2 years ago … or a notice that this particular client hasn't contacted you in 90 days?
If you're trying to figure out what data to keep, it helps to ask: Who are my customers? What outcomes and experiences am I trying to create for them? Anything that doesn't answer one or both of these questions can probably be filtered out without losing too much sleep. The expiration date of the information on your system is subjective, but I've found that if you still have old data on your system after a data migration from a previous system, it's usually safe to archive.
It might seem like a big hassle to clean up your data like this. Look at it as another way to improve your customer experience. Every little bit helps – especially with organic growth rates so small. If you strip out M&A activity and the market lift, most RIAs have barely grown over the past few years — if at all. A tightly focused customer experience, driven by real actionable data insights, can make all the competitive difference in this environment.
Adrian Johnstone is the CEO of Practifi.