How Financial Advisors Can Use Data to Their Advantage

Feb 28, 2023 5 min read

In today’s business world, some the most critical decisions are often data-driven. While it may seem unnecessarily complicated from the outside, it doesn’t have to be — you can start with a tool as simple as a spreadsheet, and you may already be doing data-driven things in your day-to-day practice without even realizing it. Ultimately, you want to track key customer, market, and operational attributes to analyze different metrics, identify trends and patterns, and make informed decisions.

Key Takeaways

  • Using a CRM to gather key information such as age, location, income, and industry is not only a regulatory requirement but also a necessary first step in understanding your client base.

  • Analyzing the data your clients provide more specialized offerings tailored to their individual needs.

  • Reviewing metrics of how you spend your time day-to-day can show you where some automation may help with efficiency.

  • Generating client-specific reports can enhance client communication and engagement while strengthening relationships by offering insights into portfolio performance and outlining the thinking behind investment suggestions.

Understand Your Client Base and Anticipate Their Needs

Know your customer (KYC) guidelines don’t have to be just a regulatory requirement; they can be a powerful tool when leveraged correctly. A fundamental understanding of your client base helps you provide the best possible service to your demographic A fundamental understanding of your client base is critical in knowing who it is that you serve and helps identify areas you haven’t tapped into yet. Key attributes such as age, location, income, and employment industry help you understand your client base and your current offerings. If your book is clustered with a narrow age range or specific industry, it confirms that you market and provide sound advice to that particular group, and your business is ripe for expansion into adjacent age groups and industries.
Knowing your customer means you have their best interests in mind — data can help strengthen your traditional offerings and recommendations for cash flow planning, debt management, and asset accumulation. When you look at this data across all your clients, patterns and trends emerge, allowing you to get ahead of the curve and better understand what new clients will need. For example, if you see that a client was previously invested in ESG funds, you can present them with a series of ESG options. Using a CRM is a necessary first step in gathering all of your clients’ pertinent information for further analysis.

Increase Your Profitability Through Personalized Service and Additional Service Offerings

Using the data your clients provide, you can identify areas of their financial lives in which they are underserved. The data will often tell a strong story about where clients can use your support, such as when reviewing their debt figures, spending activity, or investment activities. You can also review your revenue from each household to see which ones are the most profitable for you to serve without overcommitting on the overall servicing time provided. Financial planners can better understand their clients’ financial conditions and offer more individualized advice by compiling information from multiple sources, such as account statements, spending habits, and investment histories. A more specialized offering is not only more accurate and correct for the client, but it is also more likely for them to recognize the value provided since it is tailored specifically to them. Data also allows you to calculate a customer’s lifetime value and determine if they fit your profile and the level of service required to keep them.

Decrease Operational Toil and Increase Efficiency

Time not spent on revenue-generating activities is time lost. Administrative tasks, duplicated efforts, and repetitive work all take away from doing what is best. Reviewing metrics on where you spend your time on a day-to-day basis can save precious hours of your day to serve your clients better. For example, if you track how you allocate your day and find that you spend 20% of your week doing paperwork, it is a good indicator that it may be time to consider a platform that offers an online portal so clients can self-serve and you don’t need to guide them step-by-step.
Many free technologies exist to help automate workflows for advisors, such as robotic process automation (RPA), to reduce the time spent on administrative tasks. RPAs are most useful for repeated tasks and are great for cases where large amounts of data gathering are required, minimizing time spent on cleansing.

Use Data to Improve Client Engagement, Trust, and Communication

You can use data to generate client-specific reports and regular performance updates. You can enhance client communication and engagement while strengthening client relationships by offering insights into portfolio performance and outlining the thinking behind investment suggestions. Data is helpful for you and your team to understand, give insight to your clients, and help them understand why you make the choices you do.
Data also allows you to create targeted marketing campaigns that reach the right audience with the right message. By analyzing client data, you can identify trends and preferences to tailor marketing efforts. By segmenting your clients, you have a fundamental understanding of who you target well and where new opportunities are — external data from outside your clients can also be used.
Data analytics has become a crucial tool for wealth management in today’s quickly changing financial world. To remain competitive, manage risks, and seize new possibilities, businesses need to gather, analyze, and act on large volumes of data. Financial planners and advisors can better meet client needs, increase revenue, streamline procedures, and make better decisions by using data analytics. Additionally, the value of adopting data analytics will only increase, given the vast amount of data produced.

Embracing data analytics can help you stay competitive, gain a competitive advantage, and remain relevant in today’s data-driven world. If you’re thinking of launching your independent practice, we at Purpose Advisor Solutions can help you navigate the switch and achieve your firm’s aspiration.

-Andre Bettio is in charge of strategic initiatives on the business transformation team at Purpose Advisor Solutions

Success stories


Adopting Purpose's tech platform was like jumping 20 years into the future. This partnership has been a game-changer for us especially since we started from scratch. We're now able to accelerate our growth at a much faster pace than we ever could have on our own.



President & CEO @ Origin Wealth