Rob Thorpe: Data is important but relationships matter | PA Adviser (portfolio-adviser.com)
In recent months, the growing importance of data in distribution has been a key topic of discussion I have had with the senior management of various asset management firms and multi-asset fund buyers. With the rise of AI, these discussions are unsurprising. Of course, fund groups have always used data, often from third-party sources, to identify key client targets and analyse trends for product design. Groups also capture significant data daily from client meetings, events, and social media activities, amongst others, so access to data is not an issue.
During my tenure as head of distribution in asset management, data vendors frequently contacted me, promoting their datasets and tools that promised unique market insights and improved client targeting. While some data providers are indispensable, the real challenge for any business lies in the overwhelming abundance of data. In my previous role with a 30-person team, each person typically had at least 10 client contacts a week, resulting in around 1,200 interactions monthly and over 14,000 annually.
When vendors claimed their data could help us reach more clients and sell more funds, I often explained that access to data was not the problem. The challenge was deriving meaningful actions from it. Such analysis is time consuming when there is so much else to grapple with day to day. There are some excellent exceptions among data vendors, but often groups are still required to mine it for useable actions. My recent work with fund groups indicated that while the desire to better harness data is there, much progress is needed for many. First, data ownership could be more cohesive.
Sales team data typically remains with the sales team; marketing data stays with marketing and product data…you guessed it, with product teams. While firms are recognising the growing importance of data, many struggle to harness it effectively. Most I have spoken to lack a central ‘owner’ of data responsible for capturing, analysing, and determining key business actions from it. Some suggest that AI is the solution. While AI can improve efficiencies in interpreting large datasets, it is not a panacea. Data gaps (you don’t know what you cannot see), regulatory changes, corporate strategies, client-specific business models, and market directions require cognitive and visceral judgment. As more groups start to realise this, expect to see the development of the role of chief distribution data officer (CDDO) – you heard it here first!
As data becomes more important, personal relationships and connections remain crucial. One business head recently suggested that the future is all about data and less about personal relationships. I challenged that view as no amount of data harnessing can replace personal connections, and not all business opportunities are identifiable from data. We have always used data in our industry, there are just better ways of doing so. Fund buyers have told me they have always used data and can usually obtain the data they need. However, they particularly value the interactions with their fund group representative, gaining insights not available in spreadsheets, such as conjecture, valuable soundbites, thought leadership, and, yes, bringing to their attention investment strategies, not on their radar.
Such interaction and collaboration helps product development. Importantly though, we are social beings and value such connectivity. This is why in-person events quickly rebounded after the lockdown and why Zoom never fully replaced client meetings, as some had predicted. While it is important for groups to establish a pan-business strategy for utilising data, it is equally important to maintain sight of the value of in-person business relationships. Further, harnessing data is not just about deriving observations but creating meaningful actions from it. Many successful data vendors recognise this and use their ‘relationships’ with fund groups not just to sell their data, but to consultant with them on what actions they may take, justified by that data. Data is important but relationships matter.