MARS V9 Advanced Visual Analytics

The Adoption of FinTech Distribution Data Solutions by Dave Halligan

Fee compression, expense reduction, the preponderance of lower cost products, and a more educated and cost conscious consumer have been disruptors for mutual fund firms for several years.  The mutual fund industry is not alone as it relates to disruptors.  Brick and mortar stores have been displaced by Amazon, Taxi services are in much less demand due to ride services such as Uber and Lyft, and if you know what a travel agent is, you are dating yourself.  Each one of these examples shares a common theme in that their displacement or disruption was due to an advance in technology, creating an ease of use for the end consumer.

The mutual fund industry has certainly made great strides in how the end consumer can purchase their product.  Long gone are the days of mailing or faxing an account registration, processed by the transfer agent, now replaced with online account forms and a multitude of online brokers offering hundreds of mutual funds.  The advisors have similar technologies in place to purchase mutual funds for their clients on the myriad of distribution platforms.  However, I would argue that mutual fund distribution groups have lagged in their adoption of the most efficient technologies and services available to them today.

Distribution data for mutual funds is spread across multiple platforms and sources creating quite a challenge for firms to normalize aggregate and utilize this data.  Ultimately, distribution groups need to provide actionable intelligence to their end consumer, the wholesaler and/or specialist that is engaging with advisors on a daily basis.  It is too often the case that these strategic resources do not have all the data provided to them in a clear, concise format.  In today’s app lifestyle, shouldn’t a wholesaler be able to open an app, type an advisor’s name and get all the recent sales and asset data as it relates to your firm?  Some firms do have these technologies in place, most do not.  Why?  It’s not a simple solution.

Mutual fund firms have multiple, disparate data sources as it relates to distribution.  Through the years, many firms have built internal processes to cleanse and aggregate this data and present it in the CRM, thus providing their distribution team with some actionable intelligence.  However, with the advent of ‘Big Data’ and a desire to add multiple data points, firms now look to add market share, and prospecting data as examples.  This creates a need to manage additional data sources and enrich it along with the sales and asset data.  Are mutual fund firms staffed and resourced to perform these tasks, or should they focus on their areas of expertise?

A fair amount of mutual fund firms have robust operations and IT groups that welcome projects such as these.  I have worked with and spoken with firms that have built impressive systems and applications that provide an end to end solution for their distribution sales team.  However, they are clearly in the minority.   The majority of mutual fund firms struggle with how to create an efficient and cost effective  way to gather, cleanse, aggregate, process, summarize, and deliver these various data sets.  For example, many firms have adopted a very popular CRM platform over the past several years.  Once a mutual fund firm implements this CRM platform, how do they get all the distribution, market share, and prospecting data loaded into it?  They hire an implementer to design the platform specifically for their business needs.  Some firms have budget for this, most do not.  This is an example of adding an expense on top of an expense, while trying to create efficiencies.

Creating efficiencies should ultimately reduce expenses.  Hiring a vendor that specializes in FinTech distribution technologies and services should take the burden off your internal resources allowing them to focus on their true areas of expertise.  When speaking with asset management firms, I am no longer surprised to learn that many senior management staff are tasked with researching and tracking down transactional information, or that wholesalers are walking into an advisor’s office not knowing what history that advisor has had with their firm.  These examples illustrate a far too common and current challenge for mutual funds firms today.  Solutions exist for these challenges, and some of the solutions utilize the cutting edge technology we have come to depend on in our everyday life.  Then why aren’t the majority of mutual fund firms utilizing some of the FinTech distribution data solutions available today?

Moving from embedded, legacy processes and systems requires time and resources, most of which are scarce in today’s cost cutting environment.  However, being able to see past the initial change and disruptions, firms that do implement technologies and services related to distribution data will soon reap the benefits.  They will no longer rely on older, out of date, legacy systems and processes and will be able to reallocate those precious, internal resources. The ability to ascertain sales data and intelligence on a specific firm, office, and/or advisor should be easy based on the data available.  It’s certainly not a simple process to provide that data, but it can be made easier with the FinTech data distribution solutions in today’s marketplace.