You can probably tell when your clients are drowning in too much information. Daily bombardments of intra-day trading figures, predictions of doom from TV experts who have no personal stake in the client’s success, recommendations from whoever they happen to find on TikTok. …
…you know you might be experiencing this yourself, as well.
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 sharp investor will benefit from an outside perspective filtering data and weighing it against their goals.
Like your clients, you need data to make the best financial decisions and offer clear-eyed 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 need to absorb and process both kinds of data to succeed as an advisor. However, more data does not necessarily make for better advice.
That feels a little counterintuitive, doesn’t it? Especially at the current moment, when financial institutions can’t get enough troves of data to train large language models. But volume is not the same as quality. The AI folks call it “model collapse” when an LLM makes inferences with too much low-quality data. The human version of this can look like a manila folder full of uncurated client data or a CRM that has never been cleaned out and updated.
The advisors I see who are especially good at avoiding information overload have learned to filter static data, which is to say, information that focuses on past events. You’ll need some of this information to get a sense of who your clients are as people. But let’s say there is another bout of market volatility. What is more useful information to you as an advisor? Archived notes from a conversation you had 15 1/2 years ago … or a notification that this particular client hasn’t reached out to you in 90 days?
If you’re trying to figure out which data to keep, it helps to ask: Who are my clients? What outcomes and experiences am I trying to create for them? Anything that does not answer one or both of those questions can probably be filtered without losing too much sleep. The expiration date of information in your system is subjective, but I’ve found that if you still have legacy data on your system after a data migration from a previous system, it’s usually safe to archive.
It might sound like a lot of bother to clean out your data like this. Look at it instead as another way to improve your client experience. Every little bit helps—especially with organic growth rates so small. If you take away M&A activity and market lift, most RIAs have barely grown over the last few years—if they’ve grown at all. A tightly focused client experience, fueled by genuinely useful data insights, can make all the competitive difference in this environment.
Adrian Johnstone is CEO of Practifi.
