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Two Big Data Solutions for Financial Enterprises

'Big data' will no longer be a fantasy for financial advisors after the introduction of cutting-edge tools.

Bill Winterberg, 11/14/2013

This month, I joined venerable technology reporters and consultants Joel Bruckenstein (from whom I inherited this column) and David Drucker to produce T3 Enterprise, a technology conference positioned for the needs of broker-dealers and large financial-services enterprises. One theme repeated throughout the duration of the event was the advent of big data and its potential application for financial advisors.

Big data is the buzzword du jour among technology companies both in and outside financial services. The term is used to describe any collection of data that is too large to manage and interpret using conventional tools.

Imagine loading 10 years of historical transaction data from client portfolios into a spreadsheet and then attempting to determine the flow of money in and out of particular market sectors over time. Although it may be technically feasible in a spreadsheet, advisors will benefit from more sophisticated tools to process vast amounts of data and deliver actionable insight and business intelligence.

At least two technology providers at the T3 Enterprise Conference introduced tools to address the challenges of interpreting and using big data. Below are the key takeaways from new products coming from Redtail Technology and cleverDome Solutions.

Redtail Data Cloud
Most advisors recognize Redtail Technology as the provider of one of the most popular web-based CRMs in the financial-services industry. According to Brian McLaughlin, president and CTO of the Gold River, Calif.-based company, Redtail serves more than 70,000 users covering approximately 17,500 offices in all.

With so many users and offices, Redtail is ideally positioned to leverage the volume of data that advisors enter into the system as well as the more than 85 integrations with third-party service providers. All the data input regarding client profiles, investment holdings, marketing opportunities, and so on provide the groundwork for the application of "big data" solutions.

In an effort to equip advisors and broker-dealers with big data analytics capabilities, Redtail Technology announced the introduction of Redtail Data Cloud.

Big Data Output
Redtail Data Cloud collects data from more than 500 existing data points across its three products: Redtail CRM, Redtail Email, and Redtail Imaging. Data can also be collected using external APIs to products such as MoneyGuidePro financial-planning software, Riskalyze risk assessment software, Advisor Websites website hosting, ActiFi advisor benchmark data, and much more.

Redtail Data Cloud can then generate meaningful analytics in appealing graphs and charts, such as a heat map of the United States illustrating the concentration of clients (or assets under management) region by region.

Using the integration with MoneyGuidePro, Redtail Data Cloud obtains the date each client's financial plan was updated to highlight plans that might be aging. It can also retrieve confidence levels from each plan and alert advisors when plans begin to fall out of their confidence range.

The beauty of the examples above is that reports are generally available on a moment's notice. Data does not need to be exported to Excel files or subsequently imported into a reporting tool. All the data is self contained in Redtail Data Cloud, offering nearly endless combinations to slice and dice source data to uncover relevant insight.

Redtail Data Cloud is not a solution exclusive for advisors, as broker-dealers can also use the tool to view information and statistics across all of their representatives. Some advisors might consider this encroaching into Big Brother territory, so one must weigh the pros and cons of such a system. I'm optimistic that the pros will greatly outweigh the cons, as broker-dealers can, for example, be more efficient when supervising rep activity, monitor the flow of assets across all reps, and proactively identify opportunities for marketing and other growth strategies.

McLaughlin said that introductory analytics will be available in January for both advisors and broker-dealers. Until then, Redtail will continue to load data from a variety of its key integration partners. Also expect deeper data sets and more comprehensive reports to be introduced throughout 2014.

As for pricing, look for details associated with the product introduction in January.

cleverDome is a startup borne out of the challenges of managing the day-to-day document workflow inside United Planners Financial Services, an independent broker-dealer based in Scottsdale, Ariz. Aaron Spradlin is the vice president of information technology for United Planners, and is also the president and CTO for cleverDome.

cleverDome introduced two new tools at T3 Enterprise--Source of Accurate (SOAR) and Media Integrated View Unification (miVu)--to tackle the fundamental challenges of implementing a successful document management solution. Too often, document management responsibilities get assigned to employee positions that experience high turnover, such as admins and interns. In other cases, advisors largely depend on document management solutions provided by their broker-dealer or parent company, but are unable to define or control the structure and organization of their files.

To echo the Redtail Data Cloud theme, Spradlin says cleverDome is "a big data solution … powered by metadata, making document management invisible to the user."

Metadata is data about data. In a basic example, my 2012 Form 1040 tax return can be saved in an advisor's document management system, and tagging the document with labels like "1040" "2012" "tax return" and "Bill Winterberg" makes up the metadata about my document.

The power of metadata is illustrated when one needs to search for a document. Instead of navigating a complex labyrinth of folder structures, one can simply enter a search term like "Winterberg 2012 1040 return" into a dialog box, and the system will return a link to my tax return file, likely in the first search result.

At its core, cleverDome aims to simplify document management for advisors with this kind of functionality, but my basic example does little justice to the potential of the complete solution. cleverDome includes what it calls Smart Indexing Technology to simplify the metadata tagging process when documents are added to the system, reducing much of the manual guess work.

The solution also integrates with other technology providers such as Redtail Technology CRM, Laser App, and Finance Logix, which allows cleverDome to retrieve documents based on the context of where an advisor is in the primary application. For example, if an advisor is reviewing client financial plan details in Finance Logix, cleverDome uses the context information to retrieve financial plan documents and related information stored in the system, all without the advisor having to type in specific search terms.

SOAR and miVu are available as a regulatory-compliant cloud solution and are hosted on Amazon S3 infrastructure, significantly reducing the cost of storage and data retrieval historically necessary for large document management system installations. At the time of publication, pricing will likely start close to $65 per advisor per month for core functionality, which also includes 100 GB of storage. Expect SOAR and miVu to be available sometime in early 2014.

Big Data Is Real
Redtail Data Cloud and cleverDome's SOAR and miVu will no doubt lead the inevitable flood of big data solutions for financial advisors. And it's about time, because too frequently advisors are left to their own devices to figure out ways to manually manipulate Excel spreadsheets to reveal useful information of any kind.

With seamless integrations and the massive collection of data on clients, assets, financial plans, risk assessments, and so on, advisors stand to benefit tremendously from big data tools built just for them. Advisors should keep one eye trained on the new segment of big data tools that certainly have the potential to change the future of business intelligence in this industry.

Bill Winterberg, CFP, is a technology and operations consultant to independent financial advisors. His comments on technology have been featured in a variety of financial industry publications. You can view more information about Bill and see his schedule of upcoming speaking engagements at his Web site, FPPad.com. The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.

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