The Major Challenge of Data Consolidation in Wealth Management

When External Asset Managers work with 1–2 custodian banks, managing their clients’ data is not a big deal. They typically monitor portfolio performance using online banking systems. The amount of data in their hands is not overwhelming.

However, once the company starts growing, the situation changes. When the number of custodian banks multiplies, data management becomes critical to the business. Large External Asset Managers serve clients from diverse locations, which creates the need to retrieve data from numerous custodian banks spread across continents.

In Switzerland only, there are over 100 private banks. EAMs with branches overseas usually also manage assets held in Monaco, Bahamas, Andorra, Dubai, Spain, Singapore, US or UK. To make it more visual: one of WealthArc’s clients manages assets spread across over 60 custodian banks! Impressive as it may seem, that’s how many External Asset Managers operate.

Large scale of a wealth management business generates three problems:

• logging into multiple online banking systems takes plenty of time (multi-level security measures and fancy interfaces don’t help),
• making sense of data represented with diverse indicators and formats is tricky,
• packing this data into a unified client report is, again, time-consuming and error-prone.

The solution to these problems, and a medicine for the frustration they provoke, lies in data consolidation.

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Data Consolidation in Wealth Management

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Data consolidation is a process of collecting data from multiple sources and putting them into one place in a single format. It a nutshell, it transforms incomprehensible and duplicated data into clear and organized information.

Traditionally, External Asset Managers performed data consolidation manually. They would log into their clients’ online banking systems, search for information and paste it into an Excel spreadsheet. It worked but wasn’t effective and actually didn’t address the major problem mentioned above: the time wasted on endless log-ins.  

That’s why today, wealth managers use technology to do the work for them. They consolidate data using a Portfolio Management System.

WealthArc Portfolio Management System: Portfolio Dashboard view

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Portfolio Management System for Data Consolidation

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A Portfolio Management System (PMS) is a computer app that consolidates data from multiple custodian banks fully automatically. It uses APIs (application programming interfaces), i.e. sets of instructions that allow the PMS to communicate with online banking software.  

With such a programming bridge, Portfolio Management Software retrieves data from diverse custodian banks and brings it to one platform. It also performs a number of operations tomake it comprehensible and actionable for an Asset Manager.  

In this context, the most important features of Portfolio Management Software are:

• its APIs (how many of them are there? which custodian banks are included?),
• data quality (is the data format unified? does it include related financial market data? are securities classified well?).

As Portfolio Management Software works fully automatically, once an Asset Manager customizes it according to their preferences, there are no manual tasks left. The data is consolidated by the system daily, and a wealth manager can focus on developing investment strategies.

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Benefits of Using Portfolio Management Software

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EAMs using digital PMSs for data consolidation enjoy a number of tangible benefits:

• they save plenty of time as they don’t log into multiple online banking systems and perform data consolidation manually,
• they avoid errors caused by manual data unification,

• they have on-demand access to their data just by logging into one platform.

Apart from data consolidation, modern Portfolio Management Software have additional features that make External Asset Managers’ lives easier. Some of them even provide remote access to all data (you can read more about it here).  

All Portfolio Management Systems serve one purpose: saving wealth managers’ time to help them focus on their clients instead of tedious manual tasks.  

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Automatic Data Consolidation is a Must

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It makes no sense to waste time when proper technology already exists. Automatic data consolidation is becoming an industry standard, and any EAM using only traditional Excel spreadsheets is lagging behind. The time saved by Portfolio Management Software may be used to develop deeper relationships with clients—all in all, that’s what really matters in wealth management.

If you want to learn more about automatic data consolidation, see how we do it at WealthArc. Our Portfolio Management System has already helped build a number of long-lasting relationships.

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