What is an advisor data warehouse and how does it impact companies in the wealth management industry?

A common challenge is aggregating and organizing data from multiple sources into one central location so that it can be easily interpreted. This is challenging mainly due to the number of sources that financial service providers have to pull data from. On top of that, wealth management organizations also have to ensure that both advisor and client data is kept secure. To overcome these challenges, many companies rely on data warehousing.

What is a data warehouse?

A data warehouse is defined as a data management system that stores current and historical data from multiple sources into one, centralized database for easier insights and reporting. This concept is fairly similar to how companies store physical goods.

With physical goods, many retailers will store items in one single warehouse. Keeping everything centralized makes it much easier to keep track of, and analyze, their inventory. This same exact concept can be implemented in the digital world. But, instead of storing physical inventory, companies store a variety of financial data such as investment accounts, positions, transactions, client profile data, and more.

Using a cloud data warehouse, financial institutions can organize their data in a centralized, cloud-based location. Doing so makes it easier to store, analyze, and manipulate the data, without the traditional hardware requirements and scalability limitations.

How does a data warehouse relate to the wealth management industry?

More so than other industries, financial services companies have access to multiple sources of data to power their solutions and to help clients make more informed decisions. Common data sources include back office clearing systems, custodians, banking and payment systems, market data providers, CRM platforms, transactional databases, and more. 

To access this data, financial companies must also work with multiple custodians like Schwab, Fidelity, Pershing, Apex, etc. Accessing data from these custodians can present a significant challenge. But, it can be achieved by building a connection internally or buying a solution that offers modern connectivity to custodial feeds. From there, data warehousing can help companies store and keep track of all essential client and investment account data from one location.

What are the benefits of an advisor data warehouse?

The biggest benefit of using an advisor data warehouse is that it helps aggregate raw data to power analytics and reporting. But, there are a few more benefits of using a data warehouse:

  1. Single source of truth: Leveraging an advisor data warehouse offers a single, “golden source” repository of critical client and account data to feed downstream systems. . This streamlines operations and makes things easier for internal teams. 
  1. Maintain data quality and consistency: Relying on a trustworthy third party can ensure that all data is accurate, timely and consistent.
  1. Data-driven decision-making: Getting access to trade-ready data in a single location can enhance an organization’s business intelligence and help them make better data-driven decisions. In most cases, data warehouses can be integrated with tools and dashboards to create interactive reports and insightful analysis. Again, this can help quickly improve executive decision-making.
  1. Historical intelligence: Utilizing a data warehouse can make it easier to keep historical records and draw conclusions from these records over time.
  1. Improve operational efficiency: With a data warehouse, organizations will spend less time manually gathering and entering data. Additionally, if the data is stored in the cloud, executives will be able to access the data from anywhere. 
  1. Ensure compliance: Leveraging a data warehouse solution can ensure that your organization stays compliant with all applicable rules and regulations. For financial institutions, this mainly includes things like data privacy, security, anti-money laundering (AML), know-your-customer (KYC) regulations, and financial reporting standards.

With that said, let’s examine what kind of data can actually be stored in a data warehouse.

What data can be stored?

There are many different types of data that financial institutions are interested in storing, which likely depends on the nature of their business. However, here are just a few of the most common examples of the types of data that are commonly stored in a data warehouse:

  • Client Profile Information
  • Account Balances and Positions
  • Investment Holdings and Tax Lots
  • Contribution History and RMD activities
  • Account Opening Dates
  • Historical Transaction Records
  • Held away assets such as bank accounts, mortgages, credit cards and more.

This is a non-exhaustive list of the types of data that can be stored in a data warehouse. If you have more specific questions related to this area, please reach out to BridgeFT’s team to learn more.  

BridgeFT as an advisor data warehousing platform

BridgeFT is a cloud-native, API-first WealthTech infrastructure company that enables registered investment advisors (RIAs), financial institutions, and FinTech innovators to deliver better, data-driven outcomes for their clients. 

Financial institutions and fintechs trust BridgeFT’s data warehousing platform to power their digital wealth management ecosystem. Notably, BridgeFT is also featured as a premier advisor data warehousing solution in Michael Kitces’ prestigious financial advisortech solutions map.

BridgeFT’s flagship product – WealthTech API –  is the industry’s only completely API-first, multi-custodial software and financial data aggregation platform built by developers, for developers. This solution has been recognized by leading financial industry awards for its approach to data, applications, and analytics solutions for the wealth management industry. 

We hope that you’ve found this article valuable when it comes to learning about data challenges in the financial industry and how advisor data warehousing can address them. Learn more about BridgeFT’s data solutions and read stories from leading financial firms utilizing the approach.