Technology vs data: It’s invaluable to know the difference for your business
Data and information technology (IT) are almost entirely entwined but they are very different things. You may think you have great IT systems in your business, but have you taken a step back to consider if your IT is helping you make the most of the data you have?
If not, it may be time to reassess.
According to a report from IFA Magazine, “Data is poorly understood, inadequately valued and badly managed by global businesses costing them and their investors billions of dollars every year … This is a big problem because it means most businesses are running on data that isn’t fit for purpose.”
And it’s not just big businesses, it’s smaller ones too.
Studies have shown that technology investment regularly overshadows data investment.
Statistics reveal that:
- 91% of business leaders say data is critical to business success
- Yet fewer than half manage their data (34%) adequately
- Technology gets three times the attention (73%)
- And five and a half times (88%) the budget as data
- 76% say their businesses are investing in data and digital transformation strategies.
Technology investment overshadows data investment
With technology investment regularly overshadowing data investment, what’s the critical difference?
To help understand why both data and IT are important to the running of your FS business, let’s break it down.
Let’s start with technology.
The definition of technology from Collins: “refers to methods, systems, and devices which are the result of scientific knowledge being used for practical purposes.”
While data (confusingly also known as information technology) is: “the theory and practice of using computers to store and analyse information.”
Okay, so where does data come in?
Data is the raw facts and figures that make up information. For example, summaries and totals are data.
Information occurs when data is processed, manipulated, or organised in a way that informs users and adds to their knowledge. Although information and data are used interchangeably, they aren’t the same thing. Without proper evaluation, data is useless.
Once evaluated, the data is then converted into information that can be used. Until data provides information, it is not useful.
Data is what a computer program uses to work on. Data can come as:
- Symbols, etc.
But by themselves, they have no meaning.
So, what happens when technology, information, and data come together?
Imagine you’re making fresh bread using a bread maker machine.
Data is like the raw ingredients of bread: flour, yeast, water, and salt (but this is meaningless without the quantities to make a loaf).
Information is the recipe for the bread (and will tell you the quantities of each ingredient you need to add to make the perfect loaf).
The technology is the bread maker (the bread maker is programmed with instructions for how long to knead, prove, and bake your perfect loaf).
How do I make the best loaf of data within my business?
For many of us in the financial advice industry, data can mean different things. Depending on the different outcomes you want to achieve, data can play a very different role in every organisation.
For example, client data might be as simple as name, address, or date of birth. Or it can be more sophisticated around risk profile, value of the original investment, or historical use of tax wrappers.
Each piece of data has a different purpose for an adviser. And there are other pieces of data that could influence how you use the data.
Regulation has required the industry to collect client data for a long time. The key is to collect and store it in a way that you can use it.
Years ago, it would have been written down and filed away. But, these days, technology means we’re collecting, storing, and actively using client data, or should be.
Used in the right way, for example, data can be extracted to determine client recommendations.
At a first client meeting, you’ll collect lots of information (although this can all be automated). You use this information to determine your recommendations (again this can be automated). But you’ll probably return to the data you have collected about the client and their finances when you (or your automated system) revisit the client for their annual review.
You can use the data to inform them about where they began, where they are now, and establish what actions need to happen next.
Data can drive efficiency within your business
There are three ways data can be useful:
- Drive better efficiencies
- Improve engagement between you and your clients
- Deliver more meaningful advice.
How you can use AdviceBridge to manage your data and serve your clients better
AdviceBridge takes your client data, processing it automatically, and produces information you can use to help speed up the process of giving advice.
Using the platform saves you up to 85% of time you have to spend on new clients. Instead of the typical 35 to 45 hours, AdviceBridge reduces the time needed to under five hours, and that includes meetings.
With increased time efficiency, the level of profitability increases substantially with smaller, less profitable clients.
Clients can also access their own dashboard. They can update their information 24/7 and, when they do, you’ll get an alert notifying you of any changes they are considering. This allows you to respond with advice in a timely manner and increases client trust.
The client-side app also helps attract younger clients, who expect a tech solution to all things in their pocket.
AdviceBridge automates the processes, research, and analysis, identifying which wrappers your clients should be utilising, and automatically updating the financial plan. It runs over 1,000 simulations, taking into account various tax scenarios, recommending the best structure across your client’s holdings.
Get in touch
If you want to find out how AdviceBridge can help you grow your business, please get in touch. Email email@example.com or call us on 020 3925 3850.