Small Advisories Struggling With Data

Small Advisories Struggling With Data

Nearly half say they don’t have staff to manage the numbers crush, Schwab study finds.

Reviewed by: Michelle Lodge
Edited by: Michelle Lodge

Add data management to the host of vexing issues small advisory firms are increasingly grappling with. 

Just about half, or 48%, of financial advisors at small firms say their staff doesn’t have the skills to manage data properly, a recent Schwab Advisor Services study says.  

This is a challenge for independent firms that need to know at a moment’s notice the income level, gender, age and goals of their clients, as well as tracking their assets under management and knowing which revenues are trending.  

That information is often not easily accessible since it’s buried within software systems, and staff may not have the wherewithal to pull it out, Schwab’s Independent Advisor Outlook Study found.   

Among the other big challenges are that 45% of respondents said they don’t have the internal data management capabilities and tools; less than a third noted a lack of an adequate budget to pay for third-party data; only 26% have data cleaning capabilities, which is the process of detecting and correcting corrupt or inaccurate records; and a scant 8% have enough data storage capacity.  

On the plus side, 76% believe having the right data allows them to serve their clients better, and 56% like how data can streamline their operations. Those surveyed work at firms with these characteristics, all numbers represent the median: the number of employees is six, clients per firm is 200 and AUM is $175.5 million.  

“Clearly, these small firms are unlikely to have a data scientist on staff to figure out how to best leverage this analytical data,” Amir Noor, director of financial planning at United Financial Planning Group, a three-person advisory in New York City, wrote in an email. 

Eric Clarke, CEO of Orion Advisor Services, one of the largest providers of technology and accounting services for financial advisors, said he understands the constraints of small firms. 

“The challenge advisors face when it comes to data is their ability to gather and process all of it effectively,” he said. “Many firms, particularly smaller firms, don’t have the in-house data expertise to effectively use the tremendous amount of data available to them.”  

Clarke added that his firm is offering tech solutions for independent advisors that aim to improve data accessibility and transparency. 


Follow Michelle Lodge on Twitter @lodgemich   

Michelle Lodge is a journalist who is a contributor to many sites: Fortune, Money, Time, Barron’s, Investopedia, and