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Data Analytics Reshaping Distribution Function

Two papers from consulting firms McKinsey and Casey Quirk explore technology’s impact on the asset management distribution model and suggest that firms should allocate more resources into distribution technology. Casey Quirk observes that many asset management firms suffer from obsolete distribution functions and are failing to keep up with trends that have reshaped buyers’ needs and client demands. Firms are continuing to staff up while distribution officers’ efficiency goes down -- technology and not additional staff is the answer, Casey Quirk contends. “To improve client experience, asset managers must place technology at the center of distribution strategy.” The paper proposes that firms invest in: (1) an organized, integrated repository that centralizes client data from disparate sources; (2) a client analytics engine that helps uncover client needs and preferences; and (3) client experience applications that deliver mass-customized services and real-time information. McKinsey also sees technology resolving distribution woes. The firm observes that “a robust multidimensional data repository on individual clients that combines the best of external and internal data” is critical to overhauling outdated distribution models. McKinsey also describes how firms are now using data and advanced analytics to revamp their distribution models and boost their existing distribution functions. These current use cases include: building data reservoirs of client characteristics to design distribution and service models that better enable firms to cover the right clients, through the right channels, at the right time; using algorithms to improve productivity through precision targeting, for instance, to identify specific sales opportunities or clients at risk of redemption; and using advanced analytics to manage sales team performance and monitor effectiveness of sales and marketing activities and campaigns.

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