Lessons in data from Gareth Southgate

That long-awaited trophy may have proved elusive, but Sir Gareth Southgate nevertheless transformed the England men’s football team into the most successful in decades, reaching the World Cup semi-final in 2018 and back-to-back Euros finals. And he did it with a rather mundane philosophy: that success is built on a strong defence.

Sir Gareth studied how teams win major tournaments. The key: solid defensive organisation turned out to be consistently more important than expansive attacking play. Those sides who concede few goals tend to progress further. A solid defence gives the team resilience. And if you can get to penalties or extra time, you’re still in the game.

The asymmetric cost of investment losses

Similar principles apply in wealth management.

As Warren Buffett’s golden rules of investing put it:

Small, consistent gains compound powerfully over time. Losses prove asymmetrically harder to recover from, creating holes that are difficult for investors to dig themselves out of. Lose 50% of your capital and you need a 100% gain just to break even. Losing 75% requires a 300% gain to be made whole. Protecting your downside is therefore often more valuable than maximising your upside.

The power of a strong defence

In wealth management businesses, the front-office staff are the equivalent of a football team’s attackers. They are out on the field pushing to score goals, whether that is increasing investment returns or landing new clients.

The operations department is more like the defence of the team. If they do their job properly, everything works and nobody really notices the duties they perform. But that seamless efficiency is nigh-on impossible if staff don’t have the right systems, are hobbled by error-prone manual processes or are poorly trained. And as soon as they make a mistake – be it a client error that needs remediating, a compliance slip that provokes regulatory censure, or poor data that undermines risk models and incurs losses – the results can be financially and reputationally catastrophic.

A helping hand for your data

At DCI, we are here to bolster wealth managers’ defences – to give operations teams the extra protection they need to avoid conceding goals, while ensuring the front office is fed with quality data to help them score.

As we’ve noted previously, clear, consistent, accurate and timely data is central to wealth managers’ success – and will become ever more critical as artificial intelligence use expands. Quality data helps teams spot investment opportunities, and is vital to effective governance and risk management. Taking decisions based on incorrect, incomplete or outdated information can be as bad as taking no action at all – and may even make a situation worse.

Yet all wealth managers are wrestling with often unrecognised or underappreciated data quality problems. These may include gaps in the data, inconsistencies, bad sequences (such as a data point missing in a dividend processing sequence), logical failures (e.g. a British national with a UK address who is not classed as resident for UK tax) and data duplication across systems.

Golden source data through rules-based automation

DCI has developed a rules-based system that transforms data management from reactive scrambling to proactive problem prevention. The system works by:

The checks range from basic validations (to see if email addresses and National Insurance numbers are in the right format, for example) to examining accrued interest rates and pay dates on complex fixed interest securities, or checking ESMA transaction reporting data with a firm’s to ensure what it reports is correct.

Automating the process removes human variability, ensuring data checks are always accurate and consistent. Problems are identified much quicker, enabling faster resolution. Because the rules contain transparent explanations of what they are about, every work item they find and how to fix them, they also become a valuable form of training for employees, helping staff avoid repeating the same mistakes.

The clean, clear and consistent data can then serve as a cross-enterprise, cross-system golden source used to power all downstream processes – giving you the capacity to push your business forward, without needing to add more operations staff. And unlike the England football team, with the DCI system you can trust you’ll get the right result.