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Market Data Needs for the Wealth Management Industry

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26 May 2010
Arin Ray Isabella Fonseca

Abstract

Celent estimates a total of US$1.2 billion in wealth management market data spending by the end of 2010, an increase of 5% from 2009.

In a new report, Market Data Needs for the Wealth Management Industry, Celent provides an overview of the needs and uses of market data in wealth management. Market data feeds and software are key tools for firms to increase efficiency, make secure investment decisions, comply with regulatory issues, use in long-term wealth planning and account management, develop new business leads or generate ideas, and facilitate customer communication.

For this research Celent interviewed a broad number of content providers, aggregators, redistributors, and end users drawn from all main markets (Europe, North America, and Asia). To provide an analysis for this report, the interviews examined these institutions’ business models, product offerings and functionalities, client base, emerging trends, and future plans.

Main findings of the study include:

  • Market data providers are moving beyond the traditional concept of data provision to include more advanced features like analytical tools and charting.
  • Firms are after an enterprisewide market data strategy.
  • The market data terminal is slowly fading. Web-based advisor dashboards allow for lower-cost deployments, maintenance, and quicker updates.
  • Different regions are at different levels of maturity with regards to market data: North America and Europe are more mature, while the Asian wealth management market is not as sophisticated.
  • While firms face the challenges of budget constraints in the aftermath of the financial crisis, heightened regulatory requirements ask for better systems to improve and address all compliance issues.

“There is increasing pressure on financial institutions to reduce their market data spending and ensure the entire firm is efficiently utilizing market data. However, there seems to be a general consensus that there will be an increase in overall spending on market data in the next two to three years. Spending on market data technology will focus on customized end user–driven requirements,” says Isabella Fonseca, Senior Analyst and coauthor of the report.

“While market data in general is considered a commodity, in the last 12 months market data providers have addressed the need of wealth managers by redesigning their products to provide one source of information—all in one place.” says Arin Ray, Analyst and coauthor of the report. “What is important today is not only the market data per se, but actionable advice based on that data.”

In this study, Celent aims to provide an understanding of the value of market data within the wealth management value chain, identify the market participants, and highlight best practices for market data tools across North America, Europe, and Asia. A short profile of some of the main players in the data marketplace is included, as well as a comparison of the functionalities of their solutions in this space. At the end of the study Celent presents concluding thoughts on the evolution of the wealth management data marketplace.

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