Tim Slavin, senior vice president of defined contribution for Broadridge Financial Solutions, has a favorite story he likes to tell about "big data," an industry buzzword for the ever-growing spectrum of electronic data clouding the retirement universe.
"My daughter runs the Canadian arm of a major merchandising company aimed at the teen market, and in just a few seconds, she can use her computer to find out how many size-small pink shirts were bought at a store in Vancouver, and then use social media to follow up on those sales and build on it," he says.
But the mighty financial services industry? Not so much, he says.
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"The mutual fund world has literally hundreds of millions of dollars in holdings and transactions, and there's almost no tracking of where and when those transactions are happening, and no ability to aggregate or mine the data. And that data is enormous in this industry. It's not to say that nobody's doing it, but a majority still does it manually."
Slavin, who spoke earlier this week at SPARK's annual forum in Palm Beach, Fla., said that mutual fund companies and defined benefit providers and administrators can benefit from systems which better take that massive cloud of data and organize it into a more sales-friendly and usable format.
"Fund companies can come in and start to see real details, like there's an advisor in Cleveland who's not selling any stable-value funds, and work on that. You can really grind down and look at the opportunities for DCIO people. And it's important that they know that kind of stuff. It makes it much easier to trace your data management, manage your revenue data and match up what they paid."
The major challenge, he notes, is taking data that's spread across multiple platforms, in multiple formats, across a variety of distribution channels, and can make the most of it.
That mess of data, in the meantime, leads to lost revenues due to inaccurate invoicing and auditing, ineffective sales and revenue forecasting, troubles in negotiating revenue agreements and the lost opportunities in not identifying and targeting top producers. Not to mention the possible compliance issues.
What's more, digging into the cloud of data can help uncover important demographic information on plan participants – how many are reaching the age for catch-up contributions, the specific participation rates and behavior sorted by gender and age, as well as tracking retirement shortfall analysis.
Slavin's company, not coincidentally, offers a data platform that agglomerates and aggregates information from TPAs and other sources, pooling information on direct fees and other aspects into one centralized database.
"A lot of the large TPAs have to send out reports to multiple companies, which is a waste of resources. They could all instead be on one centralized and secure file."
Broadridge's solution isn't the only one out there, but it's provided an easy way for plan sponsors to break down market segmentation, plan profitability and even do better benchmarking and disclosures to better meet DOL rules.
"We have 15 clients on the mutual fund side, to manage their 12b-1 fees and the revenue stream. We've also had a great success in the fee disclosure world, with 27 million statements sent out to participants."
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