Data swamps will do a number on RIAs, bogging them down further in an operational mess.
Data is king… quality data that is.
And that data can be worth its weight in gold when it’s clean, pristine, and unquestionably ready for use.
But for too many investment firms, that data is not where it needs to be, in the figurative and literal sense. And a lot of times it’s an absolute mess, entering into the depths of what can only be described as a data swamp.
And being in the swamp is no little thing to ignore.
This isn’t a problem limited to RIAs, but one that expands across all industries, as 80% to 90% of data globally is unstructured.
In many firms, critical investment data exists in fragmented silos: spreadsheets, emails, legacy portfolio accounting systems, and even paper files.
For example, corporate action adjustments may be tracked manually in Excel, while trade settlements live in a separate order management system (OMS).
This disconnect forces operations teams to waste hours reconciling mismatched data formats before month-end reporting.
The problem worsens when integrating new technologies, as legacy systems often lack APIs to communicate seamlessly with modern platforms.
Without a centralized data architecture, RIAs face persistent inefficiencies in performance attribution, risk analytics, and client reporting.
Almost every firm knows what this is like…
An important quarterly client or stakeholder meeting is coming up, and it’s a mad dash internally to fix inaccurate data sets and generate performance reports.
Performance data from the portfolio accounting system doesn’t align with client’s holdings, forcing teams to manually adjust numbers.
It’s like you’re throwing the mess in your house into the closet before guests arrive. The place looks nice for the visitors, but the moment they leave, the mess eventually reappears.
If this is a regular occurrence at your firm, you’re in the data swamp.
Excel is definitely a versatile tool, and spreadsheets in themselves do not equate to data swamps.
But the potential misuse of Excel in investment operations introduces significant risk.
For example:
- Reconciliation: Manually matching trades against custodian statements increases errors (example: missed breaks due to fat-finger entries).
- Billing: Fee calculations in spreadsheets often lead to under/overcharging clients when formulas aren’t auditable.
- Corporate Actions: Tracking voluntary events (example: tender offers) in Excel risks missing deadlines or misapplying entitlements.
Firms relying on spreadsheets for these functions lack audit trails and version control, exposing them to compliance penalties.
It’s technically possible to have well structured, consistently accurate and reliable data formats with our, but it’s that much harder to achieve.
While lack of automation or quality control systems don’t necessarily translate to data swamps, their absences certainly increases the likelihood of there being a swamp.
That’s because it forced RIAs to rely on human vigilance, which is both unsustainable and inevitably prone to failure.
How This Manifests in Investment Operations
- Manual Reconciliation: Teams spend hours (or days) matching trades, positions, and cash balances across systems instead of using automated reconciliation tools that flag exceptions in real time.
- No Data Validation Rules: Missing automated checks for outliers (example: a sudden 50% drop in a bond’s market value due to a pricing feed error) means mistakes go undetected until they snowball into bigger issues.
- Ad-Hoc Error Detection: Firms only catch inaccuracies *after* reports are generated—forcing last-minute corrections before client meetings or regulatory filings.
While this relates to all points above, it more’s about the feeling that, by default, you don’t think your data is reliable.
If portfolio managers and client advisors routinely question and second guess the accuracy of performance reports and data integrity, this is bound for trouble.
For instance, an RIA might discover discrepancies between custodian feeds and internal accounting records, requiring manual overrides.
In investment operations, this often stems from poor straight-through processing (STP) rates, where trades fail to auto-match due to inconsistent security identifiers or settlement instructions.
Teams then resort to time-consuming reconciliations, delaying NAV calculations and billing cycles.
The cost is not only in time but money, as analysts spend more time verifying data than generating insights in the investment portfolios.
Because many RIAs still rely on legacy technology and older portfolio accounting systems that are disjointed and fail to integrate with others, they are stuck in the data swamp.
Similarly, a lack of automation makes it harder to transfer data from one platform to another, as well as detect issues in real time.
That said, there are some changes RIAs can and should make:
Data cannot remain ungoverned, unstructured, and handled willy-nilly as it may have been before.
Laura Kayrouz, senior partner and global co-head of investments at Alpha FMC, perfectly stated what needs to be done:
“The first step to overcoming this challenge is a thorough data audit to identify gaps and redundancies. Once completed, firms should implement a robust data governance framework to ensure data accuracy, consistency, and compliance. This framework will form the foundation for a centralised data management solution, capable of breaking down silos and enabling unified data access across teams.”
CRM, Portfolio accounting, OMS system, rebalancing tools, spreadsheets..
These older systems won’t sync or integrate with new systems or handle increased workflow complexities.
While it sounds easier said than done considering timing, costs, and skill sets required to handle the upgrades and implementations, the long-term costs of inaction are far greater.
Luckily, RIA technology and operations experts like Empaxis can help, carrying out platform upgrade and implementation projects from start to finish.
Centralizing data into a single, unified platform, like an investment book of record (IBOR) or cloud-based data warehouse, eliminates silos and creates one trusted source for portfolio accounting, reporting, and analytics.
This ensures all teams work from the same accurate, real-time data, reducing reconciliation errors and manual workarounds that plague fragmented systems.
By breaking free from scattered spreadsheets and legacy databases, RIAs gain operational clarity, scalability, and the foundation for automation.
So many simple mistakes and bottlenecks could be avoided with automation.
By implementing automated tools
for activities like straight-through processing (STP) of trades, reconciliations, and manual entries — to name a few — RIAs can eliminate up to the majority of manual data handling that would otherwise lead to errors and
delays.
If there are irregularities in data sets or exceptions to the rule in un-reconciled accounts or billing, the bots can identify those exceptions, allowing the human touch and focus on those parts.
The solutions for data swamps are there, but the reality is not every firm has the time, resources, or internal expertise to carry out the aforementioned activities in house.
Wealth and asset managers can partner with outside specialists like Empaxis that focus exclusively on investment operations, technology, and data management.
We help firms get out of the data swamps they’re bogged down in, taking care of everything from tech stack consolidations and system integrations to automation and platform upgrades/implementations, as well as migration of data and out of legacy systems.
Our time-tested experience and innovative approaches make it possible for RIAs to get out of the data swamplands and into a cleaner and fresher environment.
How many red flags did you spot in your organization?
If you counted more than one or in fact all of them, you’re not alone.
Data swamps, while a common phenomenon in most organizations, cannot be ignored forever.
Patchwork fixes, short-term work arounds, and manual efforts for solutions are unsustainable approaches.
Only by taking steps to establish greater data governance, sound data architecture, tech consolidations and integrations, data centralization and automation, RIAs will drain the swamp and rebuild their operation on a solid foundation.
And Empaxis stands ready to support RIAs in these undertakings.
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