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3 Research Challenges Financial Professionals Must Tackle to Earn Trust

July 02, 2020 (5 min read)
Stock shart

To say that the economy has been unpredictable the last few years is an understatement. With rising and falling inflation--and rising and falling stocks--no one really knows what the future holds for 2023. Top economists continue to make predictions about the state of the global economy, but there hasn't really been a consensus. 

If the big banks are finding this challenging, imagine how hard it is for individual financial advisors. That's why it's important to keep up with current news, business information, and other important intelligence. Researching relevant business intelligence enables data-driven decision making, a crucial advantage for navigating the uncertainty ahead. But in order to get maximum value from research for financial professionals, you’ll need to address three challenges.

Addressing the problem of fake news

The issue of fake news has grown exponentially in recent years, thanks to the ease and speed at which memes and misinformation are shared on social media. Platforms like Facebook and Twitter, however, aren’t the only way fake news spreads. Research by the Yale School of Management found that investment websites like Seeking Alpha and the Motley Fool have seen their fair share of deceptive articles. The research suggests that “These fakes may erode public trust in real financial analysis.” The loss of trust is a significant problem, but it’s not the only one.

Yale research found, “After fake news about small firms was published, the companies’ stock prices temporarily rose and then fell. The deceptive articles often coincided with press releases and insider trading, suggesting that those firms tried to artificially inflate prices and sell their stock in a “pump and dump” scheme.” The problem hasn’t escaped the attention of the U.S. Securities and Exchange Commission (SEC).

In 2017, the SEC cracked down on articles purported to be independent financial analysis when they were actually the work of PR firms hired to produce the bullish articles about clients to boost stock prices. More than 27 individuals and entities were charged with misleading investors and to date, 17 of them have agreed to pay more than $4 million in fines to settle the charges.

Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy said in a press release. “Investors looking for objective investment information should be aware that fraudsters may use these websites to profit at investors’ expense.”

This is why due diligence in finance is so important. You can't simply rely on one article to make recommendations to your clients--you need to confirm that the information you're reading comes from reliable sources and double-check that you can verify the information in more than one location. If you can do that, you'll likely be using business intelligence that you, and your clients, can trust. 

Making sense of big data with data visualization

Data visualization is useful for understanding for identifying relationships or patterns in large volume data much more quickly than manual processing of data—whether it’s a scatterplot or a word cloud. For instance, applying data visualization to customer click data can help financial services organizations understand shifts in customer behavior. Analysis of data related to market conditions and trends can provide insights into emerging opportunities or fuel product innovation. But those aren’t the only reasons for making use of data visualization.

There’s a reason that infographics are so popular. According to research, the human brain processes images 60,000 times faster than words. What’s more, combining images with text increases recall by 650%—just what is needed when sharing critical research findings to colleagues or the C-suite.

By using data visualizations, financial professionals tell a more compelling, memorable story about the data, which can increase trust in data-driven decisions.

Digging through big data to find measurable value

Financial services organizations generate and collect a lot of data on transactions and customers, but they also need alternative data to provide added context and support decision makers across the business. The problem? As the volume of big data grows, finding the right information to fuel digital transformation, enhance customer experiences, manage risk, and achieve strategic goals becomes more difficult.

That’s one reason that conducting research for financial professionals shouldn’t be done on the open web. On top of the fake news from anonymous sources that permeates the internet, the open web also prioritizes the results returned based on factors like paid ads, sponsored content, and clever keyword use--which means you may never find the data you need. Plus, search results tend to focus on content based on the user’s country, making it more difficult to find information that covers multiple regions or countries.

Using a specific research tool, however, means you can narrow your search using Boolean queries and access information from top publications around the world. 

How Nexis® for Finance can help

Financial professionals can benefit from using a research platform like Nexis® for Finance for multiple reasons:

  • The world-leading database features more than 40,000 news and business sources, including international, national and regional news from print, broadcast and web publishers; company and executive information including financial details, corporate hierarchies, and SEC filings; regulatory, legal and patents data; and more.
  • News content includes an archive that goes back 40+ years, allowing financial professionals to review mentions of a company of interest or track trends over time to better anticipate market fluctuations.
  • Powerful search technology allows pre- and post-search filtering to help cut through the clutter of big data. Our proprietary LexisNexis® SmartIndexing Technology™ analyses and tags content for company and people names, industries, geographies and topics, including synonymous terms, to surface relevant results—even if a document doesn’t have the exact phrase entered.
  • Alerts help financial professionals stay up to date on key searches by sending an email when new information is available. In addition, Nexis lets users annotate documents uncovered in their research and organize documents into folders that can be shared with others across the organization.

Plus, conducting comprehensive research allows financial professionals to verify findings against multiple sources, reducing the chance of being misled by biased or false information, and enabling them to provide clients with information they can trust.

Experience the difference for yourself. Connect with us to arrange a trial or demo.