In a previous column, I forecasted how advisers who control their customer data will control their world. Data mining is one of those essential data issues to control. Terabytes of this stuff reside on the Internet and can provide competitive advantage if one knows how to tap into it.

Health claims

Manipulate health care claims data and you create lots of value. For example, claims data can unveil the secrets of a better plan design, one attuned to the behaviors of the underlying participant population. Financial data in health claims can be readjudicated to test alternative plan designs and the resulting savings, or loss, of such plan designs. The modeling process can also tell you how many plan participants will be affected by the changes in plan design suggested by the modeling.

One of the savviest uses of health claims analysis that I've seen is using health claims data to negotiate lower rates. For example, stop-loss premiums in self-funded plans are, in part, a function of the risk of the population in general and relatively few sick plan participants in particular. Underwriters have these data, but without claims data, a broker is on an unlevel playing field for negotiating rates based on what the risks represent. We're not talking about carrier report summaries here. The data you need to uncover opportunities must be raw, record-level claim data that can be manipulated.

Health claims data analysis should be a necessary first step in starting a wellness program. Data will point to areas in the plan population where wellness interventions should be emphasized. All claims have diagnostic codes that are very detailed. This can help practitioners see problem areas before taking any blood draws or risk assessments.

DC plan data

Investments in cash or deferred arrangements produce all kinds of data that can be used to educate plan participants and for assessing risk continuums as required in ERISA 404(c) plans. Virtually all of the big mutual fund families offer tools to crunch data on their Web sites. These become knowledge for plan sponsors and participants in creating asset allocation models based on one's tolerance for risk and where one is in the lifecycle.

Many 401(k) and 403(b) plan participants have seen their balances drop as much as 40%. Diversified portfolios and good asset allocation models are key to preparing for the next cyclical bull market in equities. Don't give advice, but do provide education to your employer for their plan participants on how to reset portfolios. Web sites galore have great technology to help you educate your employers. Turn data analysis into a marketing piece.

Sales lead procurement

The ERISA Form 5500 Series is the gold mine for gathering sales leads and market intelligence on your competitors, employer plans and their vendors, and commission and fee data paid by plans to vendors. The various vendors who provide databases for this information include free services with weak queries that provide very limited information. Other options include high-end systems with higher cost and high utility.

One drawback with the DOL Form 5500 data is the age of the data. Plan sponsors do not have to file a 5500 until the end of the seventh month following the end of the plan year. Additionally, the DOL needs time to compile and release the data. All this adds up to the fact that "current" 5500 data is about two years old.

Some of the more detailed information that can be gleaned from the Form 5500 series include information on plan fiduciaries, accountants, actuaries, vendors servicing the plans and, of course, plan advisers.

Data mining software

In some cases, you still need an expert or specialized software to mine databases. However, many of today's spreadsheet and off-the-shelf statistical software packages can do the heavy lifting.

Although data mining is a term from yesterday, its power is more potent than ever. Don't overlook data mining as one of your tools for becoming a more effective employee benefit adviser.

Davidson, is founder of the Davidson Marketing Group, FutureOffice Network and Sales RockStar. Reach him at craigd@davidsonmarketing.com.