Some are finding it difficult to accept advisers have the right to access certain client data whenever they want
One of the most important issues in the modern relationship between advisers, providers and platforms is who owns client data.
The answer to that question can have a significant impact on the long-term value of an advice firm. If data is the new oil – and evidence grows daily that it is – any situation in which a provider or platform limits an adviser’s access to data that they have client consent to request is going to cause difficulties.
The past year or so has seen many more advisers tell me that they are looking to build a strategy around their use of technology. This usually involves them reviewing their existing technology and whether it meets their current and future needs, as well as building a roadmap for additional solutions that they wish to implement.
In helping firms with these plans, discussions soon turn to ensuring they have access to all the data they need to service their clients.
In a pre-RDR, analogue world, most of the detailed record keeping about clients’ investments and other contracts would be maintained by providers and platforms. Advisers would typically obtain updated information as necessary to generate periodic client reports.
But as advice firms began to embrace digital propositions for their clients, they needed access to more data, more frequently. Today’s increased focus on financial planning and tax optimisation means even more granular information is required, especially from platforms.
Some platforms have very different attitudes to others when it comes to providing client data to advisers.
Their stance will come down to whether they believe that those using their service are the clients of an adviser who has chosen to place them there, or the customers of the platform who are currently being served by said adviser.
If it is the second, the relationship between adviser and platform is going to become strained sooner rather than later, so establishing attitudes is crucial in any due diligence review.
Advisers need a series of tests they can apply to measure how platforms address this issue in practice, rather than just accepting assurances that they can have whatever they want.
A platform that does not have mechanisms in place to easily share all client data, including detailed transaction histories, could cause trouble in the future.
A few technology providers have done great work in this area (Sprint Enterprise Technology and Financial Express being examples that spring to mind) but much more needs to be done.
I expect to see far more software providers build APIs to facilitate the extraction of data from platforms to adviser systems as necessary.
No risk to reporting
More advice firms are wanting to evolve their reporting processes so that, rather than submitting lengthy paper reports to clients annually or quarterly, all the relevant information is available daily on their smartphone or tablet.
This strongly reinforces the adviser’s brand, making them the natural first port of call for the client whenever they think about a financial issue.
Platforms’ attempts to implement portals that will show a consumer’s holdings in this way will always be an inferior alternative to those delivered by advisers.
No platform has been able to record and report all off-platform assets, such as legacy investments, employers’ pensions, mortgages, protection and inheritance tax planning, among a range of other key financial issues.
As such, they will not replace regular client reporting. If the off-platform assets cannot be included with the asset allocation, how can any portfolio optimisation ever accurately align with the client’s attitude to risk?
With the adviser’s role increasingly focused on delivering financial plans, helping clients identify and achieve their goals, their alignment with providers and platforms is changing.
Generally, this is good for both parties, with each having their own distinct ways of adding value.
However, it does mean platforms coming to terms with the fact that advisers need access to data whenever they want it.
Attempts to defend assets by constricting that access will be counter-productive in the long term.
Ultimately, there is only one answer to the question of who owns the data: the client. Equally, that client must be able to decide who they wish to have their data.
Any organisation not willing to recognise this is not going to be a good partner.
Ian McKenna is director of the Finance & Technology Research Centre