Data essentials for advisory firms 

February 23rd, 2024 | Insights

Data essentials for advisory firms

There’s been a lot of talk about advisory firms having access to client investment data and we started to wonder – do advisory firms know why they want data or what they do with it once they have it? So, we contacted advisory firms to ask them what they thought. 

The need for a data strategy for advisory firms 

Before we get into the details of data requirements for advisory firms, what we did find is that its key advisory firms have a data strategy, regardless of the complexity. However, a data strategy can mean different things to different people (from data collection and utilisation to advice journeys and system checks), but within financial services, compliance, and in particular, Consumer Duty [i] adds another level of complexity and organisation. The FCA is asking for more data-led proof on advice, so from a regulatory viewpoint alone a data strategy is key. But here at Sprint Enterprise, we feel there needs to be a greater understanding of what good data can be used for.

According to Platforum research [ii], over half of advisers stated that their back office system is more important for the day-to-day running of their business than the platforms they use. With that in mind, it’s no surprise that the main benefit of having client investment data is to power them (76%, closely followed by a client portal (and/or bespoke software solution) (66%) and third on the list is needing data when platform switching (48%). Switching platform/s is an interesting one, as advisers don’t move clients off platform without good reason. Switching tends to be based on service levels (or lack of) [iii], however insufficient functionality (does this also sit within their wider data strategy?) alongside cost/general business efficiency are also key drivers.   

See our data essential for advisory firm’s infographic here.

The requirements of investment data

Unsurprisingly the results showed the main benefit of investment data for advisory firms is to power CRM systems and client portals. It’s probably fair to say the majority of advisory firms employ the use of a back office system to some degree. Interestingly data to support platform switching was ranked third and with the amount of effort required to re-platform, an assumption could be that having investment data ‘plumbed in’ could be crucial in a re-platforming exercise.

Data for advisory businesses

Contributions and withdrawals data took the top spot here. When speaking to some advisers for their thoughts, this is key for producing client reports when analysed against a plan valuation (rated second in importance). It makes sense, end clients want to know how well a plan is performing without necessarily knowing all of the ins and outs and the minute detail. Has my adviser been performing and am I getting value for money from them?

Fee data was ranked third most important and further feedback would suggest it tends to be used for FCA/RMAR returns – where has the income come from, and probably fair to assume it’d be used for regulatory reporting over book balancing, but important nonetheless. Fees can also be used for exit strategies and showing a tangible value of the business for acquisitions and sales. Think of the Dragon’s Den scenario… “prove your business is worth £X…”

The main reasons for transaction data

Transaction data requirements was something we really wanted to delve into as we’ve heard a few reasons from various sources over the years as to why. Ranking highest for importance came performance analysis – reporting on real growth for clients, and again this can be correlated to contribution and withdrawal data and compared against valuation data for performance purposes. Accurate performance reporting for clients is key (also, see our Fastrak reporting solution for customisable reporting software). Ranking second was understanding contribution and withdrawals, again this makes sense looking to prove accurate investment returns and subsequently value to clients. But third on the importance scale was using transaction data for tax planning/CGT calculations.

The reasons for a data hub

Naturally, we asked a question about data hubs and the reasons why advisory firms consider using one. Top spot in importance was ‘part of the company’s wider data strategy’, the second highest requirement was ‘to do more with better quality data’ and this was aimed more at automation and business efficiency gains. So, all roads lead back to data strategy it seems.

To summarise, data strategy (of varying degrees) is key for advisory firms and good quality data feeds are key to providing advisory firms what they need, regardless of how deep they go with data strategy.

We love talking data, so do let us know if we can help you in any way with clean and reconciled investment data – contact us today.


[i] Consumer Duty: Data strategy is ‘key’ for financial advisers 

[ii] Platforms versus back office systems – each has its place 

[iii] Advisers cite service levels as main reason for switching platforms 

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