Data provision is influencing financial advisers’ decisions on which platforms and providers to work with amid concerns about quality, availability, and integration, a report from NextWealth has found.

Its Adviser Technology Series, Data Openness: Examining the Data Pipeline report revealed that data provision was a key consideration for 88 per cent of advisers when choosing platforms and providers.

Furthermore, nearly three quarters (70 per cent) of advice firms viewed data as a strategic asset.

NextWealth assessed current practices, perceptions, and challenges, focusing on larger firms, and found significant concerns among financial advisers around data quality, availability, and integration.

It said that while the back office should be reliable and accurate, its data was often inconsistent, incomplete, and delivered in hard to integrate formats at most firms.

The challenges were greatest at larger advice firms and consolidators, according to the report, with 40 per cent of advisers at firms with more than 10 advisers stating that they did not receive all the data they required from providers.

“Financial advice firms need good data for regulatory compliance, to reduce risk and critically – to deliver better outcomes for clients,” commented NextWealth managing director, Heather Hopkins.

“Advisers told us that good data and data processes influence provider selection, so this this presents a golden opportunity for platforms and providers that wake-up and respond to this growing need.

“The importance of data was even greater at the largest advice firms. Platforms and providers that respond stand to gain an outsized share of assets.”

NextWealth’s report also found that while providers give access to valuation data, there were major gaps in the provision of transaction-level data, and costs and charges data.

“Financial advice firms increasingly want to break-out of the annual review cycle and offer a true on-going service to clients,” Hopkins stated.

“Major life events don’t happen on an annual cycle. To deliver a true on-going service to clients, advisers need better data and platforms and providers are part of the solution. Gone are the days when an admin team would spend months collecting data for the annual reviews.

“Platforms and providers have an opportunity to thrive amid the current disruption by responding to the changing needs of advice firms. Equally, some platforms and providers may risk becoming obsolete if they don’t wake up to the growing need data openness.”

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