Better quality data needed to fill compliance gap

Technology usage within practices has normalised in the financial advice industry, but structural change within the industry has exposed huge gaps in risk and compliance.

Speaking at a HUB24 webinar hosted by HUB24’s Senior Business Strategy Manager Greg Hansen titled ‘The future of technology and data in enabling advice’, XY Adviser’s Managing Director Clayton Daniel, Fortnum Private Wealth’s Managing Director Neil Younger and HUB24’s Director of Strategic Development Jason Entwistle, the panel agreed over the past 12-months, advice practices have particularly embraced technology.

“Since COVID, technology deserves its place in the ecosystem,” said Daniel. “It’s not a tool anymore, its how business is done.”

Currently, advice practices are engaging with a wide range of technology applications, but most have a siloed approach, limiting their capabilities to provide an integrated and scalable solution.

“Advisers are using solutions from Silicon Valley, Mumbai and they are cheap and often free, but nothing is talking to itself or together,” said Entwistle. “There needs to be an industry-wide solution.”

Mind the gap

Structural change in the industry has highlighted the absence of the data infrastructure needed to make risk and compliance a ticket to the game rather than a competitive edge.

Fortnum Private Client’s Managing Director Neil Younger said for many licensees, technology is a challenging space, as they have been left to work it out for themselves.

“Historically, the majority of licensees were part of institutionally-owned businesses where the structure was quite defined and it was designed with a pathway to product of that institution where choice was reduced by the nature of the operating model,” said Younger. “Product and processes were therefore shaped around this, but today, advisers are looking for a greater degree of freedom and flexibility.”

To bridge this gap and to help practices create ‘freedom in a framework’, Younger said advice collectives have become the holy grail, where practices can come together in areas such as technology and compliance to achieve efficiencies and scale but maintain their own business identify.

Better data required

But this does not overcome the challenge of sourcing the data and the current double, triple, and quadruple handling of it which makes it hard to reduce the cost to serve and increases the likelihood of mistakes.

“The common thing in advice practices is lack of quality data,” said Entwistle.

To address these challenges, HUBconnect has been working with advice collectives to identify their common data challenges and solution needs.

In this way, HUBconnect is partnering with them, leveraging its technology and data to create a baseline data set which can be used to build industry-wide solutions and help make advice more accessible and cost effective.

To do this, HUBconnect is applying machine learning to structure unstructured data and create scalable industry solutions to enhance business efficiencies and create value.

HUBconnect provides seamless integration between platform and platform administration and reporting services to deliver greater choice and flexibility and provide a single view of wealth.

“By leveraging HUB24’s data and technology, we can help build a data set that can be used to digitise practices and create tools and build solutions to solve industry challenges.”

In this way, licensees and advice collectives can use data and technology to help them with visibility but to also give their advisers flexibility in their business models.

• Watch ‘The future of technology and data in enabling advice’ webinar. 
• Check out our related research paper, “The future of technology and data in enabling advice.”