What firms should know when looking to custodial independence for advisors
One of the biggest challenges that wealth firms face is providing their advisors with seamless access to custodial data. This is not just a technical hurdle, but a fundamental aspect of how WealthTech can empower financial advisors to better serve clients with utmost confidence.
This is according to a new webinar hosted by ByAllAccounts, a financial data aggregation and enrichment solution from the team at Morningstar Wealth. The company has been supporting multi-custodied advisors for more than 23 years and empowers advisors to maximise their potential through an unrestricted network of advisor book of business data providers.
The webinar ‘How to facilitate custodial independence for your advisors’, was hosted by ByAllAccounts director of product management Don McHenry and ByAllAccounts senior product manager Hazal Sabah.
Sabah stated that if trust represents the cornerstone of the relationship between clients and advisors, then accurate and comprehensive financial data is the essential prerequisite of delivering well-tailored advice. She added, “As such, the seamless integration and accessibility of custodial data is paramount for advisors who rely on this data to make informed decisions and manage assets with precision.”
Unfortunately, the route to seamless integration of this data is not simple and carries a multitude of technical barriers and strategic challenges, she said.
ByAllAccounts has worked with a number of firms that are deciding between whether they spend time and resources on building custodial integrations in house or partner with a provider and use those resources for other areas of the product roadmap and building greater differentiation in the platform.
First of all, Sabah explained that this decision is about a commitment to accessibility and service. “The breadth of the market that a WealthTech platform can serve is directly tied with their ability to seamlessly integrate advisors’ managed assets. In a world where a majority of advisors are multi-custodial, your platform’s capacity to provide comprehensive, hassle-free access to custodial data is not just an advantage; but it’s a statement of your dedication to meeting advisors where they are, enriching their ability to serve their clients.”
Secondly, she noted that each custodial feed has a variety of challenges. These range from data formatting and delivery, through to enrichment processes, such as security matching. Highlighting the complexity of the task, each custodial feed will be different and need its own unique approach.
Another important aspect to consider is the time-consuming nature of building these integrations. For example, Sabah noted that it can take up to three months to build a single feed. On top of this, to achieve comprehensive coverage of the market, the number of feeds needed can snowball, ultimately meaning the product pipeline can become very long.
The final point Sabah noted was that the resources dedicated to building custodial feeds is a significant opportunity cost that could take resources away from other more impactful areas of product differentiation.
She added, “I do want to say that this is not just an either/or decision but striking a balance between establishing a comprehensive service offering and pursuing innovation that sets you apart at the same time. It’s about recognizing that the true differentiator is not just going to come from the features you offer but the problems you solve and the ease with which you solve them.”
For more in-depth information, the webinar explores the data challenges faced when supporting multi-custodied advisors, the key features to look for in a book of business aggregation solution, the advantages of partnering with an industry expert that can offer seamless integration and customised data outputs without the custom development, and more.
Watch the full webinar here.
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