The main problem wealth management companies have with their data is trying to integrate it across various specialty technology platforms that weren't meant to function together. According to Brian Costello, Head of ByAllAccounts Data Aggregation Strategy at Morningstar Wealth, 90% of businesses use four to seven platforms to handle their different operational requirements. When what these businesses truly need is a one-to-many model—a smooth and dependable mechanism to transfer their firm and advisor-level data across the numerous platforms they use—they frequently find themselves creating individual connections to each platform. According to Costello, the lack of these connectors causes bottlenecks that hinder operations and innovation activities.

Data disparity is the most common issue that can arise from working in these data silos, but there are many others as well. For example, a company may have several distinct connections to a data source for use in various activities, yet each connection produces differences that cause the data that the company receives to be inconsistent.

"There's just too many times where we've noticed variations, either in timing or the actual underlying data," claims Costello. A company may discover that information on its clients, advisors, or business itself is inconsistent across various platforms. In wealth management, ensuring data reconciliation and maintaining a single source of truth are critical. Because of how common this problem is, ByAllAccounts regularly assists clients in creating unified data repositories by combining data from multiple sources into data lakes. The one-to-many capabilities that businesses require to improve their operational efficiency is provided by the ByAllAccounts platform.

A common misperception among wealth management organizations is that financial data potability and integration across wealth management platforms are simple, which could exacerbate the data connectivity issue. On the other hand, considerable coordination and, frequently, custom creation between the data providers, the intermediaries, and the data recipients are needed for wealth management data availability and usability.

As an alternative, ByAllAccounts makes it easier for businesses, like custodians and financial institutions, to publish data by connecting them to more than 70 wealth platforms and wealth management companies' wealth redistributors. A firm's entire addressable market is increased by having a single connection to ByAllAccounts, which makes its data and products easily accessible to over 16,000 advisers and other financial professionals.

The function of artificial intelligence

Artificial intelligence (AI) is a topic that always comes up when talking about innovation and the future of business. Most firms are very focused on technology, and the current developments in generative AI have only made this more intense. Businesses must understand that high-quality data is a prerequisite for technology to operate at its peak efficiency, according to Costello, as they begin to investigate the application of AI. This is true for all levels of AI, not just the most sophisticated ones. Whether it is generative AI, sophisticated calculation, or relatively simple technology, the foundation of all AI operations is clean, structured data.

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Wealth managers should not be specialists on how to prepare data for use, even when they are fully aware of how important data is to their professions. They understand very well what occurs when the technology system malfunctions and prevents them from doing their jobs, according to Costello. Since they are not technologists, they are unable to fully comprehend what is going on within.

For this reason, it's critical that businesses look for a reliable partner to make sure their data is enriched, clean, normalized, and ready for use. Wealth management companies should be free to concentrate on their main responsibility of offering financial advice rather than worrying about gathering data and making sure everything is accurate.In the past, I could open the hood of my car and diagnose the issue if it wouldn't start in the morning. However, at the moment, it's really binary; I have to take it to the mechanic since it's either not functioning or working.

Open banking's significance for wealth management

The European Union launched the open banking project, which aims to make it easier for customers to share the data they own at financial institutions with outside parties so they may receive more individualized support. As more nations begin to implement open banking policies, the market is expected to grow to be worth $122 billion by 2032, according to Global Market Insights.

The US is among the nations that are beginning to move toward open banking. The Consumer Financial Protection Bureau put up regulations last year that would enable people to provide third parties access to the financial information that financial institutions have about them.

While praising the US for moving toward open banking, Costello pointed out that the wealth management industry has long been asymmetrical. According to him, advisors have a restricted legal authority to access brokerage data through representation agreements for brokerage accounts. But there are some murky areas when it comes to getting access to customers' bank and credit union accounts. Over time, the difficulty of gaining access to this data has increased due to the implementation of security controls by these institutions, which prevent fraudsters from accessing accounts and interfere with authorized access.

"With open banking, a lot of that asymmetry will be eliminated," Costello continued. "A consumer will be able to grant permission for their advisor to access their financial data held by these banks through an intermediary like ByAllAccounts." But it's not quite ready yet. The regulation's first phase does not apply to 529 education plans, retirement savings, or brokerage accounts. "That's a great start, but to make sure advisors can continue to get that full 360-degree view of all of their clients' accounts, we still need to smooth out those asymmetries."

Additionally, open banking is still too far off that most US wealth management firms are not considering it. As a result, in order for the objective to be achieved, it is critical that the sector and authorities keep pursuing it. Costello wants to see more acceptance and understanding of delegated access as one of the next steps. He pointed out that, in some circumstances, an authorized advisor may represent their client in the capacity of an agent by virtue of a representation agreement. Regretfully, digital ecosystems do not fully comprehend or utilize these relationships.

"The main focus of open banking has been on the individual, or occasionally the joint account holder, authorizing the bank directly through a somewhat laborious digital experience. Millions of Americans, however, use advisors, financial planners, or other lawfully authorized agents instead of going that route. Therefore, it is crucial to acknowledge the advisor's involvement in these digital flows.

How ByAllAccounts is beneficial

ByAllAccounts makes sure wealth management companies and wealthtechs are prepared for the AI and open banking futures. Thanks to its technologies, businesses can strengthen their data infrastructure by dismantling silos and simplifying integration.

Not all forms of data aggregation are created equal, as Costello pointed out. For example, wealth data aggregation remains quite complex, whereas retail data aggregation is homogenized. For the last 20 years, ByAllAccounts has concentrated on the intricacies of wealth data in all of its manifestations. Because of its laser focus, the data it offers clients is perfectly appropriate for their intended use.

"The ByAllAccounts Data Network functions as a comprehensive wealth data network that facilitates data portability within the highly fragmented wealthtech ecosystem," said Costello in closing his explanation of why businesses should engage with ByAllAccounts. It makes data transfer throughout the wealth ecosystem more smooth.We can assist you with any use case, including onboarding your managed accounts as an adviser or distributing your data across many platforms. You may get vital information with just one connection, guaranteeing accurate, dependable, and richer data. In addition, there is committed service and support to make sure all of your data demands are satisfied quickly and effectively.