Taking your clients’ data with you: It’s not this easy.

As a trusted financial advisor, your client relationships are the foundation of your business.  Many advisors we talk to have worked with their core clients for years, with decades-long relationships not an uncommon scenario. What is all too common, however, is a situation whereby advisors make changes to their business in pursuit of greater ownership — and are met with the harsh realization that the historical data long utilized to illustrate clients’ performance history must now be sacrificed due to portability limitations. This stands to negatively impact clients’ trust, which was likely hard-won — and isn’t always easy to regain.

Take the example of landing a high-net-worth client early in your career. Maybe you were working at a wirehouse at the time. Several years in, you make the move to an independent broker-dealer, and then down the road you launch your own RIA — a familiar career path for many. That high-net-worth client trusts you implicitly and has moved with you every step of the way.  You’ve been diligent about managing their considerable portfolio and have delivered great results. But what if that valued client wanted to sit down with you to understand how they’ve performed over the last 10 or more years, and you were unable to easily answer their request because you lacked access to the requisite data?

Unfortunately, in an era of consolidation and rapid change, that reality is increasingly common for advisors. Though it tends to be a more noteworthy problem for portfolio management data than CRM, there are three recurrent situations where data portability limitations may pop up as an unpleasant surprise:

1. Breaking away

Whether you are considering moving away from a wirehouse to an independent broker-dealer or RIA, changing relationships from one IBD to another, or starting your own RIA, it’s quite possible that you’re forced to “reset” your client’s performance history at each step. This data loss can occur due to non-solicitation agreements or lack of data authorization by the previous entity to pull history from the source system or custodian.

2. Custodial changes

Each custodian has a different approach to data retention and accessibility. In some cases, a reporting vendor can reproduce an extensive snapshot of the advisor’s history simply by gaining access to custodial files. Other custodians are quite limited in the data history offered, irrespective of whether one can see the complete transaction history on the custodian’s website.

3. Switching technology providers

One of the greatest challenges that manifests when switching portfolio management systems is inconsistency in the previous vendor’s data formats and quality. This can pose certain limitations when trying to transfer said data. On the surface, firms believe that transferring an existing system’s data should be straightforward when moving elsewhere, yet there are varying methodologies and data management procedures that render some portfolio management systems’ available data insufficient when trying to convert to more robust systems.

While most of the firms that come to us can be categorized under one of these three scenarios, some can pose a combination of challenges. As an example, one firm not long ago broke away from an independent broker-dealer and switched their custodian relationship — all within a two-month window. Unbeknownst to them, the data they had been able to retain from the IBD was not going to be sufficient to load into a portfolio management system, and suddenly — as a result of the custodian switchover — they were confronted with a six-week gap in data.  Between their team and ours, we were able to fill this gap and supplement the IBD system’s insufficient data — but not without a significant allocation of time and resources on both sides.

The fact is, these large undertakings occur more frequently than one might expect, and that’s why we believe it is so important for advisors to understand their data’s portability limitations and prepare accordingly.

We believe there are a few things advisors can do to avoid these unfortunate situations:

  1. If you’re working with an IBD, even if you have no intention of making any changes, start saving your raw custodian data files. All portfolio management systems typically work with the same custodian source data.  Think of this effort as insurance for your performance history.
  2. The same applies to those in the RIA world — don’t rely on someone else to do this for you. Not all data is portable between portfolio management systems, so your ultimate fail-safe is having access to the raw data files.
  3. If you’re considering new technology, this is a great opportunity to ask questions about data portability. We encourage you to probe a bit beyond simply asking, “Do I own my data?” The answer is almost always “yes,” but the devil is in the details. Some good questions to ask:
    1. “In what format will you supply my data?”
    2. “Is there a fee?”
    3. “Do you provide a full transactional offboarding database, or monthly returns only?”
    4. “How quickly will you turn this around?”

Data is a crucial asset that impacts every facet of an advisor’s business, and interruption to access can pose a serious threat to productivity and client relations alike. By ensuring that you and your team are educated as to the possible pitfalls surrounding data portability, and are prepared accordingly, you could avoid potentially costly and frustrating data disruptions.


John Mackowiak is chief business development officer at Advyzon, an industry-leading, cloud-based fintech platform that offers a comprehensive suite of solutions for advisory firms of all sizes.