Hello from the Other Side: Data Reconciliation Insights from an Advisor-Turned-Advocate

As a seasoned financial advisor who has transitioned from working on the frontlines to the behind-the-scenes world of portfolio management software, some of the most eye-opening lessons I’ve learned are about the importance of data reconciliation.

First, a little background: I was a financial advisor for over ten years. I worked for a large broker-dealer and a mid-sized RIA, both of which gave me invaluable experience and deep familiarity with investment strategies, market trends, and client relationships. In 2022, I chose to come behind the scenes to be an advocate for what financial advisors need to successfully run their businesses.

What I didn’t know is that the process of data reconciliation is truly the heartbeat of a financial advisory firm, keeping accuracy, credibility and trust alive.

Now, as part of the AssetBook team, I’ve seen firsthand the critical impact of reconciliation on financial advisors’ practices – and I firmly believe advisors can never know too much about reconciliation. 

Hopefully, your portfolio management provider has a dedicated team performing data reconciliation for you, so you don’t necessarily need to know how to do it yourself. But understanding the background, the process, and the implications of accurate (or inaccurate) performance data might inspire you to pay closer attention to what’s really going on with your data.

The Process: What Data Reconciliation Is and How it Works

Data reconciliation is the meticulous process of comparing share balances in a portfolio management system with the share balances provided by custodians. Any discrepancies are investigated and resolved through diligent research and communication. If custodian data doesn’t provide the answers, the process extends to reaching out to the respective offices for the missing information. The primary objective of data reconciliation is to maintain accurate performance data and billing records.

Before joining AssetBook, I didn’t know just how integral the people behind data reconciliation were to an advisory firm’s success. Now, I’ve seen firsthand the incredible hard work going on in the background of data reconciliation, with dedicated teams working daily to ensure data accuracy.

The Sticking Point: Why Data Reconciliation Matters So Much

Reflecting on my days as a financial advisor, I didn’t realize the pivotal role data reconciliation plays in ensuring the integrity of performance data and billing accuracy. The task of reconciling balances seemed like a technicality or an accounting exercise. But the reality is far more impactful. Accurate performance data is the bedrock of a financial advisor’s report card, reflecting the success of investment strategies and providing a clear understanding of clients’ progress toward their financial goals.

What I really wish I had known during my time as an advisor was that there are portfolio management providers that offer dedicated teams capable of resolving out-of-balance situations. Many solutions lack this support, or reserve it for their biggest firms. AssetBook, on the other hand, extends this critical resource to all its clients. 

The Cautionary Tale: What Inaccuracy Could Cost You

Ultimately, ensuring data accuracy is about maintaining client trust. The chaos that ensues from incorrect data can leave clients confused, upset, and questioning the credibility of their financial advisor. When performance is inaccurately reported, the repercussions can be swift and severe, eroding the very foundation of advisor-client relationships and leading to potential consequences like client attrition, negative firm reputation, and lost revenue. 

That’s why working with a custodial partner to ensure data accuracy just isn’t enough. I’ve learned from my time at AssetBook that data quality control from a portfolio management provider, independent of an advisor’s custodian, is crucial for decreasing the risk of inaccurate data and flawed performance reporting.

AssetBook: Upholding the Foundation of the Advisor-Client Relationship

In my journey from serving as a financial advisor to advocating for financial advisors in the realm of portfolio management, I’ve come to appreciate the intricate processes that uphold the integrity of the financial advisory profession. Data reconciliation might seem like a technical aspect, but it underpins the entire client-advisor relationship. Accuracy, trust, and transparency are non-negotiable pillars in this industry, and I’m proud to work for a portfolio management software provider that advocates for the success of both advisors and their clients.

To learn more about AssetBook’s portfolio management platform, click here.