An aggregated client view that is visually pleasing, easy to understand, and contains usable data is much in demand from clients and advisers alike. Achieving that is, however, no mean feat.

“Wealth aggregation platforms should offer a comprehensive overview of an organisation’s or individual’s financial position by consolidating data from multiple banks and investment managers. The adoption rate for these platforms remains low, but we think adoption will increase in particular with family offices,” says Emily Traxler, Managing Director, Data Services, at First Rate.

She continues: “The most effective wealth aggregation platforms are flexible enough to accommodate the unique characteristics of various asset classes, such as the redemption cycle of debt securities, the capital call structure of private equity, and lifestyle assets such as art or cars.”

Indeed, at its core, a platform is just a combination of capabilities that contribute to the end output. But the all-in-one approach previously adopted by many platforms, will not work in an industry with so much diversity in terms of client base and operational setup.

A one-size-fits-all approach also does not generally offer quality configuration or lean towards integrating well with other software solutions. Thus, a mixed user experience that pleases some users some of the time with an all-in-one platform seems inevitable.

“In the aggregation arena, the end result should be creating a single source of truth by pulling in data and other information and then making it available in a unified and sensical way to the internal systems that need it, such as the book of record, the compliance department.” Emily Traxler Managing, Director Data Services, First Rate

Grayson Greer, Managing Director, Global, at First Rate, thinks that many firms are approaching aggregation the wrong way; instead of looking to use a single platform, they should instead take an ecosystem best-of-breed approach to get the very best output from each stage of the data aggregation process - and then come together on a platform - for a truly integrated single-client view.

“When I think of platforms, I think of these big behemoths that quickly become unwieldy. I do not think they solve anything; in the main, I think an integrated approach where all providers focus on what they are good at and are orchestrated in such a way as to be well integrated and make a good ‘whole’ can be more effective than a single platform that is pretty average all round.”

Traxler goes on to say that the job of the platform should, essentially, be more about accommodating a good range of third-party software solutions.

“In the aggregation arena, the end result should be able to create a single source of truth by pulling in data and other information and then making it available in a unified and sensical way to the internal systems that need it, such as the book of record, the compliance department etc... I think that most platform providers over promise and under deliver on that.”

This is an issue given the volume and complexity of data that most wealth managers are dealing with daily. And, in addition to volume, assets are held in so many different places, in different ways, and in different formats, making life even harder when it comes to pulling together a consolidated view.

“What you end up with is a bunch of different narratives, making it hard to say with absolute certainty whether the end result is a single source of truth or the best attempt at a single source of truth. So, on the downstream side of that, and whether it is going into reporting, enhanced analytics; no matter where the end destination is, can you ever count on the data being 100% correct? And in our experience? No, you can't,” says Greer.

Component parts
Indeed, if data aggregation is defined as having data acquisition, normalisation, reconciliation, and transformation; all four elements must work together to reach that single view.

If one of those components is missing or not done well, then the resulting data aggregation piece will be substandard. Data acquisition is just getting the data into one place. The normalisation piece is that you may have alternative assets, equity assets, and other assets, and they all have different attributes and fields that need to be unified.

“Once normalisation is achieved, you could still have issues with the data actually being reconciled, which means you could have two or three data sources for the same asset. Then comes data transformation, which is about creating something with a tangible outcome for users – something they can actually understand and use. It is a far from straightforward process,” says Greer.

Indeed, firms should think about the desired end result and the components that lead to that. According to Greer, the average platform is built with probably one or a couple of specific use cases in mind. “When you start digging into the unique set-up that the organisation has and their unique use cases, then the platform falls down.”

At that point, he says that large private banks throw resources at the platform to try and make it fit for purpose and that smaller firms, RIAs and family offices struggle as they do not have the resources to devote to the issue. “The problem is that the platform is not fit for purpose, so the problem is pretty much unsolvable. A new approach of finding the right people with domain expertise in each of the component parts that can come together on a well-orchestrated platform is what is needed,” he says.

Use cases
Asset managers have very manual and time-consuming processes to consume and validate alternative investment information from a bank’s internal oversight and external fund managers. Quarterly documents can reach over 25,000 in number. But automating the monthly statement-gathering process, reconciling documents, and providing the asset manager with a back office dashboard for internal review before it feeds data into downstream systems resolves these issues. Additionally, it provides an adviser-reporting portal from these statements.

“Beyond the noise of generic platforms, lies trusted expertise, capabilities, and solutions that deliver tangible outcomes. The firms that embrace this reality are the ones that will leapfrog the competition over the next decade.” Grayson Greer, Managing Director, Global First Rate

Family offices often cannot trust the data they are receiving as part of an all-in-one solution. There are numerous errors in the data normalisation and reconciliation processes, making downstream analysis and insight impossible without manual intervention. By sourcing, validating and reconciling all data fields, data can then be accurately extracted by the family office.

Private banks struggle to provide timely performance and reporting capabilities to their entire book of business because of disparate technology solutions. Harnessing digital data feeds directly to custodians that pull all account information, handle daily data calculations according to client specifications, and normalise all data files into specific outputs for consumption into IBOR makes for a streamlined approach using one system as opposed to three.

Interested in reading the full report? You can read this edition of the WealthTech 2024 Annual Report online here.