‘I’ve already told you that!’ – Why financial advice needs more APIs

When it comes to financial advice, data is now integral to providing a rich client picture, giving the right context to inform the adviser when it comes to providing the most suitable advice recommendation.  

Even though all this useful data from countless sources is available at an adviser’s fingertips, the adviser often cannot escape the requirement to rekey it into multiple systems. Many advisers claim that rekeying can take up to 80% of their time. This is an aspect of financial planning that can become detrimental to adviser productivity and satisfaction.  

Data holds the key to the future of enhanced financial advice capability, but such progress will be mired if the data needs to be input into several systems which don’t talk to each other.

So, what is the answer? How can advisers harness the data available to them effectively and use it to do what they do best? (Which is to provide the best outcomes for their clients).

The solution is not a ‘one system for all’ approach, instead advisers need to be able to have the flexibility of using their preferred CRM, risk profiler or cashflow modeler, but once the data has been inputted, it must duplicate across each area where relevant. Better still, the data might also be auto populated from other sources for even more efficiency.

APIs hold the key to enabling different systems to ‘talk’ to each other. They are like portals or tunnels between systems that allow for the sharing of data and algorithms.  

2021 has been tipped as the year of open banking. Open banking relies on the effective use of APIs. Among the many benefits it can bring to the consumer are those such as balance tracking and financial empowerment. It will also allow advisers to be more proactive and personalised when it comes to giving timely financial advice. For example, a client might receive a lump sum in their account from an inheritance which will instigate advice about how to invest it accordingly.

APIs themselves however, are not restricted to data. They can include ‘plug-ins’ such as financial advice algorithms to help advisers generate complex advice recommendations with minimal intervention.  

As well as reducing repetition for the adviser, the client will also see a benefit from APIs by not having to repeat information or indeed supply it in the first place. Gone will be the days of shuffling papers looking for past pension statements when the pension dashboard becomes available.  

When you put the client and their needs at the centre, the requirement for collaboration between providers and systems is imperative. Working together will help work to all providers’ strengths so that they can each provide and refine their component parts.

In our recent webinar on advice efficiency optimisation, Liz Pellegrini from Salesforce stated that there is a need for a centralized digital location accessible to the adviser consisting of a modular platform with flexible components.

The wider use of APIs might well present another opportunity to empower the client beyond the consolidation of their banking data. It could well lead to an interface which enables the client to control who sees what data.  

Putting the control back with the customer about the data they use and share as well as which providers they use will naturally help to increase customer trust with their adviser.  

Many service-based industries are transitioning to digital tools amid the pandemic which has been a catalyst for change for many. We can expect to see a more predictive and proactive future for customer operations, of which APIs and ecosystems will play a large part.  

Successful platform-based ecosystems in other industries include eBay and Amazon – the customer has one interface and is able to purchase items from countless suppliers and systems. They provide their address and account details only once, but they are shared with the supplier when an item is bought.  

We are in no way implying that the finance and advice industry needs another wealth management monolith. The successful deployment of APIs could mean quite the opposite; we can retain the innovation and expertise of agile providers whilst at the same time providing the most suitable service to the adviser.  

APIs hold the key to the future of the financial advice industry, with their ability to provide flexibility, increased efficiency, and a better overall advice experience for the client.