“Fundamentals win championships” Coach Marty asserted on the first day of practice. It became the ideology of the only sports team I was on that ever won a championship. It was my last year of playing inner-city baseball before going to high school. We had zero trick plays, pitchers that only threw fastballs, and equipment that was no better than everybody else. We spent our time practicing fundamentals to reduce errors, and that is what made us successful. The coach made sure the kids knew what to do with the ball when it came our way, every time.
Registered Investment Advisers (RIA’s) have a similar obligation to the technological nature of our industry. Data comes to every firm, from numerous fronts, and it’s important for the firm and its associates to understand fundamentally what data the firm receives, how data transfers from one source to another, and how information is categorized/utilized once received.
Portfolio accounting, billing, performance reporting, compliance oversight, and client communications, are all success-dependent on accurate data. The goal of most (if not all) RIAs is success in implementing their investment strategies and client relationships; both are fundamentally dependent on data integrity. Without it, even the most sophisticated technology will fail to produce reliable, accurate, consistent, or compliant content, and is ultimately doomed to result in poor client experiences.
For firms using reporting and portfolio management platforms (e.g., Orion, Advisors Solutions, Tamarac, Envestnet etc.), there is an imperative need, beyond an IT concern, to understand where your data originates, how it flows between systems, and how individuals connect to it. RIAs who master this fundamental are better positioned to ensure accurate reporting, scalable operations, and long-term operational compliance.
Why Data Integrity is Fundamental for RIAs
Data integrity refers to the accuracy, consistency, completeness, and reliability of data through its lifecycle. Ensuring the integrity of the data received and produced is part of an RIA’s fiduciary duty. It touches a myriad of categories including account registration, household details, cost basis information, transaction records, security pricing, fee schedules, performance calculations, and client mailing lists, just to name a few.
When data integrity breaks down, the consequences are tangible and significant:
• Incorrect client performance reports
• Billing inaccuracies
• Compliance and audit risks
• Reconciliation failures
• Failed operational workflows
• Loss of client trust
• Efficiency loss to manual correction
• Regulatory deficiencies
Understanding the role of your firm’s reporting platform is a critical conversation to have with your current or prospective service provider(s). Never assume that your reporting platform automatically “fixes” incoming data issues. Most reporting systems are designed to do exactly what their name implies, that is, to report the information they receive from upstream sources. Reporting platforms aggregate, normalize, and display information, however they are often limited in their ability to rectify a poorly structured integration process or inconsistent data sources.
RIAs must understand the fundamentals of their data ecosystem in order to achieve data integrity.
Many RIAs operate a muti-system technology environment, meaning there are several platforms from which data is interconnected before ultimately appearing on a dashboard or report.
Here is an example of data flow:
Custodian converts account application information into client data – Data aggregation/integration layer – Customer Relationship Management (“CRM”) – Reporting Platform – Client Portal/Reports
Each stage introduces opportunities for data to get lost or compromised in transit, whether it be from mismatched fields, transformation errors, timing delays, or incomplete mappings.
Data From the Source
The number of originating sources can also introduce a layer of complexity as two custodians may have entirely different data categorization and formatting practices. Security identifiers, transaction descriptions, and account identifiers may also vary from source to source.
If a reporting platform is receiving data inconsistently or incompletely between sources, downstream operations could be severely impacted. Examples include account registration inconsistencies preventing automatic, or causing incorrect householding, performance reporting and regulatory reporting being impacted by improperly coded transactions, cost basis inconsistencies resulting in inaccurate realized gain calculations, and/or reconciliations failing from timing mismatches.
Firms simply cannot rely solely on automated integrations; it is imperative that they understand how custodial data maps into surrounding environments.
Data On the Move
Data transmitting from one source to another is one of the most common places where data integrity breaks down. Specifically, on the first move from Custodian to CRM.
As many of you know, CRM systems like Salesforce or Redtail contain critical client information that ultimately feeds into other systems downstream. That information can include, among other things, client demographics, household relationships, beneficiary information, communication information and preferences, workflows, and compliance dates (last privacy policy sent, Form ADV etc.).
Discrepancies in how a CRM categorizes information it receives from the upstream provider and how it is further classified by the downstream provider, can result in the loss of data integrity. For example, included/default verbiage added to an account registration by the custodian may result in data mapping failures potentially resulting in duplicate households being created, or related accounts failing to aggregate.
An RIA’s assignment fields also feed reporting dashboards, fee billing systems, and compliance workflows. If those fields are not approached systematically and tested periodically by the firm, the output becomes unreliable.
Data is not simply digital information; it is the driver of operational logic across the firm.
Data mapping is a consistently overlooked operation in many RIAs. Data mapping refers to how one system’s fields connect to another system’s fields. Every integration between platforms depends on predefined mappings that tell systems to interpret information. For example, at the custodian the client may have a field called “Account Number,” but within the CRM it is referred to as the “Reporting Account ID”. Or, what the custodian refers to as “Security Identifier” may be referred to as an “Asset Classification” at your performance reporter.
When these mappings are poorly configured and not identified and monitored, reporting errors aren’t a possibility, they are an inevitability. Even worse, many firms only discover mapping issues AFTER operational problems appear, like when a client notices their bill isn’t correct or their performance doesn’t seem right. When this happens, firms are already in reactive mode.
Data On Display
To be in proactive mode, RIAs need to focus on ensuring that their team understands how to handle the data that comes to them, every time. This can include updating internal policies and procedures to include:
• Which systems are data originators vs. data receivers
• Which fields drive data downstream
• How data is transformed at each integration
• Where exceptions or overrides occur
• Which updates are automatic vs. manual
• If/where data is lost or compromised during transit
Defining these fundamentals can dramatically reduce operational risk for the firm
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It’s important for firms to remember that the data they display not only reaches clients, but it also reaches the regulators during examinations. This makes data integrity not only a business and operational concern, but a compliance concern.
Inaccurate reporting, billing errors, or inconsistent client records could expose the RIA to regulatory scrutiny, client complaints, fee disputes, exam deficiencies or enforcement action, and significant reputational damage.
When RIAs take ownership of their data governance and prioritize data integrity by analyzing, monitoring, and periodically testing, they can then demonstrate robust operational controls, consistent outputs in their reports, maintenance of reliable records, and repeatable reconciliation procedures.
Data Makes a Champion
As RIAs continue adopting integrated technology ecosystems, it is imperative for firms to understand their data infrastructure
Understanding where data originates, how it moves between systems, and which fields drive critical workflows allows firms to:
• Reduce manual corrections
• Improve reporting accuracy
• Scale operations efficiently
• Strengthen compliance oversight
• Enhance client experiences
• Support cleaner integrations across future platforms
• Prevent potential regulatory issues
Technology alone does not create operational efficiency. Operational efficiency comes from fundamentally understanding how technology, integrations, and data structures work together, and to ensure accuracy of data through ongoing analysis, monitoring, and testing…
The Core Compliance consulting team has extensive experience in assisting firms with implementing and strengthening their compliance testing, surveillance programs, and performing various compliance reviews. We also offer compliance technology solutions, which play a crucial role in your firm’s data integrity. For more information, please contact us at info@corecls.com, by phone at (619) 278- 0020, or visit us at www.corecls.com.
Author: Kevin Leahy, Compliance Consultant; Editor: Tina Mitchell, Managing Director, Consultation Services; Core Compliance & Legal Services (“Core Compliance”). Core Compliance works extensively with investment advisers, broker-dealers, investment companies, and private fund managers on regulatory compliance issues.
This article is for information purposes and does not contain or convey legal or tax advice. The information herein should not be relied upon regarding any particular facts or circumstances without first consulting with a lawyer and/or tax professional.