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Advisers could ditch fact-finding under CDR

Advisers could track their clients’ changing financial circumstances in real time under the new Consumer Data Right (CDR) rules and streamline the fact-finding process.

That is according to Alex Scriven, chief operating officer at open data and CDR intermediary platform Adatree, who told ifa that the availability of data could give rise to new opportunities for advisers to “create exceptional experiences for clients”.

“You could get rid of the fact-finding process at a few clicks of a button with this new information, along with alerts, triggers, and flags when your clients’ financial circumstances change, or when they can afford a new investment or property, or have enough funds to be able to invest in the ASX,” Mr Scriven said.

“I’ve been in the wealth industry for many years. When I think about the fact-finding process, I imagine ways you can streamline it and take all of the pain out of it. Advisers can then do what they were always built to do, which is to have meaningful advice conversations based on real-time information.”

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Mr Scriven suggested that under CDR – which is considered a key initiative in the government’s $1.2 billion digital economy strategy – advisers could establish a continuous connection by monitoring their clients’ finances on an ongoing basis as information is constantly pre-populated.

“I know product recommendation engines are being built on CDR right now. That means product providers can constantly monitor if their products suit a client at any given stage. If they fit the criteria, an alert would be sent to an adviser saying they suit this loan or investment product. So, it’s like live advice,” he said.

“The adviser is going to get the information after the machine has calculated a client’s suitability. So, it presents huge opportunities in terms of frictionless onboarding into products.”

Mr Scriven’s comments have preceded his session at the 2022 Adviser Innovation Summit in June, where he will explain the new CDR rules for advisers and how open banking could enable instant access to a comprehensive, verified, and up to date view of a client’s finances so advisers can better understand their needs.

Last year, the federal government made changes to the open banking regime to facilitate increased participation in the data-sharing arrangements by businesses and clients.

The Competition and Consumer (Consumer Data Right) Amendment (2021 Measures No. 1) Rules 2021 will allow clients to share their open banking data with trusted professional advisers, including financial advisers, accountants, tax agents, mortgage brokers, or financial counsellors.

Mr Scriven said the data sharing regime would also allow technology providers that assist advisers to receive structured summaries of a client’s financial information, which they could use to support advisers with client conversations.

Moreover, in line with the recommendation in the Inquiry into Future Directions for the Consumer Data Right, the government will establish third-party action initiation (directed by the client), which will enable payment initiation under CDR.

“This means you can not only collect your data using the CDR but you can also initiate a payment from your bank account,” Mr Scriven explained.

“If you're going to pay your tax return or financial advice fees, you can collect your data and pay at the same time using the same experience.

“Clients who meet advisers virtually don’t have to leave that environment at all. They don’t have to take their virtual headset off, go to their computer, send you (the adviser) a statement, enter the fact find, pay their fees, and then put their headset back on. They can do all of it inside that world.

“I don’t quite think we have an appreciation of just how important that is.”

Furthermore, payment initiation could also automate the funding of cryptocurrency wallets within one interface, which Mr Scriven said is currently “hugely manual” and “cumbersome”.

“With open banking and initiated payments, it is initiated through a login-into-your-bank-style account. You can choose the account you want to send the money from and you can just click a button and send the money straight from that account,” he said.

“That gives rise to an entirely new economy that exists inside that new virtual world.”

Alex Scriven will delve further into how both advisers and technology providers could take advantage of CDR and the open banking regime during his session at the 2022 Adviser Innovation Summit in Sydney.

To hear more from him and other speakers scheduled to appear at the summit on 1 June in Melbourne and 8 June in Sydney, book your tickets now and make sure you don’t miss out!

For more information about the summit, including speakers and agenda, click here.

Advisers could ditch fact-finding under CDR
Alex Scriven
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