Two trends shaping the advisory industry now are the move from a product-driven to advice-driven model, and clients’ need for increasingly complex and sophisticated investment options. At the same time, advisors are bound by their fiduciary duties including recently adopted interpretations to the Investment Advisers Act that define the advisor’s duty of care and duty of loyalty. The advisor of the future will need to deliver on all these fronts if they want to differentiate themselves from competing firms and show clear value to their clients. 

Recent guidance on the advisor’s duty of care, duty of loyalty

The 2019 interpretation gives investment advisors more specific direction about their fiduciary duty, details that were missing in the original language of the Advisers Act. As recently as 2018, the SEC issued a request for comment stating, “The fiduciary duty to which advisers are subject is not specifically defined in the Advisers Act or in Commission rules.”1,2 Clearly defining the duty of care and duty of loyalty shows the SEC’s commitment to putting some teeth and tangible consequences into the guidance.

Investment advisors are bound by federal law to execute their fiduciary duties which include the duty of care. Three important components in the duty of care are to:

  • Provide advice that is in the clients’ best interests

  • Seek best execution

  • Provide advice and monitoring over the course of the relationship

Addepar’s software and data platform was uniquely designed to give advisors and their clients a holistic picture of assets, bringing together multiple data sources and custodians, and capturing traditional asset classes like stocks, bonds, mutual funds as well as alternative investments or shares in private companies. Using Addepar, advisors can give their clients complete and timely portfolio data and reporting so clients can understand what they own, where they own it, what it's worth and their risk exposure. This holistic picture is essential to advisors executing their fiduciary duties because it informs both advice and execution.  

A consolidated view of assets deepens client relationships

As an advisor, you typically have insight into assets you’re actively managing. You may think you’re doing a good job based on what you see—but what if you’re not seeing everything? 

Addepar aggregates asset and account information from multiple sources, even multiple advisors, to provide a consolidated view of your client’s assets. This ability helps advisors deepen client relationships and serves as a basis for better understanding of client goals and beliefs. The data and account aggregation platform you’re using should allow you to view: 

  • Stock and bond allocations 

  • Trust and bank accounts

  • Retirement plan assets

  • Insurance policy values

  • Private equity investments

  • Hedge funds 

  • Real estate holdings

  • Other real assets such as art

When asset information is inaccurate or untimely, that can adversely impact the relationship between advisors and their clients.

Accurate billing reinforces acting in the client’s best interests

Secure, accurate billing not only represents a baseline for client trust, but it is also a foundational element of an advisor's fiduciary duty. To be the best advisor possible, and act in the best interest of the client, how your fee is determined plays a big role in that fiduciary duty. It establishes trust through transparency. 

Many advisors resort to calculating and tracking fees in Excel spreadsheets or on legacy software. Or, firms may utilize multiple systems/software to calculate, deploy and track fees. Systems and processes that can’t easily perform the necessary tasks for accurate bill runs could be error-prone and waste countless hours of time. Advisors need to be able to show their service charges are accurate, fair and equitable. 

Addepar’s end-to-end billing system helps simplify the calculation, production and tracking of your firm’s fees for proper execution. Our standalone module and operation-centric interface separate your billing tasks from other workflows and simplify the setup, run and review of any bill across all your accounts. 

Being able to pinpoint and audit any discrepancy with all of your underlying data and fee calculations in one place—as well as having complete control of key elements like tiered or flat fee schedules, asset exclusions, timing or valuation methods—provides the transparency you need to demonstrate you are acting in your client’s best interests.

Your choice of tech platform should support your fiduciary role

As the industry continues to look for guidance on how to assure regulators and clients that firms are living up to existing fiduciary standards, advisors need an integrated platform that demonstrates a deep line of sight into every investment a client owns, the risk potential of owning them, and how and why they are being charged for advisory services. Addepar’s systems add to the confidence that any changes to existing standards can be met with unique data aggregation, analysis and reporting capabilities. 

1. “Proposed Commission Interpretation Regarding Standard of Conduct for Investment Advisers; Request for Comment on Enhancing Investment Adviser Regulation -”, 

2. In the original ruling from 1940, adviser was spelled with an “er.” At Addepar, we use the “or” spelling of advisor.