This is, I know, quite obvious.

Indeed, a good understanding of their data will also allow financial institutions to differentiate their offering and position themselves and their products in the market in a more targeted way. Understanding what’s behind your product and linking it to the knowledge you hold of your client is distribution power. The market demands that we square the circle of client centricity (that is, selling people what’s appropriate to them whilst providing the right returns) combined with an air-tight understanding of what’s in our product. All this is, of course, further complicated, or made more interesting and exciting, by ESG.

If data is so critical to success in fund distribution, how much can we trust it? Our models suggest that circa 40% of fund static data currently in the market suffers from some form of inconsistency. In plain English, only 6 in 10 data points published across different data vendors and platforms match all their iterations. This means that asset managers, almost half the time, have disseminated different data to different destinations: one will have information which is slightly, or entirely, different from another.

Data inaccuracy is a silent distribution killer and its damage is increasing. The retail distribution (understood as sales to mass-affluent retail clients) is currently mainly carried out with the support of computers. Long gone is the time of the adviser sitting with the client and going through options ISIN by ISIN to build an investment portfolio. Computers take into account KYC information, throw in product suitability and generate an investment basket that retail investors can buy in order to build their long-term savings.

Computers often check one data point from more than one source and discard instruments whose data is inconsistent. When computers discard products on the back of data inaccuracy or inconsistency, nobody notices it. An asset manager may not distribute a specific fund despite increased marketing efforts but doesn’t know why. Advisers may well be surprised by the absence of products by this or that asset manager in their portfolios but can’t put the finger on why that is the case. Very coldly computers react against inaccuracy and there is no remedy but to publish accurate and consistent data across the entire distribution network.

As we build our data management tools for the next decade and take into account all the added complexity of ESG, let’s make sure we give the basic question of public data accuracy its due consideration. As a result, everyone will benefit from it, asset managers because their funds get visibility as they should, distributors who can rely on their fund data source used and investors who buy the funds best suited according to their investment preferences.