I recently read an interesting article in Professional Adviser about the advice market and the ongoing M&A activity within the sector.
One of the themes that caught my attention was the importance of data and management information (MI) in determining whether potential transactions can progress in a timely manner and ultimately, successfully.
It got me thinking about a related issue: the value of good MI and effective governance and how it extends well beyond a potential sale or acquisition.
For any advice firm, understanding what is happening within the business, having reliable information to support decisions, and being able to demonstrate effective oversight should be fundamental to running a successful operation.
Yet these are areas where it is worth asking whether firms are getting the most out of the information they already collect.
Having data is not the same as having insight.
A firm might produce regular management reports, populate a board pack with performance statistics and maintain a suite of Consumer Duty MI. I have seen this in firms before – whilst this may have been a satisfactory first step after Consumer Duty implementation, the goalposts are moving.
How useful is that information if it simply reports activity rather than helping the business understand what is happening and why?
For example:
- Does the MI identify emerging trends and potential issues, or simply record what has already happened?
- Does it help the firm understand whether customers are receiving good outcomes?
- Does the board have sufficient information to challenge performance and ask the right questions?
- Most importantly, is there evidence that the firm takes action when the information highlights a concern?
These questions matter in the context of Consumer Duty, where effective governance is about much more than having the right committees, reporting processes and documentation in place.
The real test is whether those arrangements give the board the information and insight it needs to understand customer outcomes, make informed decisions and intervene where necessary.
And this is where good MI and governance links to a wider business perspective to consider.
A firm that understands its own performance, can evidence how it manages risks and demonstrates that its leadership actively uses MI to inform decisions is better placed to explain how its business operates. It is transparent, it indicates a strong culture – all the things that can contribute to considering strategic decisions, succession planning or a future transaction.
Of course, good MI and governance alone will not determine whether a transaction succeeds. But the quality of the information available, and the confidence that can be placed in it, can make a meaningful difference.
For me, the underlying principle is straightforward: MI should not just tell you what has happened. It should help you understand what it means, what needs attention and what you should do next.
It is a useful reminder that good governance, done well, can support better decision-making, stronger oversight and a better understanding of how the business is performing.
Danbury Compliance provides compliance consultancy services to wealth managers and financial advisers, in particular supporting firms with Consumer Duty MI and governance.