Gathering personal information and asking probing, exploratory questions are fundamental to being a financial adviser.

Indeed, in most professions, personal data is essential for understanding a client/patient’s circumstances, needs and goals.

But if that information is not recorded, stored and, ultimately, destroyed properly, businesses and their customers are exposed to significant risk.

Recent high profile data breaches at Optus and Medibank are a reminder of the legal and ethical obligations that businesses have to their customers. There are serious financial, regulatory and reputational consequences for messing up.

Yet, many advice businesses aren’t doing enough (or anything) to protect themselves and their clients.

Reducing the amount of information a business gathers is not a viable risk mitigation strategy.

Limiting the information on a client, curbs an adviser’s ability to accurately understand and scope their needs, and provide appropriate advice.

Advisers need to collect vast amounts of personal information and record their observations to gain a holistic picture of a client.

As such, a comprehensive fact find and needs analysis are key parts of the advice process.

Going through this process, helps clients articulate their goals. As a result, they often realise their needs are far more extensive and complex.

It is this level of detail that separates professional advisers from transactional financial specialists like stockbrokers and mortgage brokers, who only need to capture enough information to support a specific recommendation.

There is a place for both. There are also times when it makes sense for holistic financial advisers to operate in a transactional manner and vice versa. The point is that collecting data is essential for ensuring holistic advice is complete, accurate and appropriate.

Therefore, financial advisers must understand the ethics of data collection.

Private and confidential