Account Aggregation: Making It Count

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Once upon a time-just about two or three years ago-consumers were scrambling to get online to check their steadily climbing net worth via aggregation tools they could access on their My-prefixed personalized home pages. Now consumers are afraid to look, still not completely clear on what went wrong so fast.

“The advice business is a good place to be right now,” says Neil Platt,  sales and business development vice president of CashEdge. He explains, “The shift in the economy has been great for financial advisors; it’s been bad for the eTrades of the world,” abandoned by disgruntled consumers who saw their stock picks erode in value. Platt adds, “The people who thought of themselves as independent investors are now flocking for financial advice.”

Suppliers of account aggregation services are paying heed. Recent developments have included:

Partner Insights

• Redwood City, Calif.-based Yodlee introduced Advisor Pro, an advisor-facing solution that provides the financial professional with client-approved access to the online accounts a client holds at all financial institutions. The hoped-for result is better-informed and more timely investment advice, as well as a greater opportunity for the advisor to bring more assets under direct management.

“If a financial advisor wants to provide truly comprehensive investment advice, they need the ability to see their clients’ entire financial portfolios including their investments, 401(k), banking, mortgage, credit card, and other accounts,” notes Yodlee marketing director Mike Matthews.

• Following on the heels of its purchase of Techfi last July, San Francisco-based Advent Software has launched a new offering that incorporates Techfi’s AdvisorMart Institutional, a consolidation and reporting application developed specifically for broker/dealers and their reps.

Listen to what George Seiters, Advent’s director of advisory marketing, had to say at the program’s launch in January: “Among the trends we’re seeing today in this marketplace are an influx of investors seeking professional advice as a result of a down market, and advisors competing amidst a very crowded financial services market to win the ‘trusted advisor’ relationship. In order to help them win those clients, independent broker/dealer firms are looking to provide their representatives with tools that deliver increased productivity potential, and allow them to deliver the best service to the investor, giving them an edge in the market.”

• Last summer, Dexter, Mich.-based Creative Solutions, developer of UltraTax and practice management software for the accounting community, teamed up with ByAllAccounts to include the latter’sWebPortfolio account aggregation engine within the CSI NetClient private portal.

Greg LaFollette, vice president of product strategy and IT, says regarding WebPortfolio: “It makes our overall [portal] product more valuable.” He explains, “Ultimately, once you begin to gather all that aggregated data for reporting to your clients, you have that data available for harvesting”-meaning you have a better understanding of your client’s positions vis-a-vis specific securities, and can better advise him or her on how to strengthen the portfolio while minimizing potential tax liability.

Moreover, since the aggregated data is digital, “the accountant could access that data for financial statement and/or tax return preparation.” LaFollette is quick to note, “We haven’t implemented that yet,” but suggests it’s certainly in the realm of not-too-distant possibility.

What’s going on here is a recognition by financial software developers that account aggregation can play a major role in providing the advisor-whether a broker or insuror or accountant-with a complete picture of the client’s financial holdings, thereby better arming that advisor to dispense timely, prudent advice and gaining the client’s allegiance as advisor of choice. This isn’t to say aggregation is a cure-all for advisors anxious about how the economy will impact client loyalties.   

A case in point: Until six months or so ago, the MyHDVest.com portal for registered reps and their clients featured an account aggregation engine powered by Yodlee. The two companies have since parted. Vest, a non-bank subsidiary of Wells Fargo, still delivers aggregation, “but it’s focused on those investments the advisors are managing for their clients,” comments president Roger Ochs.

Vest found clients were primarily only interested in updates on their stocks and mutual funds; there was sharply less interest in bank balances, credit cards, mortgages, and other account data. “At the end of the day, they didn’t care” about most of their non-investment assets, so Vest has “bypassed the Yodlee process and gone directly to the [institutional] sources,” says Ochs. “We’ve gotten no pushback at all” from either advisors or customers, he notes. “It was a non-event for them.”

It’s worth stressing, however, that Vest felt obliged to offer its advisors and their clients a substitute aggregation service to stay competitive.

Dallas-based 1st Global, which employs the WebPortfolio engine, concurs with H.D. Vest that tax and accounting professionals are natural conduits of financial planning advice. There’s no reason, in 1st Global’s view, why accountants need to be elbowed aside by brokers or insurance agents when it comes to portfolio management. As chief executive Tony Batman observes, “Account aggregation, when coupled with the credibility and trust [traditionally enjoyed by accounting professionals], proves a very powerful formula for being a complete financial planner to clients.”

Enhanced Customer Service
Yodlee’s aggregation engine provides access to more than six thousand financial accounts. The vendor’s consumer-facing OnCenter offering is used by 3.3 million customers. There are also more than 150 business clients, including many leading financial institutions and portals.

“Harvesting data can provide [the financial advisor with] tremendous customer insight into product usage and holdings ‘away from’ their home institution,” says Matthews. He cites the case of where a customer holds $25,000 in an investment account. The financial institution may not know if that represents 1 percent or 100 percent of the customer’s assets, but aggregation will answer that question. “Of course, the answer has a profound impact on how [the institution] treats that customer and which products they market to them,” points out Matthews.

Examples of enhanced customer service may include:

• Offering better-performing or lower-cost mutual funds to replace current portfolio holdings;

• Identifying customers with large cash positions and offering higher-returning, low-risk investments such as money market or fixed income funds;

• Identifying and targeting customers with 401(k) and other qualified retirement plans for rollovers.

Yodlee recently launched Advisor Pro to better ensure customers receive the timely financial advice they need. It also helps cement the advisor-client relationship. As Matthews explains, consolidating the client’s financial life on one secure Web page within the advisor’s site will greatly increase the time spent on that site.

“The rule of thumb here is that the more accounts a customer consolidates, the more likely they are to visit the site more frequently and for longer periods of time,” states Matthews. “Obviously, this is exactly what financial institutions want, as it greatly increases customer loyalty and retention, and also creates a closer bond with that user which opens up new opportunities to expand that relationship.”

Casting a Wide Net

Operating in full mode, account aggregation tools can pull in data from a wide assortment of sources to present an up-to-date snapshot of the user's total financial portfolio. These sources may include:

• Brokerages

• Mutual funds

• Insurance

• Annuities

• Retirement accounts

• CDs

• Checking and savings accounts

• Mortgages and loans

• Credit cards

• Reward accounts (such as Frequent Flyer programs)

As for WebPortfolio from Woburn, Mass.-based ByAllAccounts, it collects transaction-level data from over 1,360 online financial services. The tool has two interfaces, an Investor and Advisor version, with the latter also featuring custom benchmarks, risk metrics, and personal rates of return. Account aggregation, according to chief executive Pat Gardner, is “about gathering data at a deep, transaction level and turning it into information.”

It’s also about giving the advisor access to “the whole picture” of a client’s financial holdings. “The advisor has the technology now to manage portfolios holistically. They can add a lot more value than they did” when they only saw those investments they were managing.

That’s why tax and accounting professionals are important to ByAllAccounts’ growth plans. “The accountant already sees all [the client’s financial] data,” observes Gardner. “They are in the catbird seat as far as the relationship they have with their clients.”

That view is shared by 1st Global, which provides WebPortfolio free to its top registered reps and for a nominal fee to newer advisors. “These days, when clients are very nervous about wealth preservation, account aggregation is more important than ever,” says Batman. For example, seeing all of a client’s investments, both custodial and noncustodial, helps the tax preparer/financial planner develop tax planning strategies designed to save the client money.

“The more information you have, the better able you are to help a client reach their financial goals-saving for a home, educating their kids, whatever [those goals] may be,” says Tom Thomas, planning department manager with Shreveport, La.-based I.M. Financial, a 1st Global advisor.

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