Account Aggregation: In the Loop

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Aggregators have become a key component to financial planning.

By Carly Lombardo

For Joshua Reidinger, spending time organizing information and establishing his clients' accounts in WebPortfolio is a key in forming long-term relationships.

Partner Insights

"You can't just do tax and auditing to develop long-term relationships with clients, and account aggregation is the perfect way to know what's going on with your clients' lives, and it allows me to show clients where they stand. Knowledge is powerful," says Reidinger, a CPA who works with the Birmingham, Ala.-based firm of Warren, Averett, Kimbrough & Marino.

Although clients aren't demanding aggregation services, Reidinger says, "Once you introduce aggregation to your more computer-savvy clients, and show them what it can do--they'll use it. Not to mention, it shows our clients we have this service and others don't."

WebPortfolio, an aggregation service provided by Woburn, Mass.-based ByAllAccounts, has helped when Reidinger has been hired to provide financial planning services for a client whose assets were not managed by the firm.

"We set them up on WebPortfolio so that we can easily obtain updated information at any time. There are also times where we allow prospects to use WebPortfolio," says Reidinger. "This allows them and us to keep a close eye on their entire situation on a real-time basis."

Reidinger can't be sure this helps him capture clients' business, but "any time an advisor can equip themselves with information and specific knowledge about a client, their chances of capturing at least a piece of their business is substantially greater than without that information."

During the Internet boom, account aggregation was a hot topic. While consumer adoption did not catch on as fast as predicted, CPAs and advisors are beginning to realize that their clients want it.

According to the Forrester Research study, "Aggregation: Who's Best for Wealth Management," 88 percent of financial consultants believe that their clients want such services. Advisors agree that even during the downturn in the economy account aggregation became more important. Clients wanted to see their financial picture because in tough times, they were more concerned about assets and where they were held.

"Up until the last six months, aggregation was taking the back seat to other problems advisors were facing. Now that the economy is looking up, it will be easier for advisors to gain new clients and assets," says Robert Huebscher, executive at ByAllAccounts.

"Five years ago, people wanted to open eTrade accounts and become rich overnight, but now people are much more interested in having their advisors or CPAs manage all their accounts," agrees Neil Platt, vice president of sales and business development for CashEdge.

ByAllAccounts' WebPortfolio collects transaction-level data from 1,700 online financial services. Huebscher has found that accountants who currently prepare consolidated net worth statements for their clients by manually extracting data from statements and Web sites benefit from using WebPortfolio.

"Preparing consolidated net worth statements is a labor-intensive process and is prone to errors. Using our service automates this process, since we automatically collect the information from the customers, and provide an automated feed to the accountant/advisor," he says.

WebPortfolio has two interfaces: the Advisor and Investor versions. The WebPortfolio Advisor has client set-up and alert sets. The client section enables advisors to establish client information, including client log-ins if clients are to be given access to their accounts.

The Advisor's alert feature allows advisors to create various alert filters and then apply them to groups of clients. Account status alerts notify advisors of accounts that have not updated overnight, and security price alerts warn advisors when security price triggers are tripped. Alerts can also flag when asset allocation is out of balance, when performance does not meet expectations, or when securities or cash are deposited or withdrawn from accounts. Huebscher finds that advisors like alerts.

"Our advisors are notified about exceptions right away, so they can turn it into assets under management," says Huebscher.

Reidinger agrees. "Alerts allow me to get the information I need via email without logging into WebPortfolio, and can be set up across all of my clients or can be tailored to individual clients," he says.

The WebPortfolio Investor can organize client accounts into portfolios that are targeted to a specific objective such as retirement or education. Accounts can be downloaded and set up within a portfolio. Holdings that are not downloaded can be added, and downloaded holdings can be updated. Advisors can add assets and liabilities not held in financial accounts or not accessible online, while benchmarks such as various market indexes can be assigned to an asset class for risk/return comparison. Pricing is based on usage and starts at $50 per account, per year.

Similarly. Edmond Walters, CEO of eMoney Advisor, says his company's latest aggregation tool takes on a task that many accountants are familiar with, preparing net worth statements quarterly for clients who have lines of credit at their banks.

"CPAs say this is one of their biggest challenges," he continues. By aggregating data in order to produce the statements, eMoney's latest version eliminates what Walters says is usually a tedious process for accountants.

How Aggregation Helps

A study by Forrester Research reports that aggregation goes beyond basic investment advice. Clients' expecations of advisors have broadened to include a consolidated view of their finances and better coordination of their many financial relationships. And to top it all off, clients do not expect to pay more for additional services.

The study suggests that CPAs and advisors need aggregation to:

* Stay abreast of their clients' financial situation. Seeing all of a client's financial data is necessary for advisors to ensure that they do not duplicate efforts, create tax problems, or have their strategies undermined by other client activity.
* Streamline data entry. Financial planning tools and portfolio analytics require a lot of data. Collecting and entering financial information for assets and products custodied at other firms requires a big effort.
* Do more with less. Advisors must manage existing clients and acquire new customers to offset a drop in fees. Account aggregation can help advisors and ease the ongoing transition to a fee-based and planning-centric client relationship.

Portal Power
Last year, Dexter, Mich.-based Creative Solutions teamed up with ByAllAccounts to offer the NetClient Account Aggregation module. The module is available with CSI's NetClient portals, which are private extensions of an accountant's Web site where they provide their clients with access to a variety of online services.

The Account Aggregation module imports account information from nearly 1,700 institutions into a client's portal, letting them consolidate balances and detailed information of multiple financial holdings. As part of the NetClient offering, the aggregation module is $3 per client, per month.

"People want to see their financial picture and more and more are heading to their accountants," says Teresa Mackintosh, product manager at CSI. "The account aggregation module makes it easier for accountants to analyze the client's entire financial picture and identify how assets are allocated across accounts. And it leads to more informed advice, and builds the foundation for further communication with clients."

NetClient user Stuart Sutta, a Miami-based CPA, says his main goal is to educate his clients about the benefits of aggregation. He has 41 clients utilizing NetClient and feels "at least half will eventually use account aggregation once they know the benefits."

For example, he notes, "I have one client with 30 accounts, and he's sitting in the bank and needs to see all his accounts, fast. To provide the information quickly, all the accounts need to be aggregated together. And with the NetClient Aggregation module--bam, all the information is there."

Getting Closer to Clients
Aggregation was once paper-based. In order to see a client's complete financial situation, advisors spent hours with shoeboxes full of statements, sometimes 300 pages' worth, trying to find the data they needed and make sense of it. Now, information can be updated daily, and not just accounts with one custodian, but with several.

"The average U.S. household has 15 financial relationships, and even the most aggressive people will probably only check their accounts about once per week. With financial advisors, it's their job to do it every day. Account aggregation makes the complete financial picture readily available, and advisors can perform a greater service to their clients," says Neil Platt, sales and business development vice president of New York-based CashEdge.

CashEdge's Advanced Account Aggregation can amass data from 2,000 financial institutions. It also standardizes the transaction type (for example Buy, Sell, Dividend), applies a standard asset categorization (Fixed Income), and classifies the account type (Brokerage), tax status (Retirement), and instrument type (401(k)). The aggregation platform starts at $150 per month.

In addition, the financial Dashboards allow clients to view all their account information, including checking, investments, loans, and credit card amounts. Built on an XML API Platform, CashEdge can also be made to integrate with proprietary and third-party applications such as analytics, CRM, budgeting and planning tools, and portfolio analysis.

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