Accounts Together

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In the late 1990s, account aggregation was all the rage as it promised to revolutionize the way consumers managed their finances online and the way their financial advisors collected the data needed to create a holistic view of an investor's entire portfolio. So whatever happened to this technology some hailed as a "killer app" for e-finance? According to many sources, it has undergone its share of changes over the years but today remains alive and well, if not growing.

Back in its heyday, account aggregation was envisioned as this magical place where a person's financial data-such as bank account data, credit card debt, mortgage balances, and brokerage accounts-could be imported into a single Web page so that a financial advisor could get a complete view of the holdings (both those under the management of the financial advisor and those "held away") and the consumer also knew where they stood.

However, the unexpected complexity of such technology, high associated costs, security concerns and a lack of consumer demand proved to be significant challenges and the sizzle began to fizzle. Yet, the technology did not disappear but instead has, over the years, morphed and become an embedded part of many financial institutions' online banking, bill pay, and wealth management offerings.

Partner Insights

According to Melanie Flanigan, senior director of marketing for Yodlee, account aggregation "has become more of an enabling technology than a product in and of itself," which is why the industry doesn't hear the term as much today.

Yodlee, which is based in Redwood City, Calif., is considered a pioneer in the account aggregation space. The company was formed in 1999 with the goal of giving people a single view of their disparate financial and bill account information.

Flanigan not only maintains that the technology still exists but says the company "is now at the point where we are at a mainstream adoption level," and she points to its newly launched MoneyCenter.

The company launched in July 2006 its Yodlee MoneyCenter, which automatically collects and analyzes financial data from bank accounts, brokerages, 401k accounts, bills, mortgages, and loans.

"MoneyCenter is really the vision we had in 1999 and it has taken this long for technology and the market to get where it is," says Flanigan.

Yodlee's aggregation systems serve nearly 7 million users at more than 100 financial services firms. According to Flanigan, the company is expecting "substantial growth" this year.

Whille Yodlee's services are used by any companies. It has critics of its approach of performing aggregation.

"The firm [Yodlee] has been widely criticized within the industry for giving screen scraping a bad name, a result of providing data that was not 100 percent accurate in its early years of operation," stated William Butterfield, a research associate with TowerGroup a research and advisory services firm based in Needham, Mass.

In a recent reported titled, "Spreading Their Wings: An Analysis of the Online Account Aggregation Vendor Market," he wrote. "To the company's credit, Yodlee has invested considerable resources in its infrastructure and methods of normalizing data to deliver more accurate information to meet the demands of financial services institutions' clients."

Advent Software, which is known in the investment management industry as a provider of portfolio management and data integration services, offers two aggregation solutions. Its less comprehensive offering is Advent Custodial Data, which consolidates account-level information from more than 400 custodians. Using ACD, institutions can reconcile and supplement the data through electronic feeds with manual entry. The more robust Advent Wealth Service is a high-end aggregation and outsourced product.

Advent Wealth Service, which currently services about 4,000 investor accounts, is a data management and reporting service that enables advisors to deliver total wealth reporting to their top clients-investors with an average of $25 million. Advent Wealth Service combines account information from Advent's custodial data network with data entered manually from monthly statements. With Advent Wealth Service, advisors can provide on a monthly basis a report for a client that includes such data as performance reporting, cash flow analysis, net worth information, and gains and losses.

"This concept of aggregation is a great idea and enormously valuable, so it is not dead," says Will Clemens, vice president of Straight Through Processing for Advent, which is based in San Francisco.

During the first quarter of 2007, several new features will be added to Advent Wealth Services, including a new optional report that breaks out all assets held in the "other" category and provides more detail about what these investments actually are, and an optional report that breaks out all equity investments by size and/or style.

Richard Blonstein, CPA, CFP, is a principal of Rye, N.Y.-based wealth management firm Broad Wealth Management who finds the Advent Wealth Service to "be extremely accurate." He currently performs quarterly reviews with about a dozen clients using the hard copy reports sent by Advent.

"I feel for a small practice that wants to add this service they are excellent at what they do," says Blonstein. He does wish, however, that he had access to the report generation process so he could go in and select specific information to receive in the report. "To do that now, I would probably have to write a letter [to Advent]," he adds.

Edmond Walters, chief executive officer of eMoney Advisor, which is based in Conshohocken, Pa. and a wholly owned subsidiary of Commerce Bancorp, believes that in the 1990s account aggregation failed to ignite a firestorm because "no one applied account aggregation with the client in mind."

"It came out of the gate too early and with the objective of driving new business and consumers identified that and says, 'no way,'" says Walters.

Today that has changed. The AdvisorPlatform includes account aggregation, financial planning, an online document repository called "The Vault," online planning scenarios and customized reporting, as well as alerts and alarms that allow the advisor to monitor a client's financial situation and be notified if something goes awry.

The Web-based wealth-planning tool pulls data from about 10,000 locations, such as savings accounts, IRAs, checking accounts, and life insurance policies. More than 2,000 advisors use the platform and more than $100 billion in assets are administered on a daily basis.

"From that value perspective, the client is saying, 'I should use account aggregation,'" says Walters.

A new feature that was launched in January is a retirement spend-down tool, which looks at a person's assets and investments and identifies how much they can pull, and in what order, to pay less taxes.

Thomas Slack, a managing general partner of Media, Pa.-based wealth management firm KeyAdvisors, has been using eMoney Advisor for about two years and says "financial planning will never be the same." He has about 100 clients on the system.

Slack says the flagging or alert system in the platform helps clients make faster and better financial decisions, and The Vault simplifies estate settlement. "In terms of estate planning, the biggest problem is when a client dies and they controlled the financial matters for the family. If the client is on eMoney Advisor, everything is right there for the family and all of the documents are in The Vault," says Slack. "It is amazing in terms of estate settlement."

In 2005, 1st Global, a Dallas-based broker/dealer, teamed up with Albridge Solutions to provide its affiliates with a data access, collection, and reporting system. The system, dubbed Global Access 2005, uses Albridge's data aggregation and reporting technology to give 1st Global advisors a tool to view their clients' holdings across their entire book of business.

"Global Access 2005 is our private label for Albridge Solutions. They were probably the best provider for taking everything under the [advisor's] control and presenting it on screen," explains David Knoch, 1st Global's vice president of advisory services operations. "Albridge was the most robust we could find." He says all of its 1,200 or advisors subscribe to the solution.

The Albridge platform uses direct feeds in order to present fully reconciled data, available at the transaction level, for all accounts where the advisor is the custodian, as explains in a recent VIP Forum research report. It delivers the data that it collects and aggregates to advisors through its Web-based platform and is able to integrate data into a wide range of financial services platforms and tools. Albridge also partners with CashEdge, which provides online financial applications for banks, credit unions, and wealth management firms, to supplement its offering with external aggregation.

VIP Forum is a research program of the Corporate Executive Board, which provides best practices research, decision support tools, and education to corporations and not-for-profit institutions.

Chicago-based Morningstar targets independent advisors with its Web-based platform Advisor Workstation Office Edition, and in July 2006 began offering account aggregation capabilities when it introduced the portfolio accounting and reporting features.

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