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Offering account aggregation is an effective way to add value to your client relationships, provide better service and set your firm apart from the competition.
Account aggregation provides you with a window into your clients’ overall finances. This technology gathers data from across a client’s financial accounts – custodial accounts as well as checking and savings, 401(k)s and other retirement plans, college savings plans, and even credit cards, mortgages, and other loans. This data is then presented to you and your clients in a comprehensive, convenient online view.
Having access to this data provides more holistic guidance across all aspects of clients’ financial lives, not just on accounts for which you are the advisor of record.
“We view account aggregation as an essential part of the financial planning process and an integral part of knowing our client,” said Charles Reinhold, president and CCO of CPR Investments, Inc. “How can you provide meaningful financial advice if you are only looking at a part of the total picture? If our goal is to help our clients build their net worth and become financially independent, we need to see our clients’ entire picture and more importantly, so does our client.”
And clients may view this capability as a differentiator. According to a 2016 Salesforce Research study, 78% of surveyed U.S. investors said the ability to receive a holistic view of their financial situation and history was an important consideration in selecting a financial advisor.
Build strong client relationships
When you can easily access and view your clients’ overall financial picture, you are better positioned to provide more comprehensive guidance and advice targeted to their specific needs. If you only focus on accounts under your direct supervision, you can’t fully understand a client’s risk profile or financial priorities. Account aggregation assembles a comprehensive and up-to-date picture of a client’s total assets, liabilities, net worth, spending habits, and goals.
“Using account aggregation gives us a bird’s-eye view into a client’s entire financial picture,” said Peter Krull, CEO and director of investments with Earth Equity Advisors. “This allows us to better serve the client because we’re making decisions based all of his or her financial metrics, not just the ones we are helping with.”
Account aggregation produces more dynamic and informative client meetings. By coordinating account aggregation capabilities with your portfolio modeling or financial planning tools, you can analyze spending and investment patterns over time, and provide insights on spending, savings, and investing.
Karl Frank, president of A&I Financial Services, LLC, said his account aggregation tool saves his team time and effort. “My annual financial reviews are easier with the aggregator's results displayed as part and parcel of the regular review. My client care team’s workload is reduced significantly by having one place to gather the financial data we need to assess the client’s current situation. It makes it easier to focus on the rest of the financial plan of which the investments are only part.”
Add value to your practice
Account aggregation makes for easier client onboarding. By enabling your new clients to share their held-away account information from the start, you simplify your account setup, identify assets you may have overlooked and establish a collaborative, proactive advisor-client relationship from day one. Fully integrated account aggregation solutions streamline your back-office operations. You no longer need to manually gather and track outside account information, and the program can seamlessly share data to expedite billing and reporting. And with a more holistic view of your client’s financial situation, you will spot opportunities to provide additional services or products to support their needs.
Choosing the right tool
In selecting the right tool for your business, there are several considerations to keep in mind, including the breadth of coverage, data accuracy, ease of use, functionality, depth of integration, and data security. Here are a few things to consider:
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Compatibility with a wide range of financial institutions – Today’s account aggregation solutions provide access to more than 10,000 institutions, along with direct feeds to major custodians. Ask vendors if new institutions can be added and how long this takes. Also, find out how easy it is to add new client accounts to your system as well as maintain existing accounts.
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An easy-to-use portal – The tool should be easy for you and your staff to get up and running and ready for client use. Further, the tool should include functionality to help you and your clients stay on top of the account linking process (e.g., send alerts when passwords have expired, and accounts are no longer functional). To encourage client use of the tool, make sure the online interface is well-organized and easy to access and navigate.
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Seamless integration – Ideally, your account aggregation tool should work seamlessly with your investment platform, as well as with your financial planning and billing applications. Look for systems that can be fully integrated with your existing platform and systems, beyond just the single sign-on capability. Without full integration, you may miss out on opportunities to add value to your client relationships, glean insights, gather new assets, and retain clients over time.
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A strong commitment to data security and privacy – Your aggregation provider should be compliant with the highest quality standards and best practices in information and network security. This includes strong encryptions for data transmissions and endpoint authentication with API access tokens.
Enhance your opportunities for growth
Used strategically, account aggregation is a powerful tool to grow your business. In addition to providing better service to your clients’ existing accounts, it monitors and attracts additional client assets as well as charging appropriate fees for advice given on held-away assets. And by demonstrating the capabilities of aggregation during prospect meetings, you will be able to close new accounts more easily.
“Prior to our firm providing account aggregation, we found clients creating spreadsheets, and worse yet, finding online solutions,” said Reinhold. “The online solutions masquerade as free software, but are really nothing more than prospecting tools for our competition to steal our clients.”
Lindsay Faussone is vice president, Strategic Programs, at E*TRADE Advisor Services.
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