Account Aggregation Software

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David R. Evanson

The Career Advisor, Fall, 2004

Sometimes it’s hard to tell who the winners and losers are with technological change. Take TiVo for example. Does this help or hurt content providers? Has the Internet helped or hurt the travel industry? Sure it’s decimated the ranks of travel agents, but the ones which have survived can offer higher margin, value added services. Maybe, it’s the same with so called account aggregation software that lets investors see all of their accounts in one place – regardless of where the assets are custodied – enabling them to get a bird’s eye view of their wealth. Is this good for planners or not?

Well, according to one expert, it’s all to the plus, especially when it’s used by planners, says Harold Evensky, CFP, of Evensky, Brown & Katz. “To provide real service, we need to look at the client globally, and not myopically with the little piece we might have.” Evensky says that aggregation applications offered by CashEdge, Yodlee, By All Accounts, and UMonitor, enable advisers to see how other assets the client may have fit together with what he or she is doing and planning.

There are myriad reasons why a client would not or could not have all of their assets in one place. Clients may have irrevocable trusts, or some of their assets could be held through a family business which does business elsewhere, or it could be something so simple as a 401(k) that is custodied at another broker-dealer. Aggregation software overcomes the challenges this dispersion presents to the planning process.

Though Evensky remains sanguine about the opportunity that aggregation software offers investors and their financial planners, as a tool it’s still in its nascent stages. “The technology is not as clean as we thought. The day when all planners put it on their accounts as standard operating procedure has not arrived,” says Evensky. But he adds, the day when all planners should know about this tool and understand what it can do for them has already arrived, he says.

Looming a little further over the horizon is a much more fundamental and far reaching consequence of account aggregation software: a potential change in fee structure. While a great deal of today’s fees utilize an assets under management formula, the ability to see a client’s entire picture and make holistic recommendations leads to an assets under advisement model, suggests Evensky.

Will this be good for planners or bad for planners? In many ways it will challenge the premise of financial planning. That is, once given the access to a client’s total financial picture, can planners deliver a total solution? Like the travel agents, some will deliver more value added services, and others may get counted among the missing.