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Data Aggregation Redux

The face of data aggregation services is changing, and a look at one new product shows how much.

Joel P. Bruckenstein, 10/08/2009

Of all the technology product niches I cover, perhaps none has been more vexing over the years than account aggregation. Aggregation has met with modest success on the retail side, but it has never really caught on in a big way with advisors. According to the 2008 Financial Planning Magazine Software Survey, 75% of respondents claimed that they did not use any data aggregation provider. Among independent RIAs, I suspect that market penetration is even lower.

There are numerous reasons that account aggregation has failed to achieve wider advisor acceptance, many of them historical. When account aggregation companies first appeared on the scene, they promised more than they could deliver. Specifically, advisors came to believe, rightly or wrongly, that aggregation would consistently supply data that was complete and reliable enough to generate performance reports. That was not always the case.

It is possible that early adapters of the technology made faulty assumptions as well. Many assumed that clients would jump at the chance to aggregate everything from bank account balances to frequent flyer miles aggregated on an advisor-provided Web site. Few did. Other issues plaguing early adoption included a lack of integration and high prices.

Because many advisors had unrealistic expectations about what data aggregation could do back then, and because there was little demand on the part of clients for the service at the time, some advisors who were early adopters of the technology were disappointed. I suspect that some of this disappointment and skepticism lingers.

While a few issues remain with regard to account aggregation, much has changed in the last eight or nine years. For one thing, aggregation sales personnel no longer tout the tracking of frequent flyer miles as a benefit of account aggregation. On a more serious note, while not perfect, the quality of the data supplied by leading firms has improved markedly over the last few years.

As the data provided by aggregators becomes portable from one application to another, its value will increase, because it will reduce redundancy and decrease data entry errors. In addition, pricing has become more competitive, so the overall value proposition has improved.

Against this backdrop, I was recently contacted by CashEdge and invited to try out their new AllData Advisor product. After briefly test driving the product I became convinced that AllData Advisor would be of interest to readers.

An Introduction
AllData Advisor is a Web-based data aggregation service for advisors powered by CashEdge, a leading provider of data aggregation services to banks, brokers, independent RIAs, and other financial service firms. The folks at CashEdge believe thatAllData Advisor can add a tremendous amount of value to the independent broker/dealer or RIA practice in the current environment. Competition is heating up and advisors are looking to differentiate themselves, and one of the ways to do this is by offering a product such as AllData Advisor, which includes a strong client component.
Perhaps more importantly, with assets under management still way below the levels of a few years ago, advisors are looking to attract new assets. AllData Advisor can help attract new prospects and it can also help reveal held-away assets in the hands of current clients that potentially can become a new revenue source for you. In fact, CashEdge claims that advisors using this product, on average, capture $500,000 in previously held-away assets for every client aggregated. If that number is true, it wouldn't take much to cover CashEdge's $1,500 annual fee, which covers an unlimited number of accounts and an unlimited number of clients.

The other key piece of the CashEdge value proposition is that it saves time. Assuming you can get all of a client's data aggregated on the site, you'll always have a current picture of the clients' personal balance sheet without having to perform any manual data entry. To the extent that data can be shared with other applications, CashEdge becomes even more valuable because it reduces the need re-enter the data in other applications, which further reduces costs and errors.

A Short Program Tour
When you first enter the application, you land on the dashboard. The top of the page features aggregation alerts, and its divided into two types of alerts: advisor alerts and client alerts. I purposely generated one advisor alert to populate the top section, telling me that I do not have the proper user name and password for an account, so I know the data for that account has not been updated. If a client had failed to complete a section on the client site, there might be an alert to that effect in the client section.

Data is provided at the bottom of the screen account summary. You can see metrics like average assets per client and average assets per account. You can also track how many clients are using the system. In addition, you can see which clients have recently added substantial assets.

To add clients to the system, click on the "Manage My Book" tab. Here, you can invite clients to join. The system sends an e-mail message to the client with a link to the client portal as well as registration information. Once logged in to the system, the client can add accounts, including back accounts, retirement accounts, mortgages, car loans, and the like. The client can provide the system with a username and password for each account and then give permission to the advisor to view those accounts.

This screen contains some other useful data. For example, it allows you to check the status of clients, so you know who you have invited to join and who has accepted. If you've invited a client such as Jane Doe in this example, and she has not yet accepted, you can either phone her to find out if she is having a problem, or you can re-send the invitation by clicking on the available hotlink. As assets are added, they will show up in the assets column.

For accounts that the advisor will be adding, the advisor either clicks on the "add account hotlink" or the Manage Accounts tab. From there, you can enter the name of a financial institution, or you can pick a name from a list of all institutions, or advisor access institutions (primarily custodians, mutual funds, B/Ds, and insurance firms). Once you identify the institution, enter the required credentials, which the system then saves. You are then presented with a list of accounts that are associated with that log in. If there are multiple accounts, such as a checking account, a savings account and a mortgage, you may want to include them all. In other instances, there may be trust or other accounts that you want to exclude from the aggregation process.

Before you even start setting up accounts, you might want to make a stop at the Alerts and Profiles tab. Here, you can choose from various e-mail alerts that can be sent on a daily or a weekly basis. Useful alerts include: notification of a client adding their first account, client deleting accounts, log-in failures, and security authentication failures. Under this tab you will also find facilities to edit advisor and client profiles. Administration is where you renew your subscription; add advisors/users at your firm, and other similar tasks.

Once you have a few clients set up on the system, you can start reaping the benefits. When you click on a client's name, you are taken to a page that offers a consolidated view of all client accounts. This particular view is divided into three sections: assets, positions, and liabilities. One nice feature of this page is that it allows you to see exactly how fresh your data is. In this example, I can see that the client's investment accounts and banking accounts updated three days ago; all of the other accounts were updated 20 hours ago. If you think that the data is too old, you can refresh the data.

If you need additional details, you can drill down to get them. One option is to click the "See Account Details" heading at the top of each section. The other option is to click on an individual asset category,  which takes you to the same location.

If necessary, you can drill down one level further to get even more detail. Say, for example, that I'm looking at the details of a credit card account. Since I've chosen to display all results in U.S. dollars, that is the way they appear primarily throughout the system, but the accounts attributes section says that this credit card account is actually denominated in Canadian dollars. CashEdge provides here the true balances in Canadian dollars, as well as the U.S. dollar balances based upon current exchange rates, which obviously can fluctuate over time. Also note that the transaction information can be gathered from this screen, if necessary, by clicking the "view transactions" button.

How Good Is It?
So, how good is AllData Advisor? I guess the short answer is that it is much better than it was, but it is not as good as it could be. From a feature standpoint, the latest version of AllData adds a capable dashboard and a nice set of alert features. So, from a features standpoint, it is better.

Usability could be better. Personally, I'd like to see the option of using alternate views on the Client Overview screen. I'd like the option to few the data in a true "personal balance sheet" format, with perhaps a summary view, and a detailed view. The latter would list each individual asset and liability under the proper heading. 

Overall, the quality and quantity of data sources has improved, but you have to be careful here. Is it good enough to get a snapshot of a client's personal balance sheet? I think the answer to that question is "yes." Is it good enough to plug into performance reports that you are willing to certify as 100% accurate to clients? Perhaps not. You can, of course use them for analysis and other behind-the-scenes work, however.

Perhaps the greatest disappointment with CashEdge Advisor at the moment is the inability to easily export the data to other locations. I understand that there is, or soon will be, and export to Morningstar Office. In addition, CashEdge has long been integrated with eMoney, but that is a special bilateral connection. The firm has a similar bilateral integration with MoneyGuidePro, but as of yet, MoneyGuidePro users do not have access to the latest version of AllData Advisor (although odds are that they will soon). Clearly, the service would be much more valuable if you could effortlessly move the data to other applications via Web services or some other well established methodology.

Is It Worth the Money?
Although it lacks the integration at this point that would make it a compelling buy, AllData Advisor could still be a useful tool for many advisors. One cannot ignore CashEdge's claim that aggregated clients end up converting substantial held-away assets. If you can uncover anywhere near the assets that CashEdge claims, and if you can convert even a fraction of those assets, the AllData Advisor will pay for itself in no time.

Aside from the obvious opportunity to convert held-away assets, AllData Advisor can provide you with additional information that will allow you to do a better job of planning for your clients. Add to that the client portal and the tech-savvy image it will help your firm project, and I can see how AllData Advisor could be an asset to your firm.

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