Data aggregation is currently one of the hottest topics in the financial services industry. As technology evolves and robo-advisers attempt to snatch clients, advisory firms are seeking new ways to stay competitive.
What better way than pulling in information on all of a client's finances in real time?
Although the notion of incorporating held-away assets into an adviser's view is decades-old, in general advisers have been slow to incorporate the digital account-aggregation services that software vendors offer.
Some even feel that the process may be
a waste of time.
Data-management experts are assuring advisers that's not the case.
"Most advisers have just a partial view of assets based on an investor's profile," said Stephane Dubois, chief executive of Xignite, a data analytics and aggregator. "Without knowing that, they don't necessarily provide that holistic advice."
There are ways advisers can dive into the data to reap the best results in a time-efficient manner.
Lowell Putnam, chief executive of Quovo, a data aggregator, said advisers need to first ensure that they are pulling data from all of the accounts a client has. Through Quovo's platform, advisers can invite their clients to share their financial information without sharing their login credentials.
"What you get out of it depends partially on what you and your clients put into it," he said, suggesting that advisers ask prospects and clients to share this data in order to enable the creation of customized financial plans.
“If they are willing to share that information with you, it streamlines the process,” Mr. Putnam said. “We find advisers do very well when they aggregate client accounts, even before they have become clients.”
Clients should be engaged in the process of gathering and applying data insights from the very beginning.
David Benskin, chief executive of Wealth Access, a data-aggregation platform, said that having an easy-to-use portal helps. It also keeps advisers competitive
against the likes of robo-advisers.
“Where robos excel is the client-engagement piece,” Mr. Benskin said. “The client has to be inspired or initiated and want to provide that information.”
The trick to getting clients to jump on board is to provide an immediate result or insight for the client so they see something positive come out of the process.
Mr. Benskin said that using data aggregation through software highlights identifiable objects like a high interest rate for a mortgage or too much credit card debt. They can analyze "the overall balance sheet," he said.
Mr. Putnam suggests providing something tangible to clients as well, such as a report of all of the aggregated accounts, even if it's at first a basic overview.
"It's a big ask to share credentials online, so clients need to see benefits," he said. "You have to be able to show something back to the end client."
Many software platforms have that aspect covered, especially as more and more vendors team up with one another.
AdvisoryWorld, a
financial planning, asset allocation and investment analysis software provider, recently announced that it will use data aggregator Intuit through their integration with Orion Advisor Services, a wealth management technology provider, to analyze client data.
"Advisers are getting more and more value out of this type of data," Mr. Wilson said. "It is only going to get better the way aggregators are opening up their pipes."
Indeed, they are. Take for example, financial services technology provider Envestnet, which
recently acquired data aggregator Yodlee, or Quovo, which recently finished up a
funding round with participants including Ron Carson, Steve Lockshin and Marty Bicknell.
Sue Glover, the founder and president of Susan Glover & Associates, a financial services technology consultancy, said there's a lot that advisers can and should do with the client data they collect — such as map available data with the goals of the client to provide a better story for what they have and where they're going. However, she wonders how much information is too much information.
"Do clients really want planners knowing their credit card balances or mortgages?" she said. "If they don't want to save, then it might become an issue or seem too much like Big Brother is watching."
While that may be a concern, advisers will need to stay focused on why they're incorporating personal financial data: to provide a better personalized plan for their clients.
"This isn't a Big Brother mentality," Mr. Putnam said. "It's really what we call the 'big bro,' a hand on your shoulder and giving advisers better insights to achieve your goals."
