FOR most advisors, a primary goal is to manage as much of a household's wealth as possible. By increasing the number of accounts managed, including retirement plans and annuities, advisors can create a more robust relationship with their clients and position themselves as the go-to person for holistic financial counsel. But for this to be possible, there must be a way to view all of a client's assets, not just those custodied with the advisor.

That was the challenge facing Rob Siegmann, chief operating officer and senior advisor with Financial Management Group, in 2008. At that time the Cincinnati-based firm estimated that $30 million resided in their clients' other accounts, mostly retirement deposits and annuities. The only way to get a look at these "held-away" assets was to ask clients for statements, and manually enter the data in a portfolio management and performance reporting system-a process many advisory firms currently use.

Instead of accepting this time-consuming approach, Siegmann and his colleagues turned to a technology solution: account aggregation, in this case provided by ByAllAccounts. Now data is collected nightly from clients' accounts, including 401(k)s, annuities, credit cards and mortgages.

With one click, advisors at FMG can see an overview of a client's portfolio and can then import the data into portfolio management and performance reporting software. The firm's advisors no longer report the performance of just mutual funds or retirement accounts, but the household's entire financial position.

With this system, advisors can design asset allocation strategies based on the whole portfolio, avoiding duplication between accounts. For Siegmann this means only concentrating on the best options in a client's 401(k) because asset allocation holes can be plugged by different options in other accounts.

"We are no longer treating 401(k)s as stand-alone

accounts, but are able to integrate them into the whole portfolio," Siegmann explains. As a result of changes in process, Siegmann's firm has been able to reduce held-away assets by half.

The Players

Results like these are the very reason advisors are keen to get aggregated account information. "It's very difficult for an advisor to give a comprehensive view of a client's performance without some kind of automated account aggregation system," says Bill Winterberg, a Dallas-based technology and operations consultant to independent financial advisors.

The two largest providers of account aggregation software are Advisor Exchange and ByAllAccounts. CashEdge also provides data aggregation, but an extra step is needed to format it for performance reporting and financial planning software, observers say. Another provider, Yodlee, does data aggregation for retail clients on the personal finance site, The data is not considered robust enough for use by financial advisors.

Aggregators get access to their data in different ways. Advisor Exchange, for example, relies on direct feeds. Clients are asked to enter their account information once and data is pulled nightly for advisors. The advisor never has account access. "Your clients can enter their information through your online portal," explains John Luciano, vice president of business development with Advisor Exchange. "We have a read-only view; there's no way to get into the accounts."

ByAllAccounts, on the other hand, uses multiple methods. In addition to the direct feed, the firm also uses a method called screen scraping, in which on-screen data is captured by the system. ByAllAccounts also has relationships with several custodians that provide access to accounts.

"We are ambivalent about how we get the data as long as we get the data," says James Carney, the firm's president and chief executive officer.

Getting Informed

Advisors say they can make more informed investment decisions if they know exactly what assets clients hold. This can also help them act as better fiduciaries. "If you are able to take the contents and structure of those accounts and bring them into a unified view, then you're able to make sensible tax management decisions," notes Jonathan Tiemann, founder and president of Tiemann Investment Advisors in Menlo Park, Calif.

For example, interest payments from fixed-income investments are taxed as ordinary income, while dividends and investments from stocks are taxed at a lower rate. The ability to isolate the less tax-advantaged investments in a retirement account can create a more tax-efficient portfolio. But this is only possible if advisors know what is in their clients' retirement accounts. In addition, with retirement accounts deposits come in with each pay period, so position sizes change constantly. It's difficult for advisors to stay on top of these changes without automating their views, Tiemann notes.

"Allowing advisors to look at overall portfolios, allows us to offer a more complex and personalized portfolio management offering," he says. "Without it, we're driven to cookie-cutter products."

Increasing Adoption

After considering the advantages of account aggregation, it might seem like a no-brainer to adopt an account aggregation system. Yet it's been a challenge for many advisors to jump on the bandwagon.

Account aggregation first debuted more than a decade ago. Advisors who took to it then were left disappointed by the myriad glitches and lack of reliability. "The software itself hasn't been the easiest to use," says George Tamer, director, strategic relationships with TD Ameritrade

Institutional. He adds, although, there have been big improvements since the early days, and it is easier for both clients and advisors to use. But, the early experience is still keeping many advisors away.

Thirty-eight percent of advisors say they use account aggregation software, according to the 2010 Financial Planning Technology Survey. But Joel Bruckenstein-an expert on applied technology for financial advisors, who analyzed the results for the magazine-says the true number is probably much lower. Other software solutions that advisors use, such as portfolio management and financial planning tools, include some type of account aggregation. But experts don't consider these options to be true account aggregation software that trolls a plethora of financial institutions and provides real-time data. Still, more advisors are using account aggregation with each passing month.

The adoption of true account aggregation provided by Advisor Exchange and ByAllAccounts is closer to 10%, observers say. Advisor Exchange reports a 60% increase in the number of advisors using its software from 2010, while ByAllAccounts says it has seen a 40% rise.


Of course advisors have their own ways of finding out about held-away assets and incorporating them into comprehensive portfolio management. The most common method is to ask clients for statements (monthly, quarterly, semiannually or annually), and enter the information manually.

There are several drawbacks with this method, though. First, manual data entry is time consuming. It can take many staff hours and, depending on the number of clients an advisor works with, this may not be realistic.

Second, there is the possibility of human error. "Anytime you enter data manually, mistakes can be made," says Winterberg.

Last, this method does not give the advisor up-to-date information. By the time the accounts are entered, they are already stale.

Another option is to acquire the passwords for different client accounts as a way to see what's in the different accounts. Again, there are several problems with this approach. At the core are compliance issues. "If the advisor gets account credentials, there's a possibility that the advisor may have custody of the account," explains Winterberg. "What prevents the advisor from changing passwords and withdrawing funds?" Indeed, the Securities and Exchange Commission imposes a different layer of regulation on advisors who do this. As a result, many choose not to.

Plus, even by accessing accounts directly, there are still a fair number of staff hours that must be dedicated to the task. "It's not a scalable process," Winterberg says.

As account aggregation software evolves, advisors are finding that they can do more with it. One service that would go a long way toward a seamless solution is to integrate the software with client relationship management tools. "CRM is the center of advisors' offices and their relationships with their clients," says Tamer. "You're going to see [aggregation] software get easier for advisors and be able to access the data in the CRM."

Both Advisor Exchange and ByAllAccounts integrate with Junxure, Redtail and Protracker, the largest of the CRM providers. Yet CRM systems aren't designed to do robust performance reporting, so challenges remain.

Of course account aggregation is not for everyone. Some practices have a small enough number of clients for whom manual entry works just fine. Tiemann, for example, does not use account aggregation, though he anticipates that he will as his business grows. Winterberg believes that advisors with fewer than 30 accounts may be able to get away without it. And others may not be making that many changes in asset allocation to need real-time account views.

But wealth managers who are eager to grow must ask themselves if they could do more and provide better service if they could see all of their clients' accounts. "There is big potential for growth in this market," Winterberg says. "More and more firms want to give that comprehensive view."