Advisors, no matter the size of their firms, should consider platforms where they have the option to pair big data analysis with account aggregation.
“If I am building a financial portfolio for clients, I want to get as much as data as possible in one place and present that data so they can see what we are doing,” says Ross Gerber.
He is the co-founder, president and chief executive of Gerber Kawasaki Wealth and Investment Management in Santa Monica, California.
There is no shortage of account aggregation tools on the market that have platforms that allow advisors of any size to put each client’s accounts from all or nearly all their financial institutions in one place. At the same time, those platforms allow advisors to access additional big data sources and then analyze the client’s wealth and planning options with all those sources information.
Envestnet | Yodlee Financial Data is among the most widely used and best-known providers of such a platform, and it has competitors, including Figo, Instantor, and Kontomatik.
“People like knowing they are there,” says Gerber about the new platforms with those tools.
Not all his clients have used the tools that he has added but many, particularly younger ones, have been drawn to them, he says.
The tools ideally allow clients to view all their accounts in a single location and evaluate the impact of their investments.
Jay Hummel, senior vice president of direct sales and service at American Century Investments in Kansas City, Missouri, says that his firm’s 600,000 clients also have not yet universally embraced account aggregation.
But he is eager to have more do so.
“We are trying to show them household asset allocation,” Hummel says about American Century Investments advisors’ rationale for proposing that clients use the Yodlee account aggregating platform.
“We believe clients have always focused on investable assets, but this allows a client to see their net worth This gives us the ability to talk to our clients in real-world terms,” Hummel says.
“It’s about simplicity,” he says. “All their information is in one place.”
Blake Wood, a senior vice president and director of product strategy at Envestnet | Yodlee Financial Data, says that his company’s tools also offer advisory firms ways to analyze their own market positions.
“You may be a single-person RIA; you can slice up the demographics and figure out [what others of your firm’s size are charging],” he says.
Firms can also see if they are controlling the risks of their clients as well as their competitors, Wood says.
At American Century Investments, the company has not yet, however, started using Yodlee’s tools to compare the firm’s performance to outside competitors.
“We just look internally to date. We are kind of early in our Yodlee journey,” Hummel says.
Miriam Rozen writes about the financial advisory industry and is a staff reporter for Law.com.
This story is part of a 30-30 series on savvy ideas on modernizing your practice.