The proliferation of so-called robo advisors is altering the competitive landscape. But because robos are not typically involved in more personal aspects of wealth management, advisors can expand their firms to include financial planning services as a way to competitively differentiate.

However, in order to construct a viable financial plan, an advisor must have a comprehensive understanding of the client’s total assets and resources. It doesn’t necessarily mean that the advisor has to manage them all, but she should have a complete picture of the client’s financial life, and data aggregation allows that to occur.

If you've heard the term data aggregation but aren't quite clear what it is, it is another term for what the industry first dubbed PFM: the collection of financial account information from various record-holding systems, which can include main advisor custodians (Schwab, Fidelity, etc.); insurance companies (for annuities and other insurance with a cash value); and other held away investor account types (401(k), 529, credit cards, banking checking and savings accounts). Providers include incumbents Yodlee (which was acquired last year by Envestnet), CashEdge, and ByAllAccounts, as well as newer firms such as Plaid and Quovo.

The data is collected, reconciled, scrubbed and then mapped to a single repository, a portfolio accounting system which yields an up-to-date, real-time report on the client’s entire portfolio, including individual accounts. It is presented to the adviser and the investor through financial planning software, or more recently a CRM.

Having a complete, inclusive, holistic view of a client’s total financial position offers numerous benefits to both advisor and investor alike, which is driving the adoption of data aggregation within the advisory community.


Offering financial planning services to clients can also be another source of revenue for an advisor’s firm by charging for the planning service. Plus, by having a full understanding of a client’s financial resources, there is an opportunity to assess and review how all their accounts are performing, opening the door to a discussion that could result in increased wallet-share in the future.

Offering data aggregation services to clients also accomplishes two other important objectives -- it is a way to differentiate one’s practice from the competition and it serves to meet ever-evolving client expectations.

Prior to the emergence of aggregation software, advisors had to rely on a manual process to summarize a client’s financial position. Clients were asked to submit monthly statements and then the advisor had to key in all the information manually -- a process that is very tedious, inefficient and time-consuming, not to mention that the information is immediately stale until the next time that statements are received.

Utilizing aggregation software is a much more efficient and scalable method to interact with clients, and to access account information in a timely way. Today’s clients expect that their full account information will be available to them in real time, in a single location, on any device they’re using, and astute financial planners are providing that service for them.

For those advisors who choose to offer more comprehensive wealth management services including financial planning, the decision to utilize aggregation software is a relatively easy one. But despite its increasing prevalence, these services are not without some challenges.


First is the issue of data accuracy. A holistic view is only useful if the data is trustworthy and for a variety of reasons, accurate aggregated data is difficult to establish. Some information might be lacking; other information might be mislabeled or misunderstood.

Cost is another issue. Because it is becoming increasingly common for investors to have their assets held with multiple custodians in multiple accounts, the cost can quickly rise. Advisors can find economical ways to access aggregation as part of what’s bundled with existing financial planning software, such as eMoney or MoneyGuidePro.

Finally, there is the issue of complexity. There is a natural contention between the financial institutions that are trying to protect sensitive financial information and the aggregation software that is trying to find and collect it.

For security purposes, it might be normal protocol where a client’s password to the account expires every 30 days, after which the link breaks. An advisor would be unable to see the account any longer and is forced to reach out to the client to refresh their password -- an unenviable position for both the advisor and the client.

Despite these challenges, we have been offering data aggregation services to United Capital clients for some time. We believe it has benefited our practice through more complete and timely information about our clients’ financial lives. It still has its challenges, however the potential benefits are undeniable. 

Mike Capelle is chief strategy officer at United Capital. One of United Capital’s founders, Capelle is responsible for the company’s operating platform and technology and for driving enterprise innovation. 

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