I met with Tom Roberts last week; he's the general manager of wealth management at CashEdge Inc.
I've been fascinated with automated client data aggregation technology, which is what CashEdge has provided for years now.
It seems like such a no-brainer for advisers who want to build their practices because it gives them a window into a client's held-away assets so they can provide more holistic guidance.
With some many accounts in clients' portfolios these days, including annuities, brokerage accounts, cash, insurance plans, mortgages retirement plans, and on and on, it makes sense to have a dedicated provider doing the heavy lifting.
A small — and admittedly self-serving — survey published by CashEdge earlier this month provides some interesting insights.
The company polled 120 active advisers who have been in the business at least five years. Surprisingly, 92% of respondents said they had received an unsolicited inquiry from a client about account aggregation.
In addition, 91% said they are already performing some level of account aggregation for their clients. Of those, 58% are aggregating client account information manually from paper records — and nearly half these reported spending 11 hours or more per month on the process.
Also, 88% of the advisers that responded do provide advice on held-away assets, but only 40% of them are charging fees for it.
In case you were wondering: about 59% of the respondents in the CashEdge survey described themselves as RIAs, 29% were affiliated with independent broker-dealers and 12% were wirehouse advisers.
Background and prognostication
CashEdge is just one of several players in the field, which also includes Advent Custodial Data from Advent Software Inc. and ByAllAccounts, among others.
Each account aggregation platform collects data in its own way.
The first and least reliable method is HTML harvesting, also known as “screen scraping,” where the aggregation company's software logs into a client's account using their login ID and password, and copies the financial data from web pages. While the screen scraping method gathers only basic portfolio data, it is probably adequate for advisers who create simple financial plans.
Screen scraping may be rendered obsolete, however by increased security hurdles at custodians, the guardians and repositories of the data.
For example, multifactor authentication requirements — having to provide a second bit of information in addition to a password — can trip up the way some of the aggregators work.
That means that providers are going to have to rely more on direct feeds from the custodians themselves. These feeds number in the thousands.
For the consumer and maybe soon the adviser too
Next year, or by 2011, advisers probably will be able to see aggregated data provided by the likes of Mint.com, now owned by Intuit Corp. or more directly from the likes of Yodlee Inc., which performs the data aggregation for the Mint.com service.
Yodlee, while generally perceived as fitting only in the personal finance realm, also supplies its data to many large financial services companies. The company has over 23 million registered users.
I recently spoke with Joe Polverari, senior vice president at Yodlee who told me about some of the work they are currently doing.
“Financial advisers of every size and scope have a need for this data,” he said.
About 60% of Yodlee's data comes in the form of direct data feeds from custodians and the remaining 40% as a result of HTML data gathering.
“Our perspective is that our core competency is in unifying all this data and by the time and by the time we are done we have gotten it from about 120,000 types of accounts,” he said.
The company has introduced a software development kit for Yodlee 10, the latest version of its personal finance platform.
“All the Yodlee solutions all communicate to one another, whether bill payment or account balance, all of it sits under the Yodlee platform and what we have put on top of the platform of Yodlee 10 is the ability to customize this,” Mr. Polverari said.
“We are seeing a lot of our banking customers who want to segment all that into different applications,” he explained.
