Advicent, a financial planning platform for advisers, has teamed up with data-analytics and aggregation company Quovo, marking the latest integration relationship in the financial technology space.
While the collaboration is likely to be beneficial for both companies, the move points to a larger trend that advisers can take advantage of: software automating the process of data aggregation.
Collecting information on client investments and held-away assets has been happening in the industry for decades, as it is the only way to create a truly comprehensive financial plan. The only problem is that advisers, for the most part, have been doing it manually, squandering precious time and resources in the process.
"It hasn't happened through software," said Lowell Putnam, founder of Quovo, which recently
finished a round of funding with some big names in the industry.
“[Advisers] have been writing out what they own, where it is, how it has performed, [and] where they spend it,” he said. “Data aggregation is a part of financial planners' daily lives, but it's really painful because it's done all manually.”
Perhaps that's why some advisers aren't taking full advantage of the technology that is available to them.
An Aite Group study from August 2014 found that only 36% of the 400-plus advisers who responded said that their clients can aggregate external accounts, such as bank and credit-card accounts, by using the adviser's software, to see their full financial picture.
That's because advisers think
data aggregation, including asking clients to take the time to input their information and ensuring that the data is accurate, is more work than it's worth.
But of all the potential pain points for data entry, time and effort were most important to advisers: 42% of the 400-plus respondents said that the amount of work it required of advisers and staff was one of the top-three paint points, followed by 31% who said that it was updating the financial plan and 29% who said that the entire process just takes too long.
"They have to handle more customer-service requests from clients, so managing that has led advisers to not push it as well," said Sophie Schmitt, senior analyst of Aite Group.
Ms. Schmitt said that some firms handle data-aggregation issues, for example, out-of-date or incorrect data. BlueLeaf and Wealth Access are two examples of personal financial data providers that work with advisers to aggregate information.
"There is no doubt advisers are going to need to embrace these tools going forward as they need to become more like wealth managers," she said.
That's where financial planning software providers, such as Advicent, MoneyGuidePro and Fidelity's eMoney Advisor come in.
MoneyGuidePro recently
integrated with Wealth Access, a personal financial management platform, in a push for more sophisticated data analytics.
According to an
SEI study of more than 1,000 advisers, 58% said that account aggregation is part of the services that their financial planning software vendor provides. A little more than half of those advisers said that they use such a service for 50% or more of their clients.
Advicent has taken strides toward enabling advisers to create a more comprehensive plan by acquiring European personal financial management tool Figlo and bringing it to the U.S.
Cory Olson, senior product director at Advicent, said that Quovo will pair nicely with Figlo by aggregating the data from clients for advisers to create a more effective, customized financial plan.
"A big reason advisers haven't taken advantage of the technology is that it hasn't been there in an easy-to-consume way," Mr. Olson said. "If consumers don't use it to enter information, the adviser doesn't get data.
"Consumers are ready for this," he said.
Some forward-thinking advisers couldn't imagine not taking advantage of data aggregation.
Vincent Barbera, a managing partner at Newbridge Wealth Management in Berwyn, Penn., said that he is surprised more of his peers don't use data aggregation.
Mr. Barbera used Morningstar's ByAllAccounts at another firm, but when he started his own, he began using Quovo through Orion Advisor Services. He also uses eMoney as his financial planning platform.
He said that when he first started, he tried to input all of the data manually but it wasn't seamless.
"The number of man hours I was spending doing that is pretty significant," Mr. Barbera said. "They add up, and how confident are you really with the data?"
While there were once more obstacles for implementing data-aggregation software, such as the cost of these programs and the difficulty in using them, he said advisers should be using these tools.
"If your business is in providing advice, it needs to be a part of the process," Mr. Barbera said.
