As a financial professional, you’re likely already using account aggregation services to pull together clients’ financial data. Aggregation is an essential part of a modern planning experience in this way. But there’s a lot that goes on behind the scenes that planners could benefit from understanding—both for finding new aggregators and for evaluating your existing one—as firms everywhere try to improve their client experience.

Today’s financial planning clients expect more out of the relationship with their advisor. They expect a seamless digital experience that’s personalized to their unique circumstances. Financial advisors must have a complete, holistic view of the client’s financial life to deliver this kind of advice, and that’s where account aggregation comes into play.

There are a few things to learn about account aggregation that can help enhance the value you deliver:

• What account aggregation is
• Why account aggregation is important
• How account aggregation works
• What to consider when looking at aggregators
• Aggregation’s role in elevating your value proposition

Understanding a little more about how aggregation works, and the things you should consider in an aggregator, can help you deliver a more holistic planning experience.

What Is Account Aggregation?

Account aggregation is a service for financial advisors and their clients that consolidates all of an individual’s financial information into a single platform. This allows for a comprehensive view of an individual’s financial picture, making it a foundational aspect of financial planning.

The process of account aggregation, sometimes referred to as financial data aggregation, depends on the aggregator’s established connections with various financial institutions. The type and scope of these connections vary from provider to provider. Financial data is regularly accessed through these connections so it can be presented in a single, unified view.

Why Is Account Aggregation Important?

Account aggregation offers benefits to clients and financial professionals alike. For clients, the primary benefit includes the ability to see their whole financial picture in one place—something they’ve likely never had the privilege of seeing before. It can also simplify the work of providing all the necessary information a planner needs to create a comprehensive plan.

For financial professionals, these same benefits apply. The holistic view of a client’s finances is essential for planning, but it also gives financial professionals the ability to identify and capitalize on held-away assets. Additionally, if the aggregator is regularly updating financial data, not only is the legwork of onboarding greatly reduced, the work of continuously updating a client’s financial info is also lessened. Plus, a planner will always have the most up-to-date data to work with, which helps them make more personalized recommendations.

Simply put, account aggregation gives financial professionals and their clients a complete and accurate look at the client’s information, which plays a key role in more productive planning relationships.

How Does Account Aggregation Work?

Every aggregator has the same end goal of consolidating financial data into a single source, but not every connection is the same. In today’s world of account aggregation, there are three primary ways in which accounts are aggregated.

1. Parsing: Also called screen scraping, this method involves using a client’s username and password to directly access a provider’s website. This was once the primary way aggregation worked, but today it is not the preferred method because it involves collecting and storing a client’s credentials. Additionally, it requires clients to enter their credentials repeatedly over time to maintain the connection. Most aggregators are working to eliminate the use of this type of aggregation, but it is still relied on by some providers more than others.

2. Bulk file feed: This method is mostly used at the advisor level for aggregation. For instance, if an advisor has a book of business with thousands of data points, the aggregator could take a digital file with this information and directly consolidate it into the advisor’s planning platform. Bulk file feeds are common for this type of aggregation. It’s actually one of the oldest methods of data sharing, but despite being old, it still stands as one of the more secure ways to aggregate data.

3. API connections: Connections built via API, especially those that use what’s called 3-legged OAuth, are the safest and most secure forms of account aggregation. In this method, the client enters their info one time and the aggregator receives a token which is used to access all financial institutions. Because of this, client credentials are not stored and clients gain control over the way their data is used, and the connections themselves are far more stable than those that rely on parsing or screen scraping.

To financial advisors and clients, the front end looks the same no matter which type of aggregation is used. But even though they look the same, there is a big difference in the way accounts are aggregated and the resulting impact on the client’s experience.

5 Considerations for Financial Advisors Evaluating Aggregators

For financial professionals who are considering working with a new aggregator, or want to evaluate their current aggregator, there are actually a number of different things to consider.

1. Safety and security. The safety and security of your clients’ data is paramount. You’ll want to work with an aggregator that leverages 3-legged OAuth in their APIs to connect to financial institutions. As I mentioned before, 3-legged OAuth keeps client credentials secure by using tokens for data access instead. Not only is this technique more secure, but it gives clients complete control over how and where their data is shared. Changing their data preferences is as simple as changing their account settings. For safety and security, even with outside financial services, 3-legged OAuth is the gold standard.

2. The volume of direct feed connections. API connections, along with bulk file uploads, both qualify as direct feed connections. Both types of connections are stable, reliable, and secure. Parsing-based connections, which will inevitably be required to connect to some small financial institutions that don’t have the overhead to create APIs, should be minimized. These connections aren’t as stable, and again, require storing client credentials. Be sure to evaluate the number and percentage of an aggregator’s connections that are based on direct feed methods, as well as whether or not the aggregator has a dedicated plan to transition more of their connections in the future. This will provide the best experience for your clients, as they won’t experience disruptions from broken connections and they won’t have to enter their credentials repeatedly over time.

3. Ease of use for clients. The client experience is essential at every step of the planning process. Particularly in the upfront work of onboarding, it’s important to assess an aggregation service for it’s ease of use. How many times are clients expected to input their data? Is it easy for them to go through the process of providing their credentials? Account aggregation is an unavoidable part of planning and it should be as streamlined as possible for the client. Safe, secure, API-based aggregation that gives clients control over their data will provide the best possible experience.

4. Frequency of data updates. Looking at the quantity and type of connections in an aggregation service is important, but just as important is the frequency of data updates. Some aggregators update every account type every night. Other aggregators only update select account types daily, while others are updated weekly or even monthly. A modern planning experience demands the most up-to-date data that allows you to personalize your recommendations to a client’s current circumstances. Be sure to investigate how often account data is updated across every account type.

5. Service and support. The level of service you receive from your aggregator is crucial. Take a look at their help or contact page—does it only have an email address listed? That may be a problem. When you want a new connection added, you’ll want your voice to be heard. And if there’s ever an issue with a connection, you’ll want prompt communication and resolutions for your clients. When you consider aggregators, don’t forget about the human element—the support professionals who will help you when you need it most.

While there may be other things to consider, these five things have the most direct impact on your business and your client experience.

Account Aggregation and Elevating Your Value Proposition

The ability to quickly and securely consolidate financial data, and keep it up to date with little input from the client, is becoming table stakes in a modern planning experience. Account aggregation happens entirely behind the scenes, but it has a direct and significant impact on the planning experience.

Providing financial advice with a holistic view of a client’s finances will help you deliver more value in your relationships, driving loyalty and retention over time.

If you want to learn more on this topic, keep reading about the ways in which account aggregation can help you grow your firm.

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