How to Use Financial Aggregation Software for Your Clients

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Smart Asset
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Clients may come to you with financial assets that are scattered across different bank accounts or investment accounts. Financial aggregation software brings all of your client’s money into view, enabling you to make more informed decisions when offering advice. Utilizing aggregation software can offer some advantages for both you and your clients, though there are some potential downsides to consider.

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What Is Financial Aggregation Software?

Aggregation software is designed to offer advisors a 360-degree view of a client’s financial situation. These software programs pull clients’ financial data from various sources and compile information in a centralized dashboard. The types of accounts you can collect information on include:

  • Bank accounts
  • Brokerage accounts
  • Retirement accounts
  • Credit cards
  • Mortgages
  • Student loans
  • Auto loans

You can view assets under your management as well as assets held away and see your client’s liabilities at a glance.

In that respect, financial aggregation software programs for financial advisors aren’t that different from consumer-facing aggregation apps. The difference is that software programs for advisors offer a greater range of functionality as a money management tool.

Benefits of Using Financial Aggregation Software

Aggregating financial data can offer some advantages to advisors. The ability to see all of your client’s account information in one place is at the top of the list.

Again, when you have a full understanding of a client’s financial position it becomes that much easier to advise them. There are no surprises since you can see the entirety of their assets and liabilities. That enables you to identify opportunities for making impactful adjustments to their plan and/or generating additional revenue.

Using financial account aggregation software can save time since you don’t have to track down information or enter it into your CRM software manually. That can help streamline the onboarding process, allowing for a better client experience. The aggregation software pulls and updates information for you automatically, leaving you free to manage other tasks.

Clients may appreciate being able to view their finances in real time through a user-friendly online dashboard. They (and you) can track the progress they’ve made toward their financial goals. And if you see that a client is veering off-course, you have all the information you need to offer personalized advice that will get them back on track.

That level of functionality can encourage higher levels of client engagement. In turn, that may lead to better retention rates if clients are satisfied with the tech solutions that you’re able to offer.

Drawbacks of Account Aggregation

The primary disadvantages of using financial aggregation software to manage client accounts center on implementation and compliance. From an implementation perspective, you must first decide which software program to use, determine how to integrate it with the rest of your tech stack and ensure that the members of your team and your clients understand how to use it.

On the compliance side, it’s your responsibility to be aware of where the data being aggregated lives online, who will have access to it and how that information is being used. In 2023, the Securities and Exchange Commission (SEC) adopted rules on cybersecurity risk management for registered investment advisors. The rules stipulate that RIAs must:

  • Disclose to the SEC and investors cybersecurity incidents occurring within the past year
  • Conduct material assessments of cybersecurity risks and incidents and develop risk management strategies that are designed to counter those risks
  • Complete appropriate due diligence on potential investments to assess cybersecurity risk
  • Encourage transparency by communicating risk management strategies to investors
  • Ensure compliance with these rules, including the development of cybersecurity risk management programs
  • Thoroughly vet the cybersecurity protocols of any third-party company service provider they choose to work with, including account aggregation platforms

Ensuring that your firm is operating in compliance with these rules at all times is crucial, as failure to do so can result in penalties.

Aside from those considerations, there’s also the possibility that your client will have assets or liabilities that cannot be aggregated. For example, they may have accounts at a bank that isn’t compatible with the software. Or they have physical assets, such as collectibles or antiques, whose values cannot be determined by the software. That could create a blind spot in your planning if you’re unaware of those assets.

Using Financial Aggregation Software to Serve Your Clients

There are two primary ways to use financial aggregation software to manage client accounts. The first is as a financial planning tool; the second centers on developing strategies for managing risk.

As you create or adjust client financial plans, aggregation software allows you to:

  • Measure a client’s total assets and liabilities from the accounts being aggregated
  • Determine and track net worth as assets and liabilities increase or decrease over time
  • Review the client’s banking history to gain a deeper understanding of their income, expenses and spending patterns

You’ll have the most up-to-date information at hand as you develop financial plans to help your clients achieve their short, mid and long-term goals. Nothing is left out if your client has assets held away, and you may be better positioned to develop plans that encourage them to move those assets to your management.

Risk management is the other side of the coin. Having client account information in a centralized location allows you to assess risk across all of their investments. You can then use that assessment to make recommendations to the client that align with their risk tolerance and risk capacity.

How to Choose an Account Aggregation Software

There are certain factors to consider when implementing account aggregation software in your business. Specifically, it’s important to weigh:

  • Safety and security
  • Integration with other software programs or applications you’re using
  • Data accuracy and error rate
  • Software functionality and average downtime
  • Features, including reporting and access to visualizer tools
  • User experience for both you and your clients
  • How frequently client data refreshes
  • Pricing
  • Client-facing service and support
  • Advisor-facing service and support
  • Compliance checks

Scheduling a demo is an opportunity to take the software for a test drive. Many of the top financial aggregation platforms offer demonstrations to help advisors better understand the full range of features.

Frequently Asked Questions

What is a financial services aggregator?

A financial services aggregator compiles information from various sources to provide a snapshot of an individual’s financial picture. Aggregation apps are commonly used in banking to allow consumers to view all of their accounts in one place. Financial advisors can also use aggregation software to guide their decision-making when offering advice to clients.

What is the purpose of account aggregation?

The main purpose of account aggregation is to allow the consolidation of financial data in one place. In financial planning, account aggregation enables advisors to view client information they may not have had access to before and clients can view the same details through a personalized portal or dashboard.

Is account aggregation safe?

Financial aggregation tools are typically designed with user privacy and safety in mind, though like any other tech solution, they’re not always foolproof. Registered investment advisors who use these tools must take additional steps to ensure that their client’s data is protected in compliance with regulatory requirements.

Bottom Line

Financial aggregators can make your job easier by bringing client information to you, rather than requiring you to have to track it down. Offering this type of functionality can increase your firm’s value proposition if you’re hoping to retain or attract clients who are looking for a tech-savvy advisor.

Tips for Growing Your Advisory Business

  • Partnering with an advisor marketing platform can help you boost your visibility and gain more clients without tying up hours of your day. SmartAsset AMP (Advisor Marketing Platform) is our holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
  • Cybersecurity is just one area of compliance that RIAs need to be familiar with. Understanding the compliance rules that apply to your firm can help you avoid running afoul of the SEC. Hiring a chief compliance officer (CCO) can take the responsibility of ensuring compliance off your shoulders so you’re free to focus on serving your clients.

Article by Rebecca Lake, Smart Asset