Why Account Aggregation Is the Way To Go Now

By Bill Winterberg on Tuesday, November 9th, 2010

Advisors who deliver comprehensive investment management across a client’s total wealth know how important it is to monitor activity in “held-away” accounts, those not maintained with the advisor’s preferred custodian. Activity in held-away accounts is typically monitored through manual processes, but as assets under management grow, advisors quickly find they can’t keep up with the increased account data that needs to be gathered.

Account aggregation services automatically collect activity information in held-away accounts, and today there’s a new reason why advisors should seriously consider adding aggregation to their internal processes. Members of Congress recently proposed legislation to automatically enroll employees into employer-sponsored retirement plans, and if successfully passed, the number of held-away accounts may multiply rapidly in the years ahead.

In August of this year, Congressman Richard Neal (D-MA), chairman of the Subcommittee on Select Revenue Measures, introduced the Automatic IRA Act of 2010 (H.R. 6099) into the U.S. House of Representatives. A companion bill, S. 3760, was filed in the Senate by Jeff Bingaman (D-NM).

The two bills aim to increase voluntary employee contributions to employer-sponsored retirement plans by automatically enrolling workers. Employees would be free to opt out of the plan at any time, but automatic enrollment will increase the prevalence of held-away accounts for advisors to monitor, especially among younger workers and those who switch employers frequently.

While the outcome of this legislation is uncertain, advisors can get ahead of the curve by implementing account aggregation and increasing their capacity to monitor a growing number of held-away accounts.

Bill Winterberg is a CERTIFIED FINANCIAL PLANNER™ professional with past experience as a Registered Representative, Registered Investment Adviser, and an Operations Manager. He writes a technology column for Morningstar Advisor and is a technology contributor to advisors4advisors.com. Bill has been published in the Journal of Financial PlanningFinancial Planning Magazine, and other industry publications.  You can find him online at FP Pad – his Financial Planning and Technology Blog.



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