Another Reason to Adopt Account Aggregation

By Amy McIIwain, President, Financial Social Media on Thursday, November 11th, 2010

In my previous post. I highlighted pending federal legislation that gives advisors a fresh incentive to adopt automated monitoring of held-away accounts. Should the legislation pass, the number of held-away accounts could grow dramatically, increasing the workload required to keep portfolio accounting systems accurate and up-to-date with account activity.

Now, a recent trend in the retirement plan marketplace presents a second reason why advisors should make the switch to account aggregation soon.

In recent years, clients have enjoyed a growing number of self-directed options for employer-sponsored retirement plans. Self-directed plans, such as 401(k) and 403(b), allow account owners a wider array of investment options, including individual stocks, ETFs, and real estate. Options, futures, derivatives, and other leveraged investments (including selling short or buying on margin) are prohibited by ERISA regulations.

Compared to retirement plans that are limited to just a dozen or so mutual fund investment options, self-directed accounts tend to have increased account activity, including more frequent securities trades, income distributions, and reinvestment. This increased volume of transactions quickly becomes too large to effectively manage for advisors who still manually update account activity in portfolio accounting software.

This development in the retirement savings landscape, especially when combined with the legislation I blogged about previously, illustrates the growing need for advisors to adopt efficient and scalable account aggregation solutions. Without account aggregation, advisors and their back-office staff face an uphill battle to keep up with the growing activity and complexity of clients’ held-away retirement accounts. Here is just another reason to get ahead of the curve by implementing account aggregation now.


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 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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