How to Boost Managed Assets Using Clients’ Financial Data

By Martin Dickau, CTO, ByAllAccounts on Wednesday, December 28th, 2011

Connecting all the data points in your clients' financial lives is key to unlocking new assets. Getting all those data points in the first place doesn’t have to be a grueling task.

Everyone in today’s wealth management industry has access to more information than all their predecessors put together, leaving many advisors in the paradoxical position of needing even more data while they struggle to use what they already have.

Most of the advisors I have been talking to either have tried to ignore the growing need or have tried to satisfy it the only way they know how: by brute force, hiring staff to go collect the information by hand.  The phone calls I am getting tell me neither camp’s approach is particularly successful.  Market conditions and increased scrutiny make ignoring the need impossible, while collecting information by hand is slow, error-prone, and costly.  

Advisors  who need to pull in data fast from multiple vendors -- custodians, retirement plan administrators, brokerage platforms --  are desperate, but hopeful: Can account aggregation help?

When I get these calls, I find myself having to challenge plenty of preconceptions before we can get down to business.

1.) All account aggregation solutions are the same. False. Account aggregation is a technology on which solutions are built.  I like to draw a comparison to motor vehicle technology.  Would you go buy some motor vehicle technology?  Of course not.  If you need to commute to work, you might evaluate sedans.  If you need to haul dirt and debris from a construction site, you might look at dump trucks.  You wouldn’t compare a sedan to a dump truck, nor would you think any less of a sedan for its lack of debris-hauling capacity or of a dump truck for its lack of passenger room. 

2.) “Screen scraping” cannot deliver good data. False. “Screen scraping” refers to harvesting information from web pages, i.e., what you see on the screen.  Since web pages are usually designed to look good, not to deliver information in a way that’s easy for a computer to read and understand, harvesting information from them can be difficult.  But these pages also often combine information from several different systems, making their information more complete and robust than a more easily understood download from one of those systems.

3.) There is a universal financial data standard. False. Every major vendor in the industry records, stores and delivers data in a different format. While there are some commonalities, the differences and gaps can be big enough to turn client accounts into gibberish -- and the more data you’re working with, the bigger the errors can get.

4.) It’s easy to convert data from their format to mine. False. Even if you have access to all the numbers you need, it’s a fair bet that they will need to fit into different fields in your database. Validating the fit manually can take weeks even if there are only a few hundred accounts involved. For all practical purposes, a relatively sophisticated automated conversion solution is required.

5.) My software dictates the sources I can use, and my sources dictate the software I can use. False. An aggregation solution should be able to take information from any source and deliver it to any platform, automatically converting data formats and also translating otherwise incompatible behaviors.

You can and need to work with all of your clients’ assets

So let’s take a look at how a solution built on account aggregation technology can help a beleaguered advisor.

Whether you have an internal audit requirement such as trade system reconciliation or personal trade compliance monitoring, or are simply trying to deliver better all-around service to your clients, rounding up data boils down to three tasks:

  1. Acquiring the information you need
  2. Moving the information into your platform
  3. Making sure the information you have is correct

Many advisors faced with these three tasks will apply brute force -- doing it by hand -- or admit defeat.

That’s where computers can help. 

Let’s start with a quick look at the first of the three things any would-be aggregato  needs to do:  getting to the information. 

The Internet brings us all connectivity once reserved to dedicated data center-to-data center phone lines, giving everyone in the industry instantaneous access to information housed at thousands of financial firms. 

The challenge here is that several different means are used to transmit all this data.  Some, like FTP and gopher, are now the preserve of high-tech specialists.  All are protected by multiple forms of encryption, and each requires different authentication to get in.

Add in the procedure for getting the data from each source, and the prospect of pulling the files for every client by hand rapidly becomes impractical if not impossible.

Each information source is different, so we need to have one script for each of thousands of sources.  Naturally, if the encryption or access procedure changes, the script breaks.

This means constant monitoring and updating, and most advisors have enough on their plates without watching what other firms are doing to their systems.

 The good news is that aggregation technology takes care of these problems.  Much as motor vehicle technology provides the ability to travel between two places, aggregation technology connects advisors to sources of information. 

Sedan or dump truck?  We’ll talk about bridging the gap between the information that’s available and the information that you need next time. 

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