How many accounts are enough to justify cost effective aggregation?

By Cynthia Stephens, VP of Marketing, ByAllAccounts on Tuesday, January 7th, 2014

If you are like me, you’ve postponed projects until after the holidays when things are less hectic.  I typically use lists to keep track of them and mentally de-clutter until I am ready to get to them.  But, I digress.

One reason why account aggregation may not have made it to the top of your list is because you don’t know whether now is the right time to pull the trigger on it and justify the investment of time, and money, to get started.

So, a good question to ask is how many accounts are enough to justify the cost of automated account aggregation?  The answer, which may surprise you, is that one account may be enough for your firm.  Let me explain.  You may already get access to most of the client data you need for reporting through your custodian. Perhaps you have fewer than 20 additional “outside assets” to report on.  Let’s make it even simpler.  In this example let’s say there is one outside account.

(In a recent survey 86% of survey takers said that reporting on all a clients’ assets was Extremely or Very Important.  Download results from a national survey Trends in Holistic Wealth Management.)

A better question to ask is “how long does it take someone to manually enter data each month?”  Sometimes one large account may have frequent transactions during a reporting cycle.  For example, a $3 million trust account with multiple holdings (e.g., such as ETFs) can have more than 10 transactions per day.  It might take someone several hours per month to manually enter the transaction data from that single trust account.

Consider this regarding the above example: assume it takes someone 8 hours per month to manually enter those transactions.  If that person makes $30 per hour, one way to look at it is the firm is already spending $240 per month on manual data entry for one account.

Now consider the opposite end of the spectrum in terms of account volume.  Let’s say your firm has 25 outside assets that are primarily employer sponsored retirement plans such as 401(k) or 401(b).  These will likely have fewer transactions on a monthly basis than in the first example.  Perhaps it only takes 30 minutes per account to log into the account online, collect the necessary information and enter it into your reporting platform.  Do the math: with 25 accounts and 30 minutes per account it will still take someone roughly 8 hours per month for manual data entry – costing the firm $240 per month.

In the end, the best question to ask may be what is the opportunity cost of not having automated account aggregation?  In other words consider what other activities are not getting done, or are being postponed, because the operations team has to spend time on manual data entry. Making sure that each person in a firm is spending time on the best activities for the business, those that have the highest business value, is a project that should be at the top of each of our lists in 2014.

If you are considering aggregation in 2014 and want to do more due diligence on what makes the most business sense for your firm, read our Daily Checklist. It gives you a step-by-step guide on what to expect on a daily operational basis when you use ByAllAccounts.

You may also be interested in:

Select a time on your calendar to speak with our Jhan Frias to learn more

Read educational guides on account aggregation in our Online Learning Center

Watch a 2-minute video on aggregation

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