If your fiscal year ended on December 31st then someone at your firm is likely in the process of preparing to submit an ADV form to the SEC. Perhaps this is why I’ve received a few recent calls from attorneys asking about custody on behalf of their advisory clients. Or, maybe the recently issued Examination Priorities for 2014 is on everyone’s radar. In either case you may be wondering how the SEC feels about account aggregation. Let me answer that question for you.
Data aggregation technology and compliance
The SEC contacted ByAllAccounts last year to know how our data aggregation solutions work, and how these solutions impact our advisory clients vis-à-vis the Custody Rule. Here are the highlights of our CEO’s conversation with the SEC:
- Audits: Upon learning about our solutions, the members of the SEC expressed the opinion that using our data aggregation solutions would cause no problem whatsoever for advisory firms being audited.
- Data Aggregation Mission: James reiterated to the SEC that ByAllAccounts solutions are for the express purpose of gathering data for compilation and reporting, not for trading.
- Custody: We discussed the fact that when advisors get their clients’ credentials, it can be a key step in setting up the account aggregation model. We also re-affirmed that even when the advisor is in possession of these credentials, he or she does not necessarily have custody. Such as when, the advisor still can’t make withdrawals from the account, or only has permission to transfer funds to an account with the same account name or registration at a qualified custodian.
Setting up account aggregation with/or without client credentials
By now, you are probably aware that ByAllAccounts provides a choice of how to setup accounts for aggregation depending upon your firm’s business model. There are three options:
1. You do not have client credentials. Your clients enter their Login IDs and passwords using our web-based account setup application
2. You do have client credentials. You do the account setup on behalf of your clients (and may still not have custody, per the description above)
3. You have advisor-level access to an institution or data source. ByAllAccounts can use this to access accounts online. Some advisors prefer this to using individual login credentials (i.e., PINS and passwords) because it saves chasing individuals to update their account credentials. Advisors can contact their custodian to determine if advisor- level login is offered to manage all their accounts under one login that the advisor controls, and to be setup with this type of login.
To receive a list of institutions that offer advisor-level access please contact email@example.com.
Security and privacy
ByAllAccounts has strict security and privacy measures in place. If you’d like to learn more about them watch a 1-minute video presented by our Chief Technology Officer Martin Dickau. Or complete a brief form to contact us and learn more (please briefly indicate in the comments section what you’d like to know more about).
You might also be interested in:
- Download a whitepaper: “Are you compliance ready?”
- Listen to Sheryl Rowling speak about preparing for an SEC audit