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  • Home>Practice Management>Technology>Data Aggregation Redux

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    Data Aggregation Redux

    The face of data aggregation services is changing, and a look at one new product shows how much.

    Joel P. Bruckenstein, 10/08/2009

    Of all the technology product niches I cover, perhaps none has been more vexing over the years than account aggregation. Aggregation has met with modest success on the retail side, but it has never really caught on in a big way with advisors. According to the 2008 Financial Planning Magazine Software Survey, 75% of respondents claimed that they did not use any data aggregation provider. Among independent RIAs, I suspect that market penetration is even lower.

    There are numerous reasons that account aggregation has failed to achieve wider advisor acceptance, many of them historical. When account aggregation companies first appeared on the scene, they promised more than they could deliver. Specifically, advisors came to believe, rightly or wrongly, that aggregation would consistently supply data that was complete and reliable enough to generate performance reports. That was not always the case.

    It is possible that early adapters of the technology made faulty assumptions as well. Many assumed that clients would jump at the chance to aggregate everything from bank account balances to frequent flyer miles aggregated on an advisor-provided Web site. Few did. Other issues plaguing early adoption included a lack of integration and high prices.

    Because many advisors had unrealistic expectations about what data aggregation could do back then, and because there was little demand on the part of clients for the service at the time, some advisors who were early adopters of the technology were disappointed. I suspect that some of this disappointment and skepticism lingers.

    While a few issues remain with regard to account aggregation, much has changed in the last eight or nine years. For one thing, aggregation sales personnel no longer tout the tracking of frequent flyer miles as a benefit of account aggregation. On a more serious note, while not perfect, the quality of the data supplied by leading firms has improved markedly over the last few years.

    As the data provided by aggregators becomes portable from one application to another, its value will increase, because it will reduce redundancy and decrease data entry errors. In addition, pricing has become more competitive, so the overall value proposition has improved.

    Against this backdrop, I was recently contacted by CashEdge and invited to try out their new AllData Advisor product. After briefly test driving the product I became convinced that AllData Advisor would be of interest to readers.

    An Introduction
    AllData Advisor is a Web-based data aggregation service for advisors powered by CashEdge, a leading provider of data aggregation services to banks, brokers, independent RIAs, and other financial service firms. The folks at CashEdge believe thatAllData Advisor can add a tremendous amount of value to the independent broker/dealer or RIA practice in the current environment. Competition is heating up and advisors are looking to differentiate themselves, and one of the ways to do this is by offering a product such as AllData Advisor, which includes a strong client component.
    Perhaps more importantly, with assets under management still way below the levels of a few years ago, advisors are looking to attract new assets. AllData Advisor can help attract new prospects and it can also help reveal held-away assets in the hands of current clients that potentially can become a new revenue source for you. In fact, CashEdge claims that advisors using this product, on average, capture $500,000 in previously held-away assets for every client aggregated. If that number is true, it wouldn't take much to cover CashEdge's $1,500 annual fee, which covers an unlimited number of accounts and an unlimited number of clients.