Financial Advisor Marketing & Technology

Marketing & Technology For Independent Financial Advisors

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Account Aggregation For Advisors

An Advisor Products client emailed us yesterday asking about our account aggregation capabilities. Specifically, the question was about CashEdge.

Since we receive a lot of questions from advisors who would like to provide aggregated account information to their clients, I am going to answer some questions here.

The aggregation interface offered by Advisor Products comes with our Client Portal system.

Feeds from two account aggregation companies currently are integrated into Client Portal: ByAllAccounts and Advisor Exchange. CashEdge is not currently integrated with Client Portal.

ByAllAccounts is a Woburn, Mass. company founded by James Carney along with Martin and Ellen Dickau in 1999. Carney is the President and CEO. An entrepreneur who had succeeded in two previous tech start-ups—a systems integration firm sold for $50 million in 1992 and an engineering technology software company that went public in 1996—Carney was not involved day-to-day in the early years of BAA. The company, along with just about all of the aggregation vendors, foundered for a few years after the tech bubble burst in 2002.

About six years ago, Carney became more involved in day-to-day operations at BAA and it was purchased by State Street Bank in August 2004 at a time when State Street was considering opportunities in the wealth management business. But BAA was not a good fit for State Street after it backed away from the wealth management backoffice support business and in 2008 Carney and his partners bought back BAA.

Since then, BAA has grown by focusing on feeding reconciliation-ready data from held-away accounts into portfolio management software (PMS) systems, including Schwab PortfolioCenter and Advent Axys. By focusing on aggregating data clean enough for a PMS system, BAA has gained traction with about 475 advisory firms and is currently bringing in about 15 new advisory firms monthly.

Advisor Exchange of Glenview, Ill. was founded in 2006 by D. Keith Ross, a successful options trader. Ross began his career as an options analyst in 1976 after graduating from Princeton University. In 1979, he became a member of the American Stock Exchange and a registered options trader on the floor of the exchange. In 1983, Ross formed Ceres Partners, specializing in risk arbitrage and options market making. In 1988, he became a member of the CBOE and was a market maker until 1999.

With a background in electronic trading, Ross was drawn to the account aggregation business by its potential for growth. Ross struck a deal to license aggregation interfaces from Cash Edge, an account aggregation vendor, and has been building a platform for advisors leveraging CashEdge interfaces with about 7,000 banks, brokerages, credit card companies, qualified plans, and other sources.

Ventures like Advisor Exchange always take longer than expected, however. Advisor Exchange has been building its advisor platform for the last three years and is expected to release a new version over the next three months. About 125 firms now use AE’s aggregation system.

CashEdge, meanwhile, is showing renewed interest in the advisor market. In 2006, when it licensed its feeds to Advisor Exchange, CashEdge displayed little interest in the independent advisor market. CashEdge had been almost singularly focused on a successful system it built for cash management at banks. However, about 18 months ago, CashEdge hired Tom Roberts as a senior VP of its wealth management business and Roberts has expressed renewed interest in developing better systems for advisors.

The Client Portal system enables a revolutionary new way to manage clients: straight-through processing of client-associated tasks from your CRM, financial planning, and portfolio management software to your clients’ portals.

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