What is aggregation?

Aggregation on the futures markets is a combination of all the futures positions held or controlled by a single operator or group of traders in a single aggregated position. However, aggregation in the sense of financial planning is a time-saving accounting method that consolidates an individual’s financial data from various institutions.

Aggregation is becoming increasingly popular with advisers when they manage client accounts because they are able to discuss accounts with the client in a clearer and easier to understand manner before breaking down the account into its respective categories.

Key points to remember

  • Financial advisers and banks aggregate their clients’ information so that they can easily produce a clear picture of that client’s finances. In addition, it adds an additional level of protection for the customer.
  • Consultants and planners hit a wall when their clients don’t give them full access, and they argue that it doesn’t give them the overview they need to give specific advice about their clients’ finances.
  • Aggregation is beneficial to both parties, but the benefit is accrued to the financial advisor, who may or may not see a gap in a client’s services where he or she may be able to sell a product or service.

Functioning of the aggregation

Financial advisers use account aggregation technology to collect position and trade information from retail accounts of investors held at other financial institutions. Aggregators provide investors and their advisers with a centralized view of the investor’s complete financial situation, including daily updates.

Financial planners manage managed and unmanaged accounts. The managed accounts contain assets under the adviser’s control which are held by the adviser’s custodian. Planners use portfolio management and reporting software to capture customer data via a direct link to the custodian. It is important for the planner to have all the accounts, since grouping them without the entire collection would paint an inaccurate picture of that client’s finances.

In addition, accounts managed by nobs contain assets which are not under the management of the advisor but which are nevertheless important for the client’s financial plan. Examples include 401 (k) accounts, personal checking or savings accounts, pensions, and credit card accounts.

The adviser’s concern regarding managed accounts is the lack of accessibility when the client does not provide login information. Advisors cannot offer a comprehensive approach to financial planning and asset management without daily updates to unmanaged accounts.

Importance of aggregating accounts

Account aggregation services solve the problem by providing a convenient method for obtaining the current position and transaction information on accounts held at most retail banks or brokerages. Investor confidentiality is protected, it is not necessary to disclose their personal access information for each unmanaged account.

Financial planners use aggregated account software to analyze a client’s total assets, liabilities and net worth; income and expenditure; and trends in assets, liabilities, net worth and transaction values. The advisor also assesses various risks in a client’s portfolio before making investment decisions.

Effects of account aggregation

Many aggregation services offer direct data connections between brokerage firms and financial institutions, rather than using consumer banking websites. Customers give their consent to financial institutions by providing personal information for all of the services.

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