ByAllAccounts Survey: Account Aggregation Important for Small Advisor Firms

Process is used to populate portfolio management and performance reporting technology

A ByAllAccounts survey of advisors conducted in June showed that financial account aggregation was used, daily in many cases, in small firms to populate their technology solutions; it was ranked as "Very Important" or "Important" by 88.1% of respondents.

Account aggregation collects and consolidates data on a multitude of accounts from many custodians, and transforms that data into a consistent format for use in a back-office system for use in financial analysis, reconciliation, and reporting. According to ByAllAccounts, account aggregation "enables advisors to efficiently monitor and advise on held-away assets, create a comprehensive quarterly report, and bill for that value-added service."

The Advisor Technology Solutions Survey of more than 500 advisors in a wide range of office types that included RIAs (53.9%), wirehouses (8.8%), independents (16.6%), and others, asked for the top five essential technology solutions. Performance management/performance reporting led the list at 83.6%, followed by CRM tools/client reporting (71.2%), trading (57.4%), financial/estate planning (56.8%), and rebalancing/asset allocation (51.2%).

A substantial number of respondents imported account-level data into each of these, with portfolio management/performance reporting leading the way at 75%; of those, 68% updated those systems daily. Almost half (45%) of respondents use account aggregation technology to populate their performance management/performance reporting systems, "making it an increasingly important part of the overall technology mix for many RIAs." The survey concluded, "Technology, such as account aggregation, is allowing more advisors to start out on their own with efficiency and strategic advantage."

Respondent firms ranged in size from 1-5 people (76.3%) to 250+ (2.1%), with assets under management ranging from less than $25 million (22.8%) to $100 billion or more (1.1%). The majority have under $500 million (80.8%), and a large segment of respondents fall into the $100 million to less than $500 million size (28.9%).

Read a story about a ByAllAccounts survey on data aggregation from the archives of InvestmentAdvisor.com.

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