TREND 1
89% of Wealth Management Firms Use Some Type of Data Aggregation
Insights and Actionable Intel
- Data Aggregation is increasing in prevalence—more than two thirds of firms use it for both externally managed and non-managed accounts
- Many firms find data aggregation is filled with pain and frustration, but also see it as incredibly valuable to the industry
- More firms are outsourcing the data aggregation function
- Take Action: For held away accounts, large firms can form an aggregation service team. For externally managed accounts, leverage a Canoe or PCR as a service bureau to reduce the frustrations with the status quo.
TREND 2
64% of Firms Do Not Charge Clients for Data Aggregation Services
Insights and Actionable Intel
- Of the firms that charge, 80% charge their full rate and 20% charge a reduced rate
- Reasons for not charging include the hope for retaining future assets, incorporating it as part of a multi-generation strategy to develop client relationships and using the information to win new business
- AUM-based pricing for advice is evolving with subscriptions, retainers for planning and unbundling of asset management and financial planning. Whether firms charge for data aggregation or not, they must provide value at or above client expectations, which might be higher than they think.
- Take Action: Weigh the risks: what if the data shows you are not outperforming your competitor?
TREND 3
85% of Firms See Data Aggregation as an Area for Growth
Insights and Actionable Intel
- As asset management cedes to financial planning as the lead service, holistic data is required to provide holistic advice.
- Data is key for growth as firms branch out into new areas of revenue including cash management, private banking, lending, private equity, and general consolidation and aggregation of all the financial information that we all create every day at an increasing rate.
- Clients expect data aggregation, much like we expect a cable TV in our hotel room—79% of firms say either their clients or both they and their clients initiate the linking of held-away accounts.
- Pain points are many: information security concerns; continued maintenance due to account password changes/broken links; data quality inconsistencies; not all held-away accounts can be aggregated leading to an incomplete picture; and operational costs are unclear.
TREND 4
One Size Doesn’t Fit All
Insights and Actionable Intel
- Not all clients need data aggregation or need it at the same level.
- Overall data helps firms gain a complete view for financial planning advice or reporting and asset allocation advice, offer a better client experience and eliminate manual entry.
- Today’s data aggregation tools aren’t perfect, but they’re better than manual entry in most cases. Firms must be realistic about what they can and can’t provide and set realistic expectations for their clients.
- Take Action: Be smart about behaviors vs assets—use the data to understand how life events affect transactions.
