Aggregation

Aggregation in the futures markets is a principal involving the combination of all future positions owned or controlled by a single trader or group of traders. Aggregation in financial planning is a time-saving accounting method that consolidates an individual’s financial data from various institutions. It is increasingly popular with advisers for servicing clients’ accounts.

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

Financial planners handle managed and unmanaged accounts. Managed accounts contain assets under the advisor’s control that are held by the advisor’s custodian. Financial planners utilize portfolio management and reporting software for capturing a client’s data through a direct link from the custodian.

Unmanaged accounts contain assets that are not under the advisor’s control but are important to the client’s financial plan. Examples include 401(k) accounts, personal checking or savings accounts, pensions and credit card accounts. The advisor’s concern with managed accounts is lack of accessibility when the client does not provide log-in information. Advisors cannot offer an all-encompassing approach to financial planning and asset management without daily updates on non-managed accounts.

Account aggregation services solve the issue by providing a convenient method for obtaining current position and transaction information about accounts held at most retail bank or brokerage. Because investors’ privacy is protected, disclosing their personal-access information for each non-managed account is unnecessary.

Financial planners use aggregate account software for analyzing a client’s total assets, liabilities and net worth; income and expenses; and trends in assets, liability, net worth and transaction values. The advisor also assesses various risks in a client’s portfolio before making investment decisions.

In late 2015, banks such as J.P. Morgan Chase & Company, Wells Fargo & Company and Bank of America Corporation disrupted data flow to certain aggregation services utilizing clients’ usernames and passwords when accessing the banks’ websites. This action may have increased the sites’ traffic and hindered other clients’ access to their personal account information.

To alleviate the issue, many aggregation services arrange direct data connections between brokerage firms and financial institutions, rather than utilizing the institutions’ consumer-facing websites. Clients give financial institutions their consent by providing personal information for the aggregate services.

Banks face increasing concerns when protecting customers’ information amid website hacking. However, working with aggregators is in their best interest for greater customer service.