Aggregation: Meaning, Importance, and Effects
Aggregation aggregates all futures positions held or controlled by one trader or group in the futures markets. However, financial planning aggregation consolidates an individual’s financial data from numerous organizations, saving time.
Advisors are increasingly using aggregation to discuss customers’ accounts in a clearer, more understandable way before categorizing them.
How Aggregation Works
Financial advisors employ account-aggregation technologies to acquire investors’ retail account positions and transaction data from other banks. Investors and their advisors can view their financial status with regular aggregator updates.
Financial planners manage and unmanaged accounts. Advisors control custodian-held assets in managed accounts. The planners use portfolio management and reporting software to gather client data directly from the custodian. Aggregating accounts without the whole collection would give the planner an erroneous view of the client’s finances.
Non-managed accounts also contain assets crucial to the client’s financial plan but not managed by the advisor.
Examples: 401(k), personal checking or savings, pensions, and credit cards. Managed accounts are inaccessible without login credentials, which worries the adviser. Advisors cannot provide comprehensive financial planning and asset management without daily information on non-managed accounts.
Importance of Account Aggregation
Account aggregation services make getting current position and transaction data easy for most retail bank and brokerage accounts. Because investors’ privacy is safeguarded, revealing personal-access information for each non-managed account is unnecessary.
Financial planners use aggregate account software to analyze a client’s total assets, liabilities, net worth, income, spending, and asset, liability, net worth, and transaction value movements. The advisor also assesses a client’s portfolio risks before investing.
Account Aggregation Effects
Many aggregation services connect brokerage firms and financial institutions directly, bypassing banks’ consumer portals. Users consent to aggregate services by supplying personal data to banking organizations.
Conclusion
- Financial advisors and banks combine customer data to understand their finances quickly. It also enhances client security.
- Advisors and planners believe that not having full access to their clients’ finances prevents them from providing reliable counsel.
- Aggregation benefits both parties, but the financial advisor has the advantage because they may spot a gap in a client’s service and upsell.
