2016 has been hectic and full of technological change for Financial Services and it is only May. There are a number of firms looking to “disrupt” the financial advice market, something that has long been overdue in my personal opinion. I am, however not convinced that many have achieved much disruption so far. The most interesting development from one financial adviser’s perspective has been the introduction of financial aggregators into the mix.
Data aggregation is a big topic at the moment and Financial Services Data Aggregation is the “hot trend” people are chucking lots of money at. Firms like Mint in the US have been leading the idea of a personal financial dashboard. They offer a “one stop” shop to managing your finances online in one place. Each aggregator seem to have a different marketing method and reason for being but it is clear that the market for financial data aggregation is attracting customers, particularly in the highly publicised “millennial” space.
So what can a Financial Aggregator do?
In simple terms, it can bring your finances into a single view. You are able to link your bank accounts, credit cards, investment accounts and also store other financial data in one place. The ones I have seen are in “read only” fashion but this may change. The boundaries are being pushed in this area all the time and many “fintech” players are looking to take it further into potentially offering advice and also behaviour management. One firm who seem intent on this in the US is Personal Capital . They have a model of picking up clients through their free widgets including a financial aggregation tool that is focused on then offering a full online advice service (all for the price of under 0.8%). I can tell you that UK players are watching this very closely and I wouldn’t be surprised to see similar in the UK soon.
What tools do I use for data aggregation?
As an adviser that works with generation X and Y clients, I saw a client dashboard tool as a must have. We partnered with Sammedia’s Moneyinfo for the Xentum Portal . The Portal offers full read only bank integration which I have to say for an adviser, is really useful. There is also a link to client’s investment accounts in a nice easy format and is able to drill down into live valuations and holdings; no more logging into clunky investment platforms and countless passwords. There is also a secure document storage for documents such as Wills/Life Cover etc.. I also really like the way you can update the information around things like Life Cover and also Property Information. You can probably tell I use it myself to help organise my family’s finances.
As a client, I also get to see the full spending and income data which is really useful in identifying where I could do better with spending and savings. As an adviser, I only get to see the high level spending/income data, not the actual client view. I have started to base my financial planning and cash flow meetings with clients around this data which is powerful and means less work for the client. It will take time to implement it fully but that’s normal with any tech.
What could it do better?
It doesn’t integrate with every bank or investment provider which is sometimes quite frustrating but I am told this will end in time as firms will be told to open up their APIs . Sometimes, the data feed fails but this is quite rare and is often solved by doing the old “switch it off and on again.” Like any Tech, it only pushes out the work that you put into it. I tell all clients that it is “their” Dashboard, not mine and they can use it as they wish. Some clients really engage with it and some don’t. I am fine with this.
What is my overall view
I think that the rise of the data aggregators is great for clients and advisers, if used correctly. The delivery of financial advice to a busy client is something the market needs to improve. Many of my meetings are now on Skype and the industry just hasn’t caught up. I would imagine that firms like Sammedia have a market edge by coming to the market first, but there is still room for improvement. It is up to them, to listen to clients and adviser’s feedback and adapt to demand. Exciting times ahead.