Aggregation

Key Takeaways

• Aggregation is the combining of all futures positions or financial data into one comprehensive view.
• Account aggregation simplifies financial planning by consolidating a client's assets, liabilities, income, and expenses.
• Financial advisors gain a clearer financial picture of clients with aggregation, aiding in better financial advice.
• Complete account access is crucial; partial information may lead to inaccurate financial analysis.
• Aggregation can identify areas for financial improvement and potential product upsells.
• Get personalized, AI-powered answers built on 27+ years of trusted expertise.

What Is Aggregation?

Aggregation is the process of combining multiple pieces of information or positions, specifically in financial contexts. It's important in both futures markets and financial planning because it simplifies complex data for better understanding and decision-making. Aggregation benefits both financial advisors and their clients through streamlined data handling and improved financial insights.

We'll explore the meaning, importance, and effects of aggregation, providing a comprehensive guide to understanding its applications and benefits.

How Aggregation Works

Financial advisors 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 both managed and non-managed accounts. Managed accounts contain assets under the advisor’s control that are held by the advisor’s custodian. The planners utilize portfolio management and reporting software to capture a client’s data through a direct link from the custodian. It is important for the planner to have all the accounts because aggregating them without the complete collection would paint an inaccurate picture of that client's finances.

Additionally, non-managed accounts contain assets that are not under the advisor's management but are nevertheless 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.

Why Account Aggregation Matters

Account aggregation services solve the issue by providing a convenient method for obtaining current position and transaction information about accounts held at most retail banks or brokerages. 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.

Impact of Account Aggregation on Financial Management

Many aggregation services offer direct data connections between brokerage firms and financial institutions, rather than using banks’ consumer-facing websites. Clients give financial institutions their consent by providing personal information for the aggregate services.

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