Account aggregation has been billed as an important new tool for brokers. Morgan Stanley became the first major retail firm to launch an account aggregation service last fall. Merrill Lynch and Salomon Smith Barney followed in February.
All of the firms partnered with Yodlee, the major aggregator technology provider. The technology allows consumers to gather information from a variety of accounts onto one statement.
By midyear, Yodlee had planned to have an adviser opt-in option for consumers. This option would have allowed users to give their brokers permission to see all of their assets in real time.
That plan has not materialized. The opt-in concept is now being rethought because of a host of legal and compliance issues.
One solution is to provide only snapshots of information. Last month, Salomon Smith Barney became the first — and still the only — firm to launch such an option. The firm's “share with your financial advisor” service gives reps a static snapshot of an aggregated account via secured internal e-mail, says Steve Clifford, SSB's senior vice president and director of interactive marketing and services.
SSB brokers will then get updates every quarter thereafter. The thinking is that the e-mailed statements will become a part of the quarterly planning process, Clifford says.
Real-time, anytime access would raise concerns about whether brokers would be responsible for reviewing all of a client's holdings with each recommendation, Clifford says. And due to technology limitations, brokers could never be sure the client's aggregated statement includes every holding. Therefore, SSB has decided to use aggregation more for overall planning purposes than for advising on specific transactions.
Merrill, Morgan Stanley
Joe Corriero, Merrill's director of online services, says the firm is also working on a proprietary sharing mechanism where aggregated statements will be sent to brokers via encrypted e-mail. He says the firm hopes to launch its service by the end of the year.
“We certainly haven't lost interest in it. It's still a core piece of our Web strategy,” Corriero says.
When it comes to the possibility of a live opt-in, Corriero says: “We're running into the same questions as probably everyone else, and we haven't gotten that far. We're going to crawl before we walk on this.”
A Morgan Stanley spokesperson says the firm does not have a share mechanism and still has no time frame for launching one.
The firms were contacted prior to the Sept. 11 terrorist attack on New York's financial district. How that event will affect timing of these services was not known at press time.
Yodlee spokesperson Melanie Flanigan confirms that Yodlee has not yet launched a true opt-in feature, though the firm is still exploring it. What Yodlee now has is the less robust sharing mechanism that allows consumers to give selected financial information to their financial (and other) advisers (see www.yodlee.com).
Consumers click on a “share” button, and are then linked to a secured Web server, Flanigan says. Users can then edit out anything they don't want a broker to see and send an e-mail to the rep that includes a URL where the adviser can access the edited statement.
So clients could potentially keep an E*Trade account hidden, for example.
That's one of the reasons Salomon Smith Barney created its own system. The firm also wanted to create a proprietary process so the messages would be part of its existing e-mail review, says Steve Clifford, senior vice president and director of interactive marketing and services at SSB.
With Yodlee's system, there would be no way of knowing if the broker clicked on the link and reviewed the statement.