Account Aggregation is a technology that consolidates financial account information into a single webpage, and in doing so, displays a comprehensive view of account balances, positions and transactions to the account holder.
How Does It Work?
Account aggregation works by leveraging the online credentials an account holders use to access the financial institution’s website. When it is time to update the account information –either manually or automatically – the account aggregation software logs into the financial institution website to retrieve the account information.
Let’s assume you have a 401k at T. Rowe Price, checking and savings accounts at Bank of America, an investment account at Fidelity, a credit card with American Express, and a mortgage at Wells Fargo. You probably don’t wait until the end of the month for the paper statements to arrive in order to see the activity in those accounts. Instead, you go to each financial institution’s website, log in and view the account information. Certainly, much more convenient and timely than waiting for statements – but still not ideal. Enter account aggregation which makes this process even more efficient for you.
With account aggregation you log in to a single website, search for the name of the financial institution where the account is held, and enter the username and password that you would typically enter at the financial institution website. You repeat this process for each of your online accounts until you have successfully aggregated all your personal accounts. The process typically takes about 1-minute to aggregate one account.
*If you setup challenge questions (What was the name of your first dog?) at the financial institution website, then those questions will appear during the setup process – usually after you enter you online credentials for the financial institution.
What Data Can Be Aggregated?
This is one of the most common question I hear from the financial advisors and clients. And the answer is very straightforward. Most, not all, but most account aggregation providers will aggregate the Balances, Positions (Investment accounts), and Transactions just as they are displayed at the financial institution website. That also means the data an account aggregation provider aggregates is as good or as bad as the data available at the financial institution website.
Although most users primarily want to see balances, positions and transactions, there is additional data that an account aggregation provider may be able to aggregate such as margin balance, vested balance, contributions (both employee and employer), death benefit, premium amount, surrender value, loan amount, purchase and advance APR’s, available credit, minimum payment due, finance charges, rewards balance, points redeemed and more.
What Types of Accounts Can Be Aggregated?
If an account is available online, then chances are it can be aggregated. Remember, two things have to be in place in order for an account aggregation provider to access an online account. First, the financial institution must offer online access. And second, the account owner must have established online access by creating a username and password to access the account at the financial institution website.
Most account aggregation providers can aggregate the following accounts:
Brokerage
401K, 403B, 529, etc.
Cash Management
Money Market
Mutual Fund
Hedge Fund
Annuity
Term, Universal and Whole Life
REIT’s
Checking and Savings Accounts
CD
Overdraft
Credit Card
Mortgage
Loans
Home Equity
Line of Credit
Bills and Other Liabilities
It is important to note there are instances when an account cannot be aggregated even it is available online. While there are many different reasons why an account aggregation provider cannot access an account, here are some of the more common examples:
- The financial institution is blocking the account aggregation providers scripting technology
- A unique multi-factor authentication process is in place which randomly changes a security/access code or displays security questions in image format
- New design technologies, such as Ajax and Java script, are in place which the account aggregation provider cannot support
