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Will Investors Embrace or Reject Account Aggregation?

What could be a better present for your most compulsive clients than neatly printed statements showing every dime they have - not just the individual securities, mutual funds and managed accounts, but their 401(k) accounts, 529 plans and checking accounts as well?

This isn't a new, untested concept. Banks and third-party dot-coms unrolled account aggregation programs years ago for modest and wealthy customers, and fund companies have been investing in account aggregation in the past few years.

However, independent financial planners, often in the vanguard of new services, have remained lukewarm on account aggregation. There may have been good reasons for reticence, but technologies - and, more subtly, attitudes - have changed. Will aggregation fizzle, or will it become the next hot application? For the time being, planners report little interest in account aggregation, but they expect it will gain a strong foothold in the years ahead.

Fund companies, wirehouses, banks and financial supermarkets may be unwelcome latecomers to the planning business, but they have deep pockets and an appreciation for what technology can accomplish. Take Baltimore-based Legg Mason, which rolled out its Total Picture service about a year ago. From the client's perspective, all online accounts are on a single screen - even those not under Legg Mason's management.

"It could include 401(k) accounts, credit cards, banks accounts, even airline frequent flyer accounts - anything that's an online account," said Sylvia Toense, director of marketing communications.

Legg Mason obviously sees this service as a way to inspire loyalty, as it provides Total Picture free to its customers. However, the service is not really proprietary. It turned to uMonitor, of Germantown, Tenn., to create its private-label interface.

"We get the information from everywhere," said President and CEO Dinesh Sheth, "whether it's a local credit union or Citibank." Would the New York-based bank protest if it knew its data, even with the full permission of one of its customers, was being used to bolster the Web site service of a rival?

It's unlikely Citibank would even know, Toense said. "To them, it just looks like the customer has logged in himself."

Screen Scraping

Sheth would be happy to private-label uMonitor for any investment manager with a service he calls "valet access." In this service, an adviser and a client turn over account passwords to uMonitor, which brings the information to the adviser's Web site where both adviser and client can view it. The company even provides analytics.

"We can tell you how much Microsoft stock you own even if it's spread out in multiple accounts," Sheth said.

Prices can vary based on size, he added. However, an adviser with about 100 clients would pay uMonitor a one-time set-up and license fee of about $10,000, plus between $500 and $1,000 per month for management.

Yodlee of Redwood City, Calif., occupies the other end of the spectrum, not in terms of its technology, which is sophisticated, but in terms of its marketing. Yodlee targets the individual consumer, although it works in co-brand partnerships with major financial firms. In fact, it's bankrolled by, among others, Chase Capital Partners of New York, E*TRADE Group of San Francisco, GE Capital of Stamford, Conn., Merrill Lynch of New York and Morgan Stanley of New York.

However, users don't have to be a customer of a partner to sign up for Yodlee. Free to individuals, Yodlee has a simple Web registration that allows users to aggregate accounts from a virtually limitless list of financial institutions and credit card companies. It even sports a feature that allows consumers to share their aggregated statements with their planners. This is a static statement, however. If the clients aren't sharing all their passwords, the planner has to rely on the client to continually send snapshots.

Privacy Concerns

So simple and comprehensive is Yodlee that it has won over at least one planner. Scott Dauenhauer, a financial planner in Irvine, Calif., said, "I use Yodlee for myself personally, and I think the service is great."

But it's just for himself. He hasn't had much interest from his clients. "There are things that our clients don't want us to know, whether we like it or not." Clients may not want even a "trusted adviser" to hold all passwords, let alone a faraway company. (However Yodlee claims that all customer passwords are encrypted and thus unavailable to sneaky staffers.)

Dauenhauer has no plans to private-label an aggregation service as long as clients, if they so choose, can register for a free Yodlee account. "Is it a cool concept? Absolutely! Will it make the difference for a client in choosing an adviser? Highly doubtful."