Guest Post: Yodlee Is Offering Free Account Aggregation With An Investor Dashboard For Controlling Advisor Access; Another Sign Of Fee-Compression Coming

Thursday, March 22, 2012 14:27
Guest Post: Yodlee Is Offering Free Account Aggregation With  An Investor Dashboard For Controlling Advisor  Access; Another Sign Of Fee-Compression Coming

Tags: account aggregation | CFP Board | competitors | differentiation | financial planning | RIAs | value proposition

Heads up: Yoddlee is offering free acount aggregation now that let’s investors share their aggregated data with their financial advisors.  It’s ingenious. An investor signs up and sends an email to share his account data with an advisor or multiple advisors.

This is a guest post by Brent E. Bentrim, founder and CEO of Carolopolis Fiduciary Counsel. Bentrim is also developing a wealth management application for fiduciary investment advisors  
Here's how I see the Yodlee platform for consumers:
The Bad
  • Advisors get “read-only” access. So advisors can’t import the data for use for use in proposals, performance reports, analytics, etc. Advisors could write some code that would enable them to grab data, if they are capable and want to bother.
  • Investors, if they choose to enable it, will receive marketing information from institutions and financial solutions that compete with advisors.
  • The platform is weak on aggregation of data common sources advisors reply upon.
The Good
  • The platform is investor-focused
  • It’s free!
  • If an advisor is sophisticated enough to write a program, the data are much, much, much cleaner than ByAllAccounts or CashEdge.
  • When account being aggregated stops “updates,” because of a password change or some other change to account settings, investors and advisors they share the data with are notified by email and via an exception if the data are being exported.
  • App store provided as well
I believe this is almost the tipping point of one of the themes Andy Gluck has been hitting on for the last six months. CFPs seem vulnerable to losing market share in a world in which investors can self-direct advice. 
The CFP designation has failed to innovatively use the mathematical capabilities of the powerful processors in today’s computers. The CFP is still taught to allow for a TI calculator or pencil and paper approach to calculations.
When you combine faster processors with making more mathematical calculations in support of algorithms with the ease of use enhancements to Web interfaces, the tipping point of for providing financial analysis has moved into the investor’s favor. First information, now analysis, is heading directly to investor. Fee compression will follow.
Most financial planning and asset allocation programs used  by advisors rely on advisor inputs. Then voila, a 1% fee is earned.  Much like when brokers were first wounded in the 90s with online trading, online advice is likely to kill advisors pinning their practice on asset allocation and financial planning. 
CFPs need to get serious about making sure that the way financial planning is done for clients is regulated. CFPs use so many different ways to create plans and there are no accepted standards among CFPs on the right way to write plans.
What would happen if CPAs didn’t have accounting standards? That’s the equivalent of CFPs not having standards governing generally accepted calculations in financial planning.
Instead CFPs focus on who can be a financial planner, and show little if any regard for whether the planning (calculations) they do for clients are sound. 


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Comments (6)

Hays Glover
Yeah - and TurboTax put all the CPA's out of business.
Hays Glover , March 22, 2012
While CPAs may not be hurt -- and I don't know that -- my guess is non-professional storefront tax preparers have been hurt.

And I'd bet preparers to the middle class are having a tougher time since the advent of tax prep software.

I'm asking for data on this issue from a couple of sources.

Also, keep mind that making an investment plan is different from filing a tax return.

Filing a return has rules and there is just one correct answer and it's checked by the IRS. Investment plans don't have to solve for one right answer.

So any self-directed investor who makes a plan using an account aggregation tool to automate data entry and asset allo9cation may be doing something really ill-conceived and he won't ever have it checked by anyone.
agluck , March 22, 2012
Uncanny coincidence: Was just sent link to FutureAdvisor, which bills itself as "Your Online Investment Advisor" and can be found at

Advisors who ignore the tech innovations spurring fee compression may be "fiddling while Rom burns."
agluck , March 22, 2012
More Brent!
ScottMartin , March 22, 2012
Hayes - I actually think the Turbo Tax comment was great and where I would hope we could head as a profession.

Imagine if you went to have your taxes done at an accounting firm by Jane Doe, CPA. When you get the completed returns back to sign, you notice that Jane Doe did not fill out and sign the paid preparer's portion of the return.

When you inquiry why, Jane says that she is only providing an estimate of what your taxes or refund may be and cannot take responsibility for its correctness as her firm will not allow it.

'But you're a CPA,' you ask. Jane's reply is yes, that is on my business card, etc but you will see in the engagement you signed a disclosure that says we just provide estimates. See FINRA Interpretive Material IM-2210-06

Both Turbo Tax and CPAs rely on Generally Accepted Accounting Principles (GAAP). One cannot claim your tax bracket is 15% and the other 30%. It is up to the taxpayer to take responsibility for the return or have the CPA be held liable for mistakes.

brentb843 , March 23, 2012
I have been in communications with Yodlee. It is NOT as simple as suggested in post above. There is an integration process that, I am told, includes back-end coding. And I was told it is not free, either. From what I can tell, a lot of work to end up with what account aggregators are already providing.
dwaterbury , July 29, 2013

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