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.
- 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 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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