Empowering Holistic Financial Planning Through Data Aggregation Technology

Financial planning is rarely one size fits all. Every client is unique, with a variety of personal goals and challenges to overcome and achieve. A strong financial plan should always begin with a complete understanding of an individual’s overall financial picture. However, obtaining all client data can be a challenge.

Most clients have non-advisor-managed accounts such as 401(k)s, checking or savings accounts, and credit card accounts. Access to this information presents a challenge for an advisor who wants to practice holistic planning—they have limited visibility into those assets held away, and in turn, the client’s complete financial picture.

How Can Advisors Start to Practice Holistic Financial Planning?

Holistic financial planning requires a top-down approach to planning, where the advisor and client identify goals and then talk about how to reach them. Instead of just plugging data into a calculator and saying “this is how much you need to retire,” comprehensive planning relationships cover other things, such as what the client hopes to do in retirement or where they hope to live, and then creates a plan tailored to those considerations.

Today, more and more advisors are taking this approach to planning because it helps them create longer, more productive client relationships built on understanding, value, and trust.

One way to create financial plans based on a client’s whole personal and financial picture is through data aggregation. Data aggregation involves collecting financial data, like 401(k), checking, savings, and investment account balances, and presenting it in a consolidated fashion within a secure electronic environment, like planning software, where the advisor and client can access it within the context of their relationship. Essentially, data aggregation is the engine that creates the complete financial picture an advisor needs to create accurate plans based on real-time data.

Where Do APIs for Financial Planning Come in?

Today, institutions and technology vendors use several methods to aggregate client financial data. One of the most popular and secure methods involves using Application Programming Interfaces, or APIs. APIs allow two systems to interact and connect with each other in a secure way to create a streamlined flow of data that allows one of the systems or an end-user to complete actions without having to go back and forth between two websites.

Basically, APIs allow the end user to view their financial information such as account balances, without requiring them to log into their bank account website. Think of APIs as offering ongoing, “view only” access to account data. The API is built into the system, so the advisor and client never see it or interact with it. Not only do APIs keep the user experience clean and concise, but API-based data aggregation tends to be more secure and reliable than other methods.

Data aggregation is increasingly important in wealth management and APIs have become the preferred method of aggregation—they offer greater accuracy and empower advisors to practice holistic financial planning to create deep, lasting relationships with clients. When advisors leverage API technology to support their planning process, they’re adding additional value that only strengthens relationships over time.

To learn more on this topic, register for our upcoming 2-part webinar series, “Data Governance, Aggregation, and Security: Best Practices and How They Affect Your Clients.”

eMoney leaders will discuss security best practices, current legislation, and what you can do to implement a culture of data governance in your organization. CFP® professionals who attend the webinar on May 14 are eligible for CE credits.