How to Track All Your Money From One Place

Account aggregation services can be powerful budget and investment tools if used properly.

By + More

Back in the earlier days of the Internet, scads of startups were drawn to the flame of using the Net to gather and make sense of mounds of financial information. Their holy grail was a single service that would hold all of a consumer's financial and investment information, creating a valuable new asset that would bring them riches, and make consumers happy in the process. One of that period's hot tech phrases was "screen scraping" – creating software tools that would automatically collect such information and make sense of it.

Screen scraping disappeared from the tech vocabulary, along with most of those startups, during the dot-com bust. But the idea of account aggregation did not, and it has evolved into a capability that is now affecting millions of consumers, often in invisible ways.

When you create a new online financial account, the process that verifies who you say you are often is supported by account aggregation tools. When your bank or broker provides you with suggested new financial product offers, it may be guided by what an aggregation tool has collected about your financial profile.

A growing number of consumers are setting up online homes for their data, pulling in financial information from their banks, credit card companies, investment brokers, retirement plans and other sources. Some are freestanding sites while other aggregation services are offered by major financial institutions where millions of Americans already have accounts. Nearly every big financial services company wants a piece of you, it seems.

[Read: Where Should You Keep Your Investment Assets?]

Lastly, a slew of new and existing companies are offering consumers additional analytical services to make sense of all their financial information. They not only collect all the data but recommend better ways for us to save, spend and invest our money.

I've been testing some of these services, and they have some impressive strengths. Big financial service companies – the household names we all know – increasingly have agreements to provide all your financial information to an aggregation service with a couple of computer keyboard or smartphone commands. Being able to see all of my financial "stuff" in one place sure beats tracking it down via a whole bunch of individual websites, with their different passwords and ways of displaying financial information.

Yes, I have concerns about all this data being hacked at one time. But, seriously, the Pentagon has been hacked, so who am I kidding that my data will be any safer if it remains spread across multiple accounts? More to the point, it's likely that my financial information is already being aggregated somewhere. Shouldn't I at least benefit from this capability?

But after using these aggregation services, it turns out that I am not really seeing all my financial information. Like most people, I have lots of financial relationships that aren't so easily gathered by aggregation services. My financial services change a lot, too, and account aggregation services may have a tough time keeping up with the pace of new product offerings and account relationships.

For example, I've got a health savings account that is now linked with not one but two mutual funds that invest some of my unspent health plan contributions. My health plan changed at the beginning of the year and thus created a second set of account relationships. And I've got other accounts that some aggregation services can't find at all or don't even try to incorporate into their product offerings.

"This is a pretty complicated business to be in," says Eric Connors, a senior vice president at Yodlee, one of the major aggregation companies. "There are tens of thousands of sources where we get data, and obviously, we don't have formal relationships with tens of thousands of data providers." His point is that the reliable and repeatable acquisition of real-time data often encounters roadblocks.

Even within what may appear to be an easily understood category, like bank accounts, there can be numerous types of accounts, Connors notes, and they change all the time. "The first time we see something out there, it's possible there will be a hiccup," he says. "There is so much variety out there, and it is changing all the time."

[Read: Keep an Eye on Free Cash Flow in 2013.]

It's possible for a consumer to get a free aggregation account at Yodlee, but the company offers this service more as a consumer research tool than as a commercial product. Its business is to offer aggregation capabilities to financial services companies, and let them offer such services to their customers.

A startup called Jemstep collects a user's investment and asset information and then uses it to recommend better portfolio management and investment choices. The logic, Jemstep President Simon Roy explains, is that few people actually manage their entire portfolio as a single pool of assets. Instead, they see portions of their holdings in different brokerage and retirement accounts. While each account may be properly structured in terms of a person's investment and risk priorities, there is no way to optimize across their total holdings. Jemstep does this using online tools.

Jemstep is not paid by investment companies and derives all its revenue from subscriptions. As a result, Roy says, it can make truly independent investment recommendations. "The key [with investment advice] is what to do to make the recommendations actionable," he says. Jemstep can access subscribers' holdings and investment options and make its recommendations based on a subscriber's actual options and fees.

"One of the beauties of this is that it keeps the service up to date," Roy says. "Any time you log into Jemstep, it shows you the real-time value of your accounts." Jemstep generates a recommended action plan for its subscribers, and Roy says 20 percent of customers take steps to realize the plan. That's more than he ever anticipated, he says. "What Jemstep has designed is a behavioral change engine."

Like Yodlee, Jemstep does not include all my financial holdings. But it does include all my major accounts, and seeing current values of all my holdings in one place is a big improvement.

[See: 10 Secrets of Successful Retirement Savers]

There are a few basic pieces of advice for anyone wanting to build their own aggregated financial profile.

1. Decide the best place where it should be housed. Yodlee says its research finds that consumers want their aggregated account at a trusted financial institution where they do the largest part of their financial transactions. This is usually a bank or, for active traders, a brokerage firm.

2. Don't be in a hurry. Aggregating all your accounts will take time. There will be some hiccups, so don't assume this is a setup task that can be done in a few minutes. It will take time and probably should take time.

3. Round up all your online account passwords before sitting down at the computer to build your aggregated account. Otherwise, you will face delays and frustration and are much less likely to actually build a useful account.