INTRODUCTION:
The world of financial advisory is increasingly competitive, and professionals looking to differentiate themselves must find innovative ways to offer greater value to their clients. In this context, account aggregation has become one of the most effective strategies for boosting an advisor’s profitability, as it enables a comprehensive view of the client’s wealth and facilitates the identification of data-driven opportunities.
Different studies have shown that consolidated asset management not only improves decision-making but also strengthens the relationship between the advisor and their client. According to McKinsey (2023), advisors who implement account aggregation solutions have managed to increase client retention by 30% and have seen their assets under management (AUM) grow by 20% within the first 12 months.
The benefits of account aggregation for advisors include:
- • Increase in conversion of new clients from 15% to 30% per proposal presented.
- • Increase in managed assets of between 25% to 40% in the first year.
- • Increase in retention by over 30%.
- • Improvement in returns of between 2% and 3% annually.
As technology evolves, platforms like CITEC 360 have revolutionized the way advisors work with their clients. Thanks to the combination of account aggregation and Artificial Intelligence, these solutions enable high-value financial advisory services to be more scalable and accessible, not only for high-net-worth (HNW) clients but also for affluent clients.
PRACTICAL CASE:
Business Owner with Fragmented Wealth:
To illustrate how account aggregation can transform a client’s experience and enhance an advisor’s growth, let’s look at the case of a 50-year-old business owner whose wealth is distributed across multiple entities and lacks a consolidated financial management strategy.
Client Profile
Our protagonist is a successful entrepreneur with various sources of income, investments in multiple institutions, and real estate holdings. Despite his financial stability, he felt frustrated by the absence of a clear, unified view of his wealth. His private banker only managed a small portion of his assets, preventing him from making well-informed strategic decisions.
Initial Situation
Assets and Investments (EUR 1,170,000):
- • EUR 500,000 in a private bank, where he does not have a close relationship with his advisor.
- • EUR 200,000 in an employer-sponsored pension plan, which has been left in a passive, high-cost strategy.
- • EUR 120,000 in European stocks held at a retail bank inherited from his father, with high custody and trading fees.
- • EUR 150,000 in a Neo Broker account, managed independently.
- • EUR 200,000 in cash in his primary account.
Real Estate (EUR 2,500,000):
- • Three rental properties valued at EUR 1.5M, generating a net monthly income of EUR 2,500 (annual yield of 2.0%).
- • Primary residence valued at EUR 1M, with an outstanding mortgage of EUR 500,000 at a variable rate of 3.5%.
Other Assets and Revenue Flows:
- • EUR 500,000 in cash across two business accounts.
- • Annual salary income of EUR 200,000.
- • 15 insurance policies with a monthly cost of EUR 5,000.
Family Wealth and Additional Opportunities:
- • EUR 1.5M in assets managed externally by his wife.
- • Two siblings with a combined wealth of EUR 10M.
- • Three 20-year-old children who have started investing through Neo Brokers.
PRESENTED PROPOSAL (APPENDIX #1):
The client aggregated his accounts and granted access to the advisor using the CITEC 360 platform.
The advisor began working on a proposal, outlining the following changes:
- • Asset Allocation Strategy: Aligned with the client’s objectives, risk profile, and market outlook. The client was in an excessively conservative portfolio (70% Fixed Income) for their profile. A portfolio with an expected return of 8-9% and a volatility of approximately 12% was proposed (APPENDIX #1).
- • Sale of Stocks and Broker Account Closure (EUR 150K): This change generated annual savings of EUR 1,000 in commission fees and a reduction of 20% in taxation on dividends (annual savings of EUR 1,764).
- • Pension Plan Transfer (EUR 200K): Moving from a plan with a 2.5% fee to one with fees below 0.3%, aligned with the new strategy. Commission savings: EUR 4,000.
- • Liquidity Reallocation: Placing 80% of the liquidity into an interest-bearing account, increasing the rate from the current 1.0% to 3.5%.
- • Sale of shares with losses in the Neo Broker (EUR 100K): Followed by reinvestment in funds that align with the strategic objectives.
- • Sale of the 3 Rental Properties (EUR 1.5M): These properties had low performance, with the proceeds reinvested according to the defined strategy.
- • Investment of Surplus Liquidity: 70% of the surplus liquidity (EUR 400K) to be invested in the company.
- • Change in Strategy with the Private Bank (EUR 500K): Reducing costs from 1.8% to 0.7% and aligning the portfolio with the client’s objectives.
- • Mortgage Loan Renegotiation: Switching to a fixed-rate mortgage at 2.5%.
- • Insurance Cost Reduction: Lowering annual insurance premiums from EUR 60,000 to EUR 35,000.
- • Commitment to Additional Investment: The client commits to investing EUR 50K annually.
IMPACT FOR THE CLIENT (APPENDIX #2):
With this capital restructuring, the client is in a much stronger position to generate long-term value.
- • Invested capital: 2.82M EUR with an expected return of 8%.
- • Annual contribution: 50K EUR.
- • Generation of additional returns from interest-bearing accounts and the optimization of the Neo Broker.
Simulating this situation using the Citec 360 «Monte Carlo Simulation», it is easy to visually explain to the client what value can be generated over 20 years. In this case, it shows that in 20 years, under the described conditions, the client could accumulate 13.7M EUR for retirement.
IMPACT FOR THE ADVISOR:
The advisor, just with the impact at the time of onboarding, is multiplying the volume of assets managed by 10X. Additionally, they are laying a solid foundation for continued growth with the client and their family and friends.
To put this into numbers, the value of this client for the advisor multiplies as follows:
- • Initial Situation: The client starts with 250K EUR, with the potential to reach 500K EUR at a 0.7% commission = 1,750 EUR.
- • Situation with Aggregation: 2.82M EUR at a 0.7% commission = 19,740 EUR.
RISK MANAGEMENT (APPENDIX #3):
Having a comprehensive view of wealth makes it much easier to manage risks. In this case, we have opted for a growth strategy.
AI Alerts to Detect Opportunities
According to the CFA Institute (2023), the use of AI tools has improved advisors’ operational efficiency by 35%. Additionally, these tools are being used to enhance commercial productivity through alert systems and recommendations for commercial actions.
Advanced tools like CITEC 360 enable secure access to all of the client’s banking information and allow for real-time detection of:
- • Recurring cash excesses in business accounts.
- • Large cash inflows and outflows and their causes.
- • Relevant news about the client and their close contacts.
- • Mortgage refinancing opportunities.
- • High costs in bank fees.
- • Suboptimal asset allocation.
- • Low returns on certain financial products.
These systems help the advisor organize their day and prioritize the most relevant actions.
Conclusion: Aggregation as a Growth Strategy
Account aggregation is not just a useful technology, but an essential strategy to maximize the profitability and sustainability of a financial advisor’s business.
Key Benefits:
- • Doubling the client conversion rate.
- • Increase of 30-40% in assets under management.
- • Greater diversification of income through the offering of complementary services.
- • Access to additional wealth within the clients’ family circle.
Implement Aggregation with CITEC AI
CITEC AI offers a comprehensive account aggregation solution that enables advisors to improve their efficiency and provide exceptional value to their clients. 👉 Request a demo and discover how CITEC AI can help you attract more clients, increase your AUM, and generate higher revenues.
APPENDIX #1: ASSET ALLOCATION
APPENDIX #2: SIMULATIONS
BACKTESTING:
APPENDIX #3: RISKS
CORRELATIONS:
CONCENTRATION:
