We talk a lot about data aggregation here at Terrapin Technologies, specifically financial data aggregation (aka account aggregation). But what exactly is financial data aggregation, and why does it matter? And what does financial data aggregation look like at Terrapin? This article provides an overview of data aggregation, its benefits, and the various data sources and integrations Terrapin offers broker-dealers and RIAs.
Financial Data Aggregation Defined
In a nutshell, financial data aggregation is the process of compiling information from different accounts into a single place. There are multiple methods used for data aggregation, including but not limited to: direct connections, APIs, and screen scraping. By compiling multiple disparate sources and process automation, data aggregation technology brings efficiency, accuracy, and visibility to your organization. In other words, it makes information more valuable. The primary categories of financial data that Terrapin aggregates for broker-dealers include: trade data, householding, positions, account suitability, customer information, and historical data.
Benefits of Financial Data Aggregation
Data aggregation allows for automating processes to help broker-dealers streamline the operations that run their business. The benefits of this offering are greater efficiency, productivity, and, ultimately, cost savings. As firms grow, they soon realize that the effort required to manage disparate data sources and manually track revenue via spreadsheets is no longer sustainable. For example, a common way Terrapin supports their customers is by reducing the effort required to reconcile commissions and compensate their advisors. Streamlining and automating tedious manual work allows our customers to achieve scalable growth.
According to Gartner, manual compensation processes are subject to error rates between 3-8% of total incentive payouts. Using manual methods to calculate and manage elaborate compensation plans opens the door to errors, particularly overpayments. Before utilizing data aggregation technologies, firms are generally heavily dependent on spreadsheets to manage their back-office and accounting operations. Dependency on spreadsheets exposes a broker-dealer to significant risk, especially when they rely on spreadsheets for their business-critical functions (such as managing their incentive compensation program). Terrapin’s platform automates manual procedures to help ensure advisors are paid accurately and on time. Less time spent resolving commission disputes and putting out fires allows managers to focus on strategy, forecasting, and leading their advisor team.
By compiling data from multiple sources, a broker-dealer will see up-to-date transaction and account information, giving a global view of their business. Having all their data in one centralized location brings visibility to the data and the related operations within the organization. With the ability to leverage comprehensive business information, managers can focus on coaching, measuring performance, and ensuring strategic objectives are met. Terrapin’s data aggregation technology captures a firm’s entire revenue production, providing executive staff with the information necessary to make critical decisions. Our revenue reporting tools are built upon robust data aggregation technology, designed to assist management in spotting specific trends to be replicated or, conversely, opportunities for improvement.
Major Data Sources and Integrations
DTCC / NSCC
DTCC provides clearing and settlement services for financial markets. Broker-dealers primarily use two DTCC wealth management services: Insurance and Retirement Services (I&RS) and Mutual Fund Services (MF). I&RS offers three main solutions: Commissions (COM), Positions and Valuations (POV), Financial Activity Reporting (FAR). MF has two primary solutions for firms: Networking and Payment aXis (formerly known as “commission settlement”). Terrapin processes numerous DTCC data feeds supporting their mutual fund and insurance products and services, including commissions, positions, financial activity, and settlement.
FAN Mail (Financial Advisor Network Mail ), developed by DST Systems / SS&C Technologies. FAN Mail allows financial intermediaries to receive automated client data files from various mutual funds, insurance products, alternative investments, and program managers. FAN Mail delivers shareholder positions, account profiles (registrations), financial transactions, dividends, and daily prices.
DST Vision, developed by DST Systems / SS&C Technologies. Vision provides information for mutual funds, annuities, alternative investments, and program managers. DST Vision offers financial intermediaries client account access, including consolidated customer portfolio management, account information, electronic statements, transaction processing, and new account establishment.
Internet Dealer Commissions
Internet Dealer Commissions (IDC), developed by DST Systems / SS&C Technologies. IDC is an automated file delivery system for Commission/Trail data. It provides trade and trail commission data from mutual funds, variable annuities, and direct participation programs such as non-traded real estate investments trusts (REITs). This data is generated by the product company’s record-keeping platform at their discretion and then distributed by DST.
DAZL (Data Access Zip Link) is an application that provides access to current mutual fund and client account information by extracting broker-dealer data at the representative, branch, and broker-dealer levels and third-party administrator data. DAZL is an offering from BNY Mellon.
Terrapin has partnerships with the major clearing firms including, Pershing, First Clearing, National Financial / Fidelity, Pershing, Thomson Beta, LPL Financial, and Raymond James. The primary types of financial data we aggregate from these clearing firms include account, activity, commission, position, and product.
Integrations and Custom Feeds
Terrapin maintains an extensive amount of integrations with various financial systems and data providers including, Salesforce, Insurance Technologies, RegEd, Finra Web EFT, HR Feeds, and Payroll Providers.