'Aggregating' Your Accounts Online

Handling finances online can cut down on paperwork. But it might not make your life simpler.

You may have multiple online bank accounts. You've probably also got brokerage accounts, mutual funds, credit cards, mortgages and other financial accounts.

And they may have different user names and passwords. So keeping up might not be easy.

But failure to monitor all your accounts can be costly. Over time your asset allocation may drift away from what you want. You might miss tax planning opportunities.

Account aggregation can help. It's software that takes info from all your accounts and displays it in one place. It can shuffle data into various categories. And it can total amounts from different accounts.

"By utilizing account aggregation, you can take a top-down view of your wealth, asset allocation, risk, and so on," said Tom Orecchio of Greenbaum & Orecchio, a wealth management firm in Old Tappan, N.J. He chairs the board at the National Association of Personal Financial Advisors.

Many financial firms offer this service. Often, there is no charge.

"Taking advantage of account aggregation requires some patience," said Mark Johannessen, a managing director of Harris Private Bank in McLean, Va. He's also president of the Financial Planning Association. You need to enter all the user names and passwords of your online accounts to get the full benefit. But you only have to do it once.

More than one authorized user can have access to the aggregator. Business as well as personal accounts can be included.

Once you've entered all the data, you can see all your online financial information with just one user name and password.

Aggregators consolidate records for your accounts so you can see the big picture. You can see everything in your overall investment portfolio. You can look at total spending on various credit cards. You can check all of your debt balances.

Value of Overview

Generally, your profile is updated once a day. But you can usually ask for an update at any time.

Having a ready-made overview can help with tax planning, for example, Orecchio says. It can make it easier to compare your realized gains for the year and your unrealized losses. That can help you decide where to take losses and cut your tax bill for the year.

Some consolidators go further. Harris Bank's Total Look aggregator has a real estate center, for instance. You can get an estimated value of the home or homes you own. That will be based on comparable sales in your neighborhood.

But there are potential negatives to these aggregators, too.

Some of your information might not be included. That could be the case if you have accounts that aren't online.

Or you might have an account that's not aggregated by the host Web site. These aggregators are known as screen scrapers. They only access information on screens at participating Web sites.

If important data is omitted, incomplete information could lead you to poor decisions.

Security is another concern. "Information you provide is vulnerable to the greedy hands of online identity thieves," said Arkadi Kuhlmann, president and CEO of ING Direct.

If all of your financial data are listed on a financial aggregator, hackers can get a trove of information -- not just bits and pieces of one account -- in one handy location.

And identity theft is on the rise. The Identity Theft Resource Center reported 449 institutional data breaches in 2008, as of Aug. 22. Those involved potentially millions of individual consumers.

The total for all of 2007 was 446. Breaches counted are those reported in the media and by state governments.

Most aggregators assume no liability, Kuhlmann says. But they do explain how they try to bar intruders in the first place.

You might learn of powerful encryption and firewalls. You can decide whether to enroll. Or you can take your own precautions.

"You can sign up for an identity theft recovery program," said Chuck Polle, chief executive of National Coverage in Rhinebeck, N.Y.

Such a program can help you minimize impact and make up for losses after a theft.

Faulty Facts

Data quality is another concern. Robert Huebscher, CEO of research firm Advisor Perspectives, in Lexington, Mass., says data given to individual investors on positions and transactions is sometimes inaccurate. Some aggregators don't check the internal consistency of data.

"Account aggregation works better for financial advisers than for individuals," Huebscher said. The technology is different and advisers can play a role in administering the accounts. So another option is to work with a financial adviser who provides consolidation of your accounts.