The account aggregation company is working with former competitors like Advent Software

June 3, 2010 — 5:25 AM UTC by Brooke Southall

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ByAllAccounts is starting to thrive after a decade in survival mode.

The Woburn, Mass.-based provider of technology that allows a financial advisor to observe and analyze all of the holdings of a client across custodians now has about 500 advisory firms using it – and partnerships with Advent Software and Schwab Performance Technologies, among others.

Sold by its founders to State Street in 2004, the company morphed from a desktop software company to more of a data provider in the ensuing four years. Then in 2008, the company’s founders bought the company back. That year, it grew its accounts by 40%, and in 2009, by another 40%.

“It’s starting to grow because it works,” says James Carney, CEO and co-founder of the company.

Getting account aggregation to work — really work — is an important watershed, according to Sean Cunniff, research director of brokerage and wealth management at TowerGroup. He recently visited the offices of ByAllAccounts.

Very frustrating technology

“The quality in the past [of data from account aggregation providers] has been an issue, and it’s been very frustrating,” he says. “It could be that the technology has advanced to a point where the quality [of data] and the quantity [of participating custodians] are good enough for the information to be actionable.”

ByAllAccounts was a dot-com era startup that struggled at first for lack of a viable business model. It had planned to be the Yodlee or of the advisory realm. Both companies aggregate on behalf of consumers.

But like in the case of many dot-com startups, ByAllAccounts was a case of build-it-and-they-don’t-come.

It looked good on paper because it seemed to be the key tool for financial advisors who wanted to shift their model more toward wealth management. Wealth managers market themselves as risk-managing overseers of all assets held by a client instead of a concentrating on one or two portfolios immediately in their control.

“There’s absolutely a demand from wealth managers for account aggregation,” Cunniff says.

Never caught fire

Still, account aggregation just never caught fire with financial advisors. Advent has tried offering account aggregation itself with mixed success. It launched Wealthline and it stopped selling that product in 2004 and only has 24 customers left. Advent has had greater success with Advent Custodial Data, which is more similar to the data service that ByAllAccounts uses today.

That product is a data feed that works with other software systems, according to Carney. See: Tech Review: ByAllAccounts has built its company brick by brick and the result is a solid product

“The defining moment for the company was in the fall of 2003,” he says. “Aggregating is great but we needed to get beyond the desktop to feeding other systems.”

In 2004, ByAllAccounts began feeding Advent Axys with data it took from custodians and formatted for the portfolio management system, and enhancing the data as needed. For instance, it may occasionally need to plug in the price of a security.

“Advent could [draw data from] 200 to 300 custodians but there are 10,000 in the United States,” Carney says. “We have access to 3,500.”

Good partner firm to Advent

ByAllAccounts’ access to so many custodians has made it a good partner firm to Advent, according to George McLaughlin, senior director, data services at Advent.

“We view ByAllAccounts as a a way to round out [clients’] electronic data collection,” he says. “We get 80% to 90%. ByAllAccounts really adds value with the other 10%. It’s not the number; it’s when you start getting to the periphery where it doesn’t make sense to have a direct interface [because it’s cheaper to use ByAllAccounts’ technology than to manually add more obscure custodians like smaller banks.]”

In 2004, Carney and other ByAllAccounts’ managers sold the company to State Street and Carney continued to work at the firm. State Street bought the company because it was going through a phase where it wanted to emphasize wealth management but subsequently it shifted its emphasis to other business lines, according to Carney.

The support of industry powerhouses like Advent and Schwab Performance Technologies was the conduit it needed to create a new market as an upstart firm. “Our goal is to be the Intel inside,” Carney says. “It allows us to be Switzerland.”

Buyout from State Street

In 2008 Carney and other ByAllAccounts managers bought the company back from State Street. The buyout was financed by Commonwealth Capital Ventures.

One of the drivers of growth is the success the company is having with executing that new data-centric business model it began adopting in the mid-2000s.

The 40%-growth is reflected in the headcount, which swelled from 17 employees in 2008 to 35 employees today. Carney declined to say whether ByAllAccounts is profitable but he said the company is in very solid financial condition.

There are 13,000 advisory firms that appear to be good candidates for using account aggregation technology from ByAllAccounts. Its goal is to have 3,500 of them by 2014, a 600% jump, Carney says.

Fast spread sheet

“People have become more aware of the data they need,” he adds. “We’re just a fast spread sheet.”

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Kevin Hollingsworth said:

July 9, 2010 — 10:10 PM UTC


Advent’s Wealthline was a client web portal application and service similar to LIghtport and is not considered account aggregation technology. Advent developed its first custodian data interface in 1989 and the build out of Advent Custodial Data (ACD) soon followed. ACD is a data network that automates account aggregation and has been part of the products and services that Advent has been providing RIAs for 20 years.


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