Simplifying Your Finances: Consolidate Or Aggregate?

November 12, 2015

Do you ever feel like you have no idea where your money is? When I do individual consultations with people, I often find that they have trouble managing their money simply because it’s spread around in so many different places that it’s hard for them to keep track of it. If that sounds like you, there are a couple of ways to simplify your financial life:

1) Consolidate. Do you really need accounts in multiple banks or would separate accounts at the same bank do the trick? How about rolling over that retirement plan from a previous job into your current employer’s retirement plan or into an IRA? (No, having money in different institutions isn’t diversification. It’s what it’s invested in that matters.)

Many financial institutions now offer one-stop banking and brokerage services as well. I’ve found that banking at a discount brokerage firm like Charles Schwab, Fidelity, TD Ameritrade, and Scottrade generally offers a better deal than investing through a bank. The former typically offer bank accounts with higher interest rates, lower fees, and even ATM fee reimbursements while the latter usually sell expensive load mutual funds and annuities. (However, one exception is my WellsTrade account, which provides me 100 free investment trades a year that I can use to purchase low cost funds.)

2) Use account aggregation software. Of course, there are reasons not to consolidate. You may want different perks or investment options at various institutions or you may have more than the $250k FDIC limit per person per bank. I know I personally use at least 5 different institutions for my banking and investment needs (Voya, HSA Bank, Wells Fargo, Consumers Credit Union, and Ally Bank).

This is where account aggregation software can come in. These sites can link to accounts from multiple institutions and allow you to see everything in one place. Here are some of the most popular (and free) options:

Mint

Pros: It’s widely considered to have the most attractive and easiest to use interface.

Cons: The site has advertising and their investment capability is more limited.

Yodlee MoneyCenter

Pros: There’s no advertising or sales. It’s very comprehensive, even including things like travel points. The account synchronization is very reliable. The summary page is customizable and you can share your info with other people like your accountant or financial advisor.

Cons: The interface isn’t the most attractive or easy to use and the investing section is even weaker than Mint’s. There’s also a fee for the mobile app.

Personal Capital

Pros: Their investment section is the most robust.

Cons: They try to sell you into a managed investment program. The budgeting tools aren’t as strong as the others and the asset allocation models and spending categories aren’t customizable.

How about you? Have you consolidated accounts or used an account aggregation tool? Please share your experiences (positive or negative) in the comments section below.