Schwab and Fidelity are requiring clients to reset login credentials to curb third-party access.
Pontera claims Fidelity "stands alone" in locking consumers out of their accounts.
Experts warn of potential risks associated with screen-scraping technology used by third-party vendors, including data monetization without client permission.
API-based integrations are suggested as a more secure alternative to credential sharing.
Some advisors support Schwab and Fidelity's prioritization of data protection over third-party convenience.
Why this matters: These changes impact how financial advisors access and manage client data, particularly for held-away assets like 401(k) accounts. Clients may experience disruptions in their advisory services, and firms need to adapt to evolving security protocols.
Schwab and Fidelity have implemented measures to restrict credential sharing, a practice where clients provide login credentials to third-party data vendors. This decision aims to safeguard client data and mitigate potential security risks. Pontera, a fintech firm that connects advisors with held-away assets, has publicly criticized Fidelity’s actions, claiming they are anticompetitive and lock consumers out of their own accounts.
Ben Henry-Moreland from Kitces.com highlights the risks of "screen scraping," a technology used by some third-party vendors that can expose more client information than necessary. He warns of the potential for data collection and monetization without client consent.
Alternatives like API-based integrations offer a more secure way to connect with client accounts. Pontera CEO Yoav Zurel mentioned a partnership with 401GO using API-based integrations, suggesting a willingness to collaborate with Fidelity on a similar solution. However, Fidelity has not yet pursued this option.
Some advisors, like Andrew Herzog from The Watchman Group, support Schwab and Fidelity’s stance, prioritizing data protection over the convenience of third-party services. Absolute Capital Management CEO Brenden Gebben also believes Fidelity is enforcing the rules of the plan appropriately.
Q: Why are Schwab and Fidelity restricting credential sharing?
To protect client data and mitigate security risks.
Q: What is Pontera’s argument against Fidelity’s actions?
Pontera claims Fidelity is acting anticompetitively and locking consumers out of their accounts.
Q: What are the risks of screen scraping?
Potential data collection and monetization without client consent.
Q: What is an alternative to credential sharing?
API-based integrations offer a more secure solution.
Be aware of the changing security protocols at Schwab and Fidelity regarding third-party access.
Understand the potential risks associated with credential sharing and screen scraping.
Discuss alternative solutions, such as API-based integrations, with your financial advisor.
Prioritize data security when choosing third-party financial tools.
Consider the impact of these changes on your ability to access and manage your held-away assets.
Do you think these security measures are justified, or do they hinder access to financial information? Share your thoughts in the comments below!
Share this article with others who need to stay ahead of this trend!
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