Recently, I came across some strong recommendations from a trusted source (that I know the reputation of, but don’t know personally) for an investment tracking too called Empower Personal Dashboard. You set it up, link it to your various brokerage, bank, etc. accounts, and it tracks in real time all sorts of interesting data – most importantly, your net worth.
I found it most appealing in trying to determine when we can actually retire. I’ve read quite a bit about retirement planning lately, and it comes down to matching anticipated spending against anticipated income. To get at those numbers, of course, I need to track our spending and somehow calculate our income.
Whether we work with a financial planner, or do it ourselves, we’ll need these numbers (along with some other factors).
So, how do we determine expenses? Well, the recommendation is to review our entire last year’s expenses, and categorize each one. This involves reviewing every expense on each of your credit cards, and our bank.
There are various tools to help with that (other than using Excel and manually categorizing every expense, by hand). These tools typically offer an automatic download, or you can export each account’s expenses in a CSV file and import it yourself. The export/import is the approach I took, because I don’t want to grant access to all my financial data to a piece of online software.
Now, we’re on to the income side. I’ve been maintaining an Excel spreadsheet of investment accounts for 20 years, and update it periodically (like maybe once a year, usually not). It’s tedious – cutting and pasting the amount from each individual investment, in each account, then verifying the totals, to make sure I’m not missing anything or counting something more than once. Thus, the irregular updates.
As we plan for retirement, we’ll want to plug in various scenarios, such as retiring in one, two, three years, allocations between stocks and bonds, etc. I’ll need to do some number crunching far more extensive than my meager Excel skills will get me. So, I’m looking at tools like the Empower Personal Dashboard.
Finally, we’re to the crux of the matter. Should I log into each account, and cut and paste each investment into the tool, or grant it (read-only) access to all my accounts?
Researching a bit, I see that Empower uses state of the art security mechanisms.
Here’s what they offer:
- Data Encryption: All data is secured with AES-256 encryption, which Empower says is the same standard as the U.S. military.
- Multi-Factor Authentication: Secure your account with multi-factor authentication for devices. You can also use biometric authentication on mobile devices.
- Security Bounty Program: Empower has a bug bounty program that pays hackers and users for finding and reporting possible exploits or security weaknesses in the platform.
- Fraud Monitoring: You can opt-in to a daily transaction monitor email to receive a list of daily transactions, helping you spot potentially fraudulent transactions.
However, my concerns are a little different – I want to know how they can truly be limited to “read-only” access? If they have the username and passwords for each of my financial institution accounts, what prevents them (or a hacker) from using those logins to access (and steal from) my investment accounts?
After some research, it turns out that Empower (and many other online tools) does not see my brokerage account login info at all. When I set up the link between Empower and the brokerage firm, Empower doesn’t get those credentials.
When you connect your brokerage accounts to Empower Personal Dashboard, you will be prompted to authorize Empower to access your data. You will not be asked to enter your passwords.
When linking to your brokerage account, you’ll be sent to your brokerage account’s portal login page, in a popup window, where you enter your username and password. So, they’re never provided to Empower (or other financial apps like Quicken, TurboTax, etc.)
Empower will then create a unique access token that allows them to access your data. This access token is encrypted and stored securely on Empower’s servers. Empower’s employees do not have access to your passwords or your access tokens.
So, resting assured that linking my financial accounts to Empower (or Quicken, or TurboTax) won’t expose those accounts to potential thieves. Great! Now, I can link all my account data very easily, and generate all sorts of useful reports, without the tedium of plugging numbers into my spreadsheet.