FPPad Bits and Bytes for August 28

On today’s broadcast, BlackRock plans to acquire FutureAdvisor, Salesforce previews it’s Financial Services Cloud platform, and a new white paper from Kaleido will tell you how you’re going to overhaul your business model.

So get ready, FPPad Bits and Bytes begins now.

(Watch FPPad Bits and Bytes on YouTube)

Today’s episode is brought to you by Laser App Software, host of the brand-new Laser App Advisor Con event coming this October in Las Vegas.

Laser App

This event will be led by top advisors, offering their own case studies and best practices on adopting industry-leading technology. Space is limited, so secure your registration today by visiting

Here are the links to this week’s top stories:

BlackRock Press Releases from BlackRock, and

Blackrock Acquires FutureAdvisor For $150M As Yet Another Robo-Advisor Pivots To Become An Advisor #FinTech Solution from

[Well, if you haven’t heard by now, the big news this week comes from BlackRock, as the world’s largest asset manager with around $4.7 trillion under management, agreed to acquire FutureAdvisor, the online automated investment service based in San Francisco. Let’s run the numbers: FutureAdvisor reportedly manages $600 million dollars, at 50 basis points, they earn, at best, $3 million in gross revenue, BlackRock reportedly paid something like $150 million for FutureAdvisor, so they paid 50, that’s right, 50 times gross revenue for the company. Wow. If it’s true, that’s like, way beyond Facebook and Twitter valuation territory! For an automated investment service!

So let me cut to the chase for your business. In a Wall Street Journal interview, BlackRock COO Robert Goldstein said that as BlackRock looks to “grow the company, our focus is going to be on working with our partners.”

In other words, financial institutions. Does that include you, the RIA? I don’t know. But it could be just institutions that compete with you day after day for client assets. Great.

So if this doesn’t light a fire under you to enhance your technology, improve your client experience, and clearly identify that your services go WAY beyond automated investing, I don’t know what will.

Look. I believe in you, I believe in the value you add for your clients, and I trust that what you is so much better than a five-question risk survey followed by an asset allocation recommendation.

But if you just sit there on your hands and do nothing, I just don’t see how your business stands a chance over the next five years.] BlackRock, Inc. has entered into a definitive agreement to acquire FutureAdvisor, a leader in digital wealth management.

Salesforce Introduces Salesforce Financial Services Cloud: Transforming the Client-Advisor Relationship from Salesforce

[Next up is news from Salesforce, another industry behemoth, that this week announced it will release the Salesforce Financial Services Cloud in February 2016.

Claiming it’s the company’s “first industry-specific product,” (I guess they want to forget about Salesforce for Wealth Management?), the platform will offer a much more modern interface, secure private messaging with clients, and even integrations like Advisor Software for portfolio rebalancing and Yodlee for account aggregation.

But after closer inspection, Salesforce Financial Services Cloud seems positioned mainly for broker-dealers and large enterprise RIAs like United Capital, one of the firms who offered design feedback. Just look at some of the terminology they use: Book of business? Tear sheet? That should give you a clue.

So as an independent advisor, I don’t quite yet see you using something like this directly from Salesforce, but rather it will likely be an option offered by an institutional custodian or one of the many Salesforce overlay providers like Concenter Services, Navatar, Salentica, and more.] Salesforce, the Customer Success Platform and world’s #1 CRM company, today introduced Salesforce Financial Services Cloud, transforming the client-advisor relationship for the digital age.

Kaleido Identifies Rapidly Declining Profitability, Failure to Prepare for Downturn as #1 Independent Financial Advisory Firm Threat in New Whitepaper from MarketWatch, and

Download the X-Cell white paper

[And finally, if you’re not already depressed by today’s broadcast, the researchers over at Kaleido, led by co-founders Angie Herbers and Kristen Luke, have noticed a disturbing trend among advisory firms. That trend is the rapid decline of profit margins.

Great. Just what you wanted to hear. But, I produce this broadcast to give you solutions to grow your business, so along with Kaleido’s research, the company issued a white paper describing what it calls the X-Cell Process™.

In a nutshell, the four-step X-Cell Process outlined should help you overhaul your service models so you can successfully incorporate automated investment technology into your business.]

This is not a paid endorsement, I just think it’s a useful resource for you to have, and all it will cost you is your email address.] Kaleido Inc., a practice growth agency serving independent financial advisory firms, has released a white paper entitled “X-Cell: The New Frontier of Advisory Client Service,” identifying growth inhibitors and other trends affecting the independent advisory community, as well as focused, tangible solutions.

Watch FPPad Bits and Bytes for August 28, 2015

Watch FPPad Bits and Bytes for August 28, 2015

Leave a comment

BlackRock to acquire FutureAdvisor

BlackRock to acquire FutureAdvisor

BlackRock to acquire FutureAdvisor

In a press release this morning, BlackRock, Inc., the world’s largest asset management firm by AUM (source: announced it has entered into a definitive agreement to acquire FutureAdvisor. Terms of the acquisition were not disclosed.

Let’s hit some fast facts again, shall we:

  • FutureAdvisor was founded in 2010 and had raised $21.5 million in four rounds (source)
  • FutureAdvisor had a reported AUM of $600 million in June 2015 (source), though their most recent SEC Form ADV from September 2014 reflected $232 million. This lagged online automated investment leaders Wealthfront and Betterment by approximately $2 billion as of August 2015
  • FutureAdvisor charged a Subscription Fee for the Premium Service of 50 basis points, making it more expensive than competitors Wealthfront and Betterment
  • Assuming a 50 bps fee on all $600 million results in gross revenue run rate, at best, of $3 million (remember AUM of $232 benchmarked in September 2014)

What does this mean for advisers?

Not much. Really. Return to your business.

But here’s the thing. BlackRock is an asset manager. BlackRock does well when its asset base grows. How can the company continue to grow its assets?

One way is to offer a new, simple, and attractive way for investors to automatically add their assets to low-cost, broadly diversified portfolios of funds and ETFs.

Enter FutureAdvisor.

A bonus for BlackRock is if the company can find a way to invest those assets into BlackRock-managed products.

Say, iShares ETFs.

What to do now

You come to FPPad for ideas on what to do with the technology in your business. So here’s what I think you should do.

Number one: Offer your own online, user-friendly interface

If the world’s largest asset manager sees the need to add a low-cost user-friendly online asset allocation tool to its arsenal, isn’t it time you have one for your business?

Prospects are comparing your capabilities to the services they see from Wealthfront, Betterment, FutureAdvisor, et. al., and if you come up short and don’t have an answer to their slick platforms, you’re probably viewed as a laggard.

Number two: Tell clients what you really do

Automated investment management is a commodity.

Anyone can get it from Schwab, Wealthfront, Betterment, FutureAdvisor. You could argue that the first mutual funds were the earliest automated investment management solution!

Sure, tax loss harvesting, daily rebalancing, and instant deposits are bells and whistles for automated investment solutions, and the results of whether or not those features actually result in any additional money in customers’ pockets is highly dependent on each customers’ personal situation.

But for you, as an advisor, investment management is just ONE of the things you do. It’s not the ONLY thing you do.


So let clients know.

Even better, let your prospects know how much more you do.

You’re not justifying the fees you charge, you are reinforcing the value you provide by giving clients the service they need in ALL areas of their financial life.

You go WAY BEYOND investment management.

So do that. Tell clients what you really do, and why what you do goes way beyond automated investment management.

Leave a comment

FPPad Tech Tour: Portfolio Pathway VP Anthony Valente

Our second stop in Charlotte, North Carolina is with Anthony Valente, Vice President of Business Development for Portfolio Pathway.

We picked up a hot dog and a soda before sitting down to talk about how Anthony first connected with Portfolio Pathway and why he works hard to support financial advisors.

(Watch FPPad Tech Tour Season 1 Episode 2 with Anthony Valente on YouTube)

FPPad Tech Tour is brought to you by the following Back Stage Sponsors:
Orion Advisor Services:
Redtail Technology:

0:14 FPPad Tech Tour Intro
1:07 Anthony’s connection with Portfolio Pathway
2:03 How has Portfolio Pathway stayed competitive?
3:00 Why do you work on technology that supports financial advisors?
3:51 What’s your typical day like when working with advisors?
5:36 How accessible are you for advisors?
6:33 How to you maintain balance in your day-to-day life?
8:36 Why the baseball glove?
8:57 Support for the Foundation for Financial Planning

Leave a comment

[AUDIO] FPPad Tech Tour: Portfolio Pathway VP Anthony Valente

Our second stop in Charlotte, North Carolina is with Anthony Valente, Vice President of Business Development for Portfolio Pathway.

We picked up a hot dog and a soda before sitting down to talk about how Anthony first connected with Portfolio Pathway and why he works hard to support financial advisors.

This is an audio-only podcast of the FPPad Tech Tour interview with Anthony Valente, VP of Portfolio Pathway. Click here to view the full video.

Leave a comment

Betterment is poised to overtake Wealthfront in AUM

AUM 600In the race for robo adviser supremacy, neither Wealthfront nor Betterment wants to be runner-up.

Love it or hate it, AUM, or assets under management, is the default metric by which investment management businesses are benchmarked.

Robo-Advisor AUM

Certainly, many automated investment services (or rather, robo-advisors) have been flaunting their AUM figures in recent years, to, well, I don’t know why, exactly, other than to beat their chest on how good they are at gathering assets.

The most vocal automated investment service for publishing AUM figures is Wealthfront, with periodic blog posts issued when the company passed the round numbers of $500 million, $1 billion, and $2 billion in AUM.

Taking the more subtle approach to AUM milestones is Betterment, long viewed as the runner-up to Wealthfront in the AUM-gathering contest since 2013.

Instead, Betterment mentions the number of customers it serves first (in part because they have more than Wealthfront, so they can be number one in that comparison), followed by the level of AUM represented by their customers.

Still, there are a few posts from Betterment that place dates on when the company crossed $1 billion (with 50,000 customers) and $2.5 billion (with 100,000 customers). One has to dig through trade publications like TechCrunch and Forbes to put a date on earlier AUM figures like the company’s first $100 million and $500 million, respectively.

Ok, fine. So how is that asset gathering coming along today?

Graph of Wealthfront vs. Betterment AUM Growth

This morning I wanted to take a quick look at the AUM growth of the two leading automated investment services, Wealthfront and Betterment. But after 10 minutes of Googling, I had no charts or graphs of how each company is growing their AUM.

So I built a quick Google Sheet using the dates and AUM figures from most of the blog posts and articles cited above. Here it is!

Wealthfront vs. Betterment AUM Growth

Wealthfront vs. Betterment AUM Growth


So what is my biggest takeaway from this chart?

Betterment poised to overtake Wealthfront in AUM

Betterment has consistently lagged Wealthfront’s AUM since 2013, and Wealthfront’s growth rate was higher than that of Betterment, but then something changed around December 2014.

The rate of Betterment’s AUM increase accelerated, while Wealthfront’s growth rate generally remained the same from January 2014.

And the most recent figures for August 2015 show that Betterment has significantly closed the AUM gap with Wealthfront.

This being mid-August, and assuming Betterment’s faster growth rate continues as it has since the beginning of 2015: Betterment is poised to overtake Wealthfront in AUM.

What Happened to Betterment’s AUM Growth?

What happened to boost Betterment’s AUM growth starting around December 2014. I suspect the cause is:

Betterment Institutional

So not only does Betterment have its own client acquisition strategies (web banner ads, TV commercials, ads on taxis and phone booths in NYC…), now the company has a new salesforce, if you will, of investment advisers who are using the Betterment Institutional service for their emerging clients.

This new cadre of advisers likely stands at a hundred or so today, but as the popularity and appeal of automated investment services expands, potentially thousands of financial advisers may be directing their emerging clients to use the low-cost service.

This is a totally new salesforce and asset gathering funnel that Wealthfront lacks today.

So in the race to be the dominant VC-backed automated investment service measured by AUM, the guard is about to change.

And nobody wants to be number two.

Leave a comment

FPPad Bits and Bytes for August 14

On today’s broadcast, Envestnet acquires account aggregation provider Yodlee, Advizr makes two announcements to close the gap among financial planning software, and find out why automated investing services might be losing their competitive advantage.

So get ready, FPPad Bits and Bytes begins now.

(WatchFPPad Bits and Bytes on YouTube)

Today’s episode is brought to you by eMoney Advisor, host of the eMoney Advisor Summit coming October 19th through 21st in Orlando.

emoney summit

Take a deep dive into the emX strategies that help you Connect, Engage and Win with your clients. Plus, everyone watching this show can take advantage of a one hundred dollar discount off your registration, so visit today and use promo code FPPAD100. That’s FPPAD100.

Here are the links to this week’s top stories:

Envestnet to Acquire Yodlee from Envestnet

[This week’s top story comes from Envestnet, as the wealth management technology and service provider announced it is acquiring Yodlee in a deal valued somewhere around $660 million. Now most of you know Yodlee for account aggregation, but Yodlee really doesn’t sell services directly to advisors.

Instead, some advisors benefit from Yodlee aggregation through third-party integrations, with MoneyGuidePro being the most well know,after announcing a Yodlee integration to much fanfare last year, priced at a dollar per day. You can get more details on that in episode 120 that I linked over here.

So let’s cut to the chase: is this good or bad? If you’re an Envestnet technology user, this is really good. Aggregating clients’ held away accounts gives you better visibility on what clients actually own, how they’re allocated, and in some cases, how they manage their cash flow. This information can only make the advice you give better, and that’s a fantastic thing for everyone!

BUT, if you compete with Envestnet and/or take advantage of Yodlee aggregation today, the future isn’t so clear. It’s way too early to speculate what’s going to happen to Yodlee’s pricing and availability, but if efficient account aggregation is a cornerstone of your business, it might be time to keep alternatives like Aqumulate, ByAllAccounts, or Quovo in mind.] Envestnet, Inc. (NYSE:ENV), a leading provider of unified wealth management technology and services to financial advisors, and Yodlee, Inc. (Nasdaq: YDLE), the leading cloud-based platform driving digital financial innovation, today announced that the Boards of Directors of both companies have unanimously approved a definitive agreement under which Envestnet will acquire all of the shares of Yodlee in a cash and stock transaction valued at $18.88 per share, or approximately $660 million on a fully-diluted equity value basis.


Introducing: Advizr Express from Advizr

[Next up is news from Advizr, an up-and-coming financial planning software provider, who this week made two announcements. First is the introduction of a prospecting tool called Advizr Express, allowing you to attract prospects by offering a super-simple retirement readiness illustration either on your website or for use with prospects during an initial meeting. Advizr Express is in beta testing today with an official release anticipated later this month.

Advizr’s second announcement is a new integration with Orion Advisor Services to import client portfolio holdings to avoid manually entering that information by hand. This adds to an existing integration with Blueleaf, and should be a preview of what to come with connections with many of the leading custodians. Wink wink.

So while Advizr is still a ways away from offering the number of integrations found in category leaders like Advicent, eMoney, and MoneyGuidePro, updates like these should help Advizr close the gap and offer you more choice in the tools you use to deliver financial planning.]

Automation Won’t Replace People as Your Competitive Advantage from Harvard Business Review

[And finally, I want to wrap up this week’s broadcast with an article from Harvard Business Review titled Automation Won’t Replace People as Your Competitive Advantage. For two years and seventy episodes of Bits and Bytes, the chatter about automated investment services and algorithmic rebalancing has reached a fever pitch, but scroll down to the end of that article and you’ll read a striking statement:

“Once smart machines are built to solve problems in asset efficiency (or indeed any area of operations) they very rapidly spread and become pervasive across an industry. Therefore, they cease to provide a competitive advantage.”

I think this perfectly describes what’s happening today in automated investing. Sure, six years ago, Wealthfront and Betterment attracted attention because there was nothing out there like their automated services. Their exclusivity was their competitive advantage.
But fast forward to today where automated services are available from Schwab, Vanguard, Future Advisor, Blooom, and even LPL Financial having announced their own plans for an automated service. Automated investing is becoming pervasive.

But what that also says to me is that if you don’t have some kind of low-cost automated service to offer, it may actually be viewed as a disadvantage because they’re so common in the industry. It’s like telling clients you won’t communicate with them via email. It’s so pervasive, who DOESN’T use email?] Geoff Colvin’s primary argument is that there are some unique human capabilities, like empathy and storytelling, that will keep people employable even as automation chips away at the content of most jobs.


Watch FPPad Bits and Bytes for August 14, 2015

Watch FPPad Bits and Bytes for August 14, 2015

Leave a comment

FPPad Tech Tour: LPL Financial CIO Victor Fetter

This is the season premiere of FPPad Tech Tour!

Note: Treat this video as you would treat a TV show. FPPad Tech Tour is committed to telling the stories of people who are working hard to support financial advisors. These stories can’t be told in a two-minute video. So fire up your Apple TV, Chromecast, or your smart TV, kick off your shoes, and enjoy this up-close-and-personal video series.

Our first stop on FPPad Tech Tour is in Charlotte, North Carolina, where we met up with Victor Fetter, CIO of LPL Financial to learn about what attracted him to manage LPL’s technology solutions for the nation’s largest independent broker dealer.

(Watch FPPad Tech Tour Season 1 Episode 1 with Victor Fetter on YouTube)

FPPad Tech Tour is brought to you by the following Back Stage Sponsors:
Orion Advisor Services:
Redtail Technology:

0:16 FPPad Tech Tour Intro
1:10 How did your career bring you to LPL Financial LLC?
2:55 How do you accommodate and respond to the needs of a diverse group of financial advisors?
4:55 Victor speaks about candid conversations with financial advisors
6:29 What’s your typical day like? How much do you interact with financial advisors?
7:53 Victor talks about connections with LPL Financial advisors beyond the business setting
8:43 One secret not many people know about you
11:14 How do you feel about automated investment services, aka robo advisors?
12:38 What are you telling advisors to do about automated investment services?
13:09 Where do you get your best information on where the industry is headed?
14:40 We take a drive to Fort Mill, South Carolina to view the construction site of the new LPL Financial facility
15:45 What investments are you and LPL Financial making for the future of financial advisors?


[AUDIO] FPPad Tech Tour: LPL Financial CIO Victor Fetter

Our first stop on FPPad Tech Tour is in Charlotte, North Carolina, where we met up with Victor Fetter, CIO of LPL Financial to learn about what attracted him to manage LPL’s technology solutions for the nation’s largest independent broker dealer.

This is an audio-only podcast of the FPPad Tech Tour interview with Victor Fetter, CIO of LPL Financial. Click here to view the full video.

Leave a comment

FPPad Bits and Bytes for August 7

On today’s broadcast, LPL financial reveals its robo intentions, Wealthbox raises the CRM stakes with an integration with Slack, and Smarsh steps up its archiving of your Microsoft Office 365 content.

So get ready, FPPad Bits and Bytes begins now.

(Watch FPPad Bits and Bytes on YouTube)

Today’s episode is brought to you by ExternalIT, a leading provider of cloud solutions to the wealth management industry, With the recent integration of Microsoft Office 365, you can enhance the familiar tools of Word, Outlook and Excel with an extensive range of apps including VoIP communication, on-line meetings, collaboration, business intelligence, and more.

External IT

See how External IT brings all this together in a free webinar on August 18, so be sure to register today at

Here are the links to this week’s top stories:

LPL Financial Launches Vendor Affinity Program from LPL, and

Google News results for LPL Vendor Affinity Program

[Today’s top story comes from LPL Financial, as the nation’s largest broker-dealer, oh, thank you disclosure, held its annual LPL Focus conference in Boston last week.
On the technology side, LPL announced it will soon introduce its own an automated investment service, cough robo-advisor, consisting of low-cost ETF portfolios powered by LPL’s research. No details on pricing or even a name for the solution were provided, but LPL president Dan Arnold did say that a pilot program with about 20 advisors will be begin in the next few months.

LPL also announced the launch of its Vendor Affinity Program, calling it “a centralized repository” of vendors that offer discounted pricing to LPL advisors for their products and services. LPL is launching the Vendor Affinity Program with over 50 vendors from the get-go, with discounts ranging anywhere from 10 percent to 80 percent off retail pricing.

Now if you’re not affiliated with LPL Financial, don’t get too discouraged. Vendors don’t get to be included in the affinity program simply by offering a discount; vendors must also meet certain security and compliance requirements imposed by LPL, so this is the takeaway for you. If you’re not really sure a technology vendor will meet the standards for your own business, you can be more confident in those vendors who have passed muster with LPL by meeting some pretty high standards.

As far as who is in the affinity program? I couldn’t reach anyone at LPL in time before filming this episode to get that list, but some detective work on Google should yield a list of usual suspects who’ve issued press releases regarding their inclusion into the program.] LPL Financial LLC, the nation’s largest independent broker-dealer, a custodian for registered investment advisors (RIAs), and a wholly owned subsidiary of LPL Financial Holdings Inc., today announced the launch of its Vendor Affinity Program, a new initiative designed to help advisors reduce the complexity and costs of running their businesses.

Wealthbox CRM Integrates with Slack! from Wealthbox, and

View Slack Pricing at

[Next up is news from CRM provider Wealthbox, as the company announced a new integration with Slack, a wildly-popular online collaboration tool. “What is Slack?” you ask.

I’d rather not make a comparison to email, but, Slack is like email on steroids. But instead of collaborating via back-and-forth email threads, Slack lets you use real-time chat, aka messaging, to work with your team using Channels centered around certain topics, connect privately with colleagues using direct messages , or set up private groups with just a few team members to work on top secret tasks.

With the new Slack integration, Wealthbox users can select from 22 different notification types to automatically push into Slack, helping everyone in the firm stay informed on day-to-day activities. And with the Slack feed on your favorite mobile device, you should be able to stay in the loop on all sorts of tasks in your office no matter where you are.

And one last thing: since Slack can be used to chat about clients, and potentially WITH clients, you’ll need the Slack Plus plan that’s around $15 per month per user that includes compliance exports of all your message so you keep your compliance officer happy.] Wealthbox CRM, an activity stream-based client relationship management app for wealth management firms, has announced an integration with Slack, the messaging app for business teams.

Smarsh Offers Enhanced Archiving Support for Microsoft Office 365 Environments from BusinessWire

[And finally, this week’s episode wraps up with news from Smarsh, the archiving solution provider, as the company introduced enhanced archiving support for Microsoft Office 365 environments. As more of you move away from local servers to the cloud, you still need to fulfill your compliance and record-keeping obligations required by FINRA and the SEC.

By all accounts, Microsoft is moving full-steam ahead on cloud services, so it’s pretty much inevitable that as long as you want to keep using Word, Excel, Outlook and more, you’ll need to incorporate a compliance solution for the resources you manage in the cloud. In addition to archiving Office 365 email, the Smarsh solution can also capture content on Yammer as well as Skype for Business Online, formerly called Lync, which is Microsoft’s attempt to compete with Slack that I mention, oh, about a minute ago.] Smarsh®, the leading provider of cloud-based comprehensive archiving solutions for compliance and e-discovery, today announced enhanced archiving support for electronic communications within Microsoft Office 365 environments.


Watch FPPad Bits and Bytes for August 7, 2015

Watch FPPad Bits and Bytes for August 7, 2015