Welcome to the FPPad fintech briefing, here are the top fintech stories you need to know today.
Outsourcing investment management just got a little bit easier for advisors using TD Ameritrade Institutional, as this week the company announced the introduction of its Model Market Center. The Model Market Center features 62 different investment models from eight investment managers, with notable managers including Meb Faber’s Cambria Investments as well as WisdomTree Investments, who made fintech news a few weeks ago with its investment in AdvisorEngine’s acquisition of Junxure. Model Market Center joins a growing market of outsourced investment management solutions which includes Orion Advisor Services, Riskalyze, and Morningstar, and others.
Online 401(k) manager blooom is helping investors protect their accounts against fraudulent activity with its new Suspicious Activity Alerts feature. Investors can connect their 401(k)s and other employe-sponsored retirement accounts to blooom which continuously monitors for withdrawals or loans on account funds, notifying clients via text message when blooom detects any suspicious activity.
And tickets are selling fast to the 2018 Fearless Investing Summit brought to you by Riskalyze, which blends the latest in investment trends and fintech innovation in its three-day agenda. Last year’s inaugural summit eventually sold out, so you need to act quickly to make sure you don’t miss out on this year’s event. Secure your tickets today by visiting fppad.com/flashbreifing for the links on today’s stories.
I’m Bill Winterberg, and those are your fintech headlines for today from FPPad.com, be sure to check back in with me later for more fintech news.
SS&C Technologies acquires DST Systems for $5.4 billion
The merger and acquisition train continues to steamroll into 2018, with SS&C Technologies announcing a $5.4 billion deal to acquire DST Systems in an all-cash transaction. Over 100,000 financial professionals use DST Systems technology like DST FAN Mail for portfolio aggregation and DST Vision to view a dashboard of all client accounts. SS&C, which also acquired Advent software in July of 2015 for $2.3 billion, says it will leverage the DST Systems acquisition to increase automation and efficiency across all of its wealth management offerings to financial professionals and institutions.
Merrill Lynch Wealth Management adds text messaging support
Do you text with your financial adviser? In the coming weeks, Bank of America’s Merrill Lynch Wealth Management division will allow its 15,000 financial advisors to use compliant text messaging software as it rolls out new software this month and into February. Merrill Lynch selected CellTrust to allow advisors to send text messages to clients using a web browser, while clients can text back to their advisor using their Apple or Android devices. All messages are captured and archived for compliance purposes, meeting the regulatory requirements imposed by the SEC an FINRA.
Junxure acquisition details from AdvisorEngine
And finally, in a webinar this week, AdvisorEngine provided details on its roadmap following last week’s acquisition announcement of Junxure. Webinar attendees learned that the company plans to continue to support both the Junxure Desktop and Junxure Cloud versions of the CRM and has no plans to change the Junxure pricing structure from a user-based subscription to a fee based on assets under management. Here’s Rich Cancro, Founder and Chief Executive Officer of AdvisorEngine with his comments about the alignment of culture between the two organizations:
When you take a look at the Junxure product and the people, as I got to know the management team, and then most recently the full team, the passion they have toward the Junxure client base is truly palpable, and that’s something that the team, the people, the care, and how they care for one another, there’s a lot of similarities around culture, being collaborative and helping one another and helping our clients.
To get links to the details on today’s stories, visit fppad.com/flashbriefing
I’m Bill Winterberg, and those are your fintech headlines for today from FPPad.com, be sure to check back in with me later for more fintech news.
AdvisorEngine acquires Junxure. Full transcript below.
Welcome to the FPPad fintech briefing for Tuesday, January 2, Here’s the top fintech story you need to know today.
Well the 2018 fintech news cycle is already off to a quick start, as AdvisorEngine announced the acquisition of CRM Software, the makers of Junxure CRM. Terms of the deal were not disclosed, but in its press release, AdvisorEngine also said it received a commitment of $30 million in new financing from WisdomTree Investments, of which $22 million was funded today with a majority of those proceeds used to fund the acquisition of Junxure.
The new funding from WisdomTree builds on the company’s $20 million dollar investment for 33% of AdvisorEngine made back in December of 2016.
So here’s my quick take on the news: Junxure has a very loyal base of users, especially among those firms that continue to use the company’s flagship desktop software introduced back in 2001. However, the rollout of the Junxure Cloud solution has taken *much longer* than I expected, and advisors continue to tell me today that they can’t convert 100% of their desktop data to the Cloud version.
So this acquisition by AdvisorEngine gives me new hope that development, support, and expansion of the Junxure Cloud solution will receive new energy and direction. Junxure co-founder Greg Friedman will take on a new role as a strategic advisor with the company.
And from an industry perspective, 2018 is shaping up to be a year where CRM providers could be in play as companies continue to consolidate application in an attempt to offer an all-in-one technology solution for financial advisors. SS&C Advent acquired Salentica in late 2016, leaving Redtail and Wealthbox among the few independent CRMs that come to mind with large user bases, followed by providers like Grendel, ProTracker, and AdvisorsAssistant that could be acquisition targets as the year progresses.
If you have some insights on the Junxure acquisition, send me a message on Twitter I’m @billwinterberg, or email me at bill@fppad.com.
I’m Bill Winterberg, and those are your fintech headlines for today from FPPad.com, be sure to check back in with me later for more fintech news.
On today’s broadcast, Vanare becomes AdvisorEngine after a $20 million dollar investment, RightCaptial gets a favorable review, and Addepar opens up about the capabilities of its technology.
Today’s episode is brought to you by eMoney Advisor, the leading provider of digital wealth management solutions. eMoney just introduced two new Advanced Analytics products: Advisor Analytics Pro, offering advisors and support staff deeper business insights, and Office Analytics, offering never-before-seen firm-wide insights.
Featuring a customizable Analytics dashboard, an expansive library of new and interactive data charts, and more, eMoney’s Advanced Analytics solutions will help you put your data to work and uncover more opportunities. For more information the eMoney Analytics solutions, visit fppad.com/emoneyanalytics.
[First up is news from Advisor Engine, which you may recognize under the company’s former name of Vanare. The name change was carried out as WisdomTree, the exchange-traded fund sponsor and asset manager, announced a $20 million dollar investment in Advisor Engine for 36% equity in the company.
This investment is the latest example of ETF issuers getting in the automated investment service space, but remember, BlackRock acquired FutureAdvisor, Invesco acquired Jemstep, yet WisdomTree chose to make a minority equity investment. I’m just not exactly sure why they didn’t acquire the whole business, but then again, I’m not the one that has to cut a check for $50 million dollars.
So let me connect some dots. All of the automated investment services are putting downward pricing pressure on asset allocation and periodic rebalancing. So in general, margins for traditional portfolio management are being compressed. You can either add value elsewhere, or look for ways to save on operational costs for your business.
AdvisorEngine’s new capital means it likely won’t shut down anytime soon, AND, the company recently added support for custody services at Apex Clearing, which could be a potential way you reduce your operational expenses AND allow you to pass some of those savings directly to your clients, all from a white-labeled solution.
For me, that’s why this transaction is an interesting one to keep an eye on.] WisdomTree is providing [Vanare] with an injection of funds in a bid to better position itself for industrywide changes wrought by new technologies and stiffer regulations, according to CEO Jonathan Steinberg.
[Next up is news about RightCapital, as Financial Planning magazine columnist Joel Bruckenstein reviewed the financial planning software and offered his take of where it fits in the marketplace. One of the distinctive features RightCapital offers is the ability to generate simulated tax forms so you can actually see how decisions on deductions, distributions, and taxable withdrawals will impact a client’s personal tax return.
Also, just because RightCapital has a fresh and modern UI doesn’t mean it’s a solution only for younger clients. RightCapital’s robust modeling of asset withdrawal strategies was highlighted in the review, allowing clients to simulate the best withdrawal strategies when factoring in Social Security and tax-deferred tax-free retirement accounts.
Of course, there’s much more to the review, but overall, RightCapital gets recommended as a more-than-adequate application for the mass affluent market. A 14-day free trial is available so you can evaluate the solution for your clients’ needs.] The middle ground in financial planning software is exactly the niche that RightCapital is targeting, according to co-founder Shuang Chen.
[But, if your business serves high net-worth households, this week’s final story on Addepar should be worth taking note. The investment management technology company appears to be opening up a bit more about exactly what it is they do.
In an interview with SourceMedia managing editor Suleman Din, Addepar’s CEO Eric Poirier described how much of the high net-worth marketplace has been historically addressed by custom Excel spreadsheets.
When clients start identifying assets like their limited partnership interests, equity investments, venture capital, and so on, most off-the-shelf solutions just aren’t compatible with the esoteric properties of these assets. But that’s been Addepar’s focus for five years, according to Poirier.
That kind of development sets Addepar apart as the Ferrari of the investment management technology space and is appropriate for households that require that kind of horsepower, and while that power certainly scales down to more traditional accounts with stocks, ETFs, and mutual funds, I suspect you’ll find it’s a bit overkill in capabilities and price if your business primarily serves the needs of mass affluent households.] While other fintech startups claimed they would disrupt the wealth management industry, Addepar has taken the tack that it can make it better.
Here are stories that didn’t make this week’s broadcast:
A close examination of the [2016 FP Tech Survey] data reveals other interesting trends, including which broker-dealers, custodians and third-party tech providers seem to be the best at meeting advisers’ needs, where advisers can get a good return on tech investment and how the next generation of advisers approaches tech.
Digital advice as an industry will take off once it is built into retail banking, capitalizing on an investor segment ignored by wealth managers, says SigFig CEO Mike Sha. That’s why, announcing his firm’s newest partnership with Citizens Bank, Sha predicts his platform will reach half of all U.S. households by next year.
On today’s broadcast, Wells Fargo announces a partnership with SigFig, Cetera’s computers systems suffer a two-day outage, lessons from a hack at Lincoln Financial, and more.
Today’s episode is brought to you by eMoney Advisor, the leading provider of digital wealth management solutions. eMoney just introduced two new Advanced Analytics products: Advisor Analytics Pro, offering advisors and support staff deeper business insights, and Office Analytics, offering never-before-seen firm-wide insights.
Featuring a customizable Analytics dashboard, an expansive library of new and interactive data charts, and more, eMoney’s Advanced Analytics solutions will help you put your data to work and uncover more opportunities. For more information the eMoney Analytics solutions, visit fppad.com/emoneyanalytics.
[First up is news from Wells Fargo, as the bank, which finds itself in the middle of a very public firestorm over opening unauthorized accounts, announced this week that it is partnering with SigFig to release an automated investment service to customers of Wells Fargo Advisors sometime in the first half of 2017.
Other than the potential release date, there really wasn’t any concrete information on pricing or the types of investments to be used in the service. Will they be Wells Fargo mutual funds, or third-party ETFs? As of today, Wells Fargo doesn’t offer its own ETFs, but earlier this year, the company filed an exemptive relief request with the SEC, signaling some intent to enter the ETF space.
But that opens the door for potential problems with the Department of Labor fiduciary rule, highlighted by industry Nerd-In-Chief Michael Kitces, where automated investment services that recommend investments in proprietary products, Kitces calls out Schwab Intelligent Portfolios and BlackRock’s FutureAdvisor, do not qualify under the Level Fee Fiduciary exemption because of the variable compensation inherent in an allocation of proprietary ETFs!
So, this is all “industry” stuff, and not all that applicable to your business, but here’s my point. All the big banks, all the incumbent financial institutions are boarding the automated investment bandwagon. Sooner rather than later, your clients and prospects are going to get solicited by the very institutions they use today.
And clients are expecting an experience like Uber, but you’re still driving around a dirty taxi that has to be flagged down with a hand in the air that doesn’t have a functional credit card machine!] Wells Fargo & Co.’s brokerage arm is partnering with SigFig Wealth Management LLC to bring automated investment advice to clients, the latest example of how traditional wealth-management firms are working with startup robo advisers to offer new digital tools to investors.
[Next up is news about Cetera Financial Group, as the independent broker dealer encountered a company-wide systems outage that affected 9,000 brokers as well as the company’s back-office and operations teams.
According to an AdvisorHub article, the outage started on Monday, and one broker with First Allied reported that he could not sign in to view emails, access performance reports, or even call Cetera using their standard phone number. Cell phone numbers were eventually sent out on Monday evening.
In a firm-wide conference call on Tuesday afternoon, Cetera Chief Executive Robert Moore apologized for the disruption and said systems had been fully restored, and added that no data had been compromised through hacking or any other unauthorized access.
So, let this be a reminder that if it’s been a while since you tested your business continuity plan, next week’s Thanksgiving break might be a good time to do so. It doesn’t matter if you manage your own systems or leverage the resources of a broker-dealer, you need to verify how you can perform the essential parts of your business in the event of a disruption.
Attackers are launching denial of service attacks every day against financial institutions, so it’s important that you know exactly what you need to do when the systems you depend aren’t available.] Just six months after emerging from bankruptcy, independent brokerage company Cetera Financial Group experienced a companywide systems outage Monday and Tuesday that walled off brokers at its seven operating broker-dealers from customer data, emails and other vital account management functions.
[And speaking of attackers, my last story is about Lincoln Financial Securities, an affiliate of Lincoln Financial Group, as the company paid a $650,000 fine imposed by FINRA for failing to safeguard customer data stored on a cloud server used by one of its OSJs.
Sometime in 2012, hackers were able to access the could server configured by a third-party vendor and obtain records on approximately 5,400 customers. The FINRA Letter of Acceptance doesn’t say HOW the server was compromised, and didn’t identify what kind of server was in use. Was it an FTP server, a service like Dropbox, a proprietary server with remote access, or something else?
But more troubling to me is that FINRA goes on to say that the firm “failed to take adequate steps to monitor or audit the vendors’ performance.” Now hold on. One benefit of leveraging third-party vendors is that they bring expertise to the table that the firm doesn’t have, like, oh, I don’t know, cybersecurity expertise.
But for FINRA to say that the firm failed to test and verify the security of the cloud servers, that just doesn’t seem right. The firm doesn’t HAVE the expertise in cloud server security, which is why the firm hired the third-party vendor in the first place, but now FINRA says that the firm is the one that has to verify the security of the third-party vendor that it hired to bring security expertise to the firm? How is that even possible?
What I do know is FINRA just levied a heavy fine on a firm because their third-party vendor had a hole in their security that was exploited by hackers, and in my opinion, that’s a troubling precedent that has been set.] A Lincoln Financial Group subsidiary on Monday agreed to accept a $650,000 fine leveled by the Financial Industry Regulatory Authority and implement tighter security protocols after hackers in mid-2012 accessed its cloud server and lifted the confidential records of roughly 5,400 customers.
Here are the stories that didn’t make this week’s broadcast:
WisdomTree Investments, Inc. announced that it has invested $20 million for a 36% equity interest in AdvisorEngine, formerly known as Vanare, an end-to-end digital wealth management platform which enables individual customization of investment philosophies.
PIEtech℠, Inc., the creator of the industry’s leading financial planning software, MoneyGuidePro®, today unveiled a new integration with MX to deepen the availability of aggregation for MoneyGuidePro® subscribers and add personal financial management (PFM) functionality via the client portal.
Envestnet | Yodlee and its parent company Envestnet, today announced a partnership for the combined organization, providing data aggregation, digital applications and data reconciliation solutions to Morgan Stanley, one of the largest, most established wealth management businesses in the industry.
