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How Morningstar’s $28 million acquisition of ByAllAccounts will change account aggregation (or not)

Posted on April 2, 2014 by Bill Winterberg in Portfolio Management Software, Technology

Morningstar buys ByAllAccounts

Morningstar buys ByAllAccounts for $28 million. What this means for financial advisers and the future of account aggregation.

News hit the wires late yesterday that Morningstar acquired ByAllAccounts for $28 million, subject to working capital adjustments. Read the press release from Morningstar.

“Business As Usual”

In an email to ByAllAccounts subscribers, James Carney, President and CEO of ByAllAccounts wrote, “For now, it’s business as usual. Going forward, we will be evaluating opportunities for closer collaboration with Morningstar in ways that benefit our customers.”

ByAllAccounts has a near monopoly, in my words, in the reconciliation-ready account aggregation marketplace. The company has over 2,100 clients, connections to over 4,300 custodians, and 40 platform and service providers as of the March 2014 acquisition.

ByAllAccounts Alternatives

The other reconciliation-ready provider is Aqumulate, formerly Advisor Exchange, which can be viewed as a value-added reseller (my words again) of the CashEdge aggregation service offered by Fiserv.

See, raw data from Fiserv’s CashEdge isn’t normalized, tech speak for “cleaned up” with usable data that can be imported into portfolio management software like PortfolioCenter from Schwab Performance Technologies®, Black Diamond Performance Reporting from Advent, Orion Advisor Services, and more.

So Aqumulate partners with Fiserv to access their network of over 14,000 financial services companies (more than three times ByAllAccounts’ connections), and then cleans up the raw CashEdge data so it can be easily ingested by advisers’ portfolio management software.

Why Reconciliation-Ready Data?

So ByAllAccounts and Aqumulate are the only two practical solutions for advisers who require reconciliation-ready account data for imports to portfolio management software.

But I see a trend among progressive RIAs who are dropping performance and rate of return calculations for client investment reports, especially among shops who embrace passive strategies of DFA and Vanguard funds.

Why continue to emphasize performance, performance, performance quarter after quarter when it’s a minority piece of the total wealth management framework?

Look at reports from Blueleaf (important distinction: they’re NOT statements) as an example of this trend. And they even use ByAllAccounts for some held away account aggregation!

And then look at the reports offered by the online advice providers with aggregation capabilities: Personal Capital and Learnvest exclusively highlight net worth, cash flow, and asset allocation, all powered by Yodlee aggregation.

But will users find actual statements on total investment portfolio performance?

No.

eMoney operates the same way. Over 90% of its custodial data connections are proprietary, with the remaining connections rounded out by CashEdge and ByAllAccounts, and you won’t find portfolio performance statements anywhere in the program.

Is individual stock and fund performance listed in these programs? In most cases, yes, because those stats come from Xignite and others and are not subject to knowledge of a client’s actual time-weighted rate of return for portfolio performance.

The Household Balance Report Standard

So household balance reporting, and not performance reporting, is gaining momentum, and that segment is being supported by lower-cost providers like Yodlee and Intuit in addition to ByAllAccounts and Aqumulate.

Remember, MoneyGuidePro struck a deal with Yodlee earlier this year to offer aggregation for less than $400 per year! See T3 2014: MoneyGuidePro to integrate Yodlee for account aggregation from FPPad.

So why should advisers pay thousands to ByAllAccounts when you can get client balance and holding information from Yodlee and Intuit for far less?

Once again, only those who need reconciliation-ready data for performance calculations were cornered into paying a premium to ByAllAccounts or investigating Aqumulate, and I think that population is slowly shrinking.

Did that influence ByAllAccounts’ decision to seek a buyer at the potential top?

One has to wonder.

The adviser’s answer to Mint.com, Personal Capital, LearnVest, and other PFM apps

Posted on July 16, 2013 by Bill Winterberg in Portfolio Management Software, Software

Mint.com is part of the explosion of personal financial management applications, or PFM, that are so popular among consumers. What is the financial adviser’s answer to PFM apps?

Consumers are connected to their finances in ways never before possible.

New and innovative apps like Mint.com, Personal Capital, LearnVest and others can loosely be organized into a group of personal finance management, or PFM, tools.

Why Consumers Love PFM Apps

Mint.com alone has over 10 million registered users of its online and mobile app tools. Users can easily aggregate their checking, savings, credit, and loan accounts from a variety of providers and financial institutions, generating one dashboard to consolidate money management.

So when a user of these PFM apps decides it may be time to seek out services from a professional financial adviser, how will the adviser’s technology stack up to the expectations established by the PFM tools?

The Adviser’s Answer to PFM Apps

Fortunately, financial advisers do have tools at their disposal to give clients the convenience of consolidated account reporting. Clients can use them to view their account details at any time and on any device, be it a desktop, laptop, smartphone, or tablet.

Advisers use the same tools to capture information on all of their clients’ holdings, and can then use the data to drive up-to-date financial plans, net worth statements, cash flow illustrations, and much more.

I covered one solution in this month’s column for Morningstar Advisor.

Read The Advisor’s Answer to Popular Personal Finance Management Tools at Morningstar.com to find out more information.

LearnVest is now an RIA, adds Portfolio Builder service for $599

Posted on September 11, 2012 by Bill Winterberg in Technology

Online financial planning provider’s registration as SEC adviser allows investment advice delivered by personal CFP® practitioners

LearnVest, the online personal finance start-up founded by Alexa von Tobel, announced today that it is now an SEC registered investment adviser and added a plan called “Portfolio Builder” to address general investment recommendations.

Readers should recognize LearnVest from recent updates (see: LearnVest’s Mission to Wrangle Your Personal Finances) and as a member of the wave of “robo-adviser” start-ups, with Personal Capital, Wealthfront, and Betterment among them.

Without the investment adviser registration, LearnVest previously limited advice delivered through its online program to budgeting and money management. LearnVest clients could enroll in the “Complete Plan” program for $349 per year and receive a financial plan, four phone calls, and unlimited email support from the company’s CERTIFIED FINANCIAL PLANNER(TM) certificants.

Going forward, clients still have the option to work with a personal CFP® practitioner at the $349 per year level (now called “The 5-Year Planner” level) or choose to receive general investment advice under the “Portfolio Builder” plan priced at $599 per year.

While investment advice is now available, Portfolio Builder clients won’t receive specific guidance on buying or selling securities or which investment account custodian to select. Clients will need to perform those selections on their own with general input from their LearnVest planner.

There’s a lot of media coverage on LearnVest’s announcement, so visit Google’s News results page and select the outlet of interest.

To learn more about LearnVest’s positioning in the market, watch their 1:07 explainer video below.

Finally, view the LearnVest SEC Form ADV Part II brochure here.

FPPad Bits and Bytes for August 17

Posted on August 17, 2012 by Bill Winterberg in Bits & Bytes

Here’s a thought; move your stuff 800 miles, update the address on all your cars, credit cards, investment accounts, etc., then prep for a two week vacation! That’s been my summer in a nutshell, stepping away only a few times to prepare the best news in financial planning technology just for you.

Here are this week’s stories of interest:

LearnVest’s Mission to Wrangle Your Personal Finances from Mashable.com

[“Weight Watchers meets personal finance” is how LearnVest founder Alexa von Tobel describes her company. Having grown to over 65 people, von Tobel describes in the video below how her goal is to help everyone sleep better at night and enrich their lives through sound financial advice.]

TD Ameritrade showcases what API can do with slick Veo-iRebal harmonization from RIABiz

[TD Ameritrade Institutional continues to expand the capabilities of its Veo® Open Access platform (see TD Ameritrade Institutional’s Veo® Open Access to enhance trading, fee billing, and client on-boarding processes). This time the custodian couples its iRebal rebalancing software with Veo’s API to streamline trade order processing and reduce manual entry errors.] TD Ameritrade Institutional has linked two of the jewels in its software crown and the combination may be a multi-carat combination — at least for the relatively small cadre of RIAs who use iRebal.

SEC Audit: Getting data out of PortfolioCenter from Krisan’s BackOffice, Inc.

[Krisan’s BackOffice, Inc. is an outsource provider for Schwab Performance Technologies® PortfolioCenter®. In this post, limited scope examination criteria from the SEC is broken down into the various fields and reports that can be used to satisfy auditors. It’s a helpful overview of how extensive even a “limited scope” request can be, and an eye-opener for advisers who insist on managing portfolio accounting software on their own.] When the SEC auditors come knocking, they usually require lengthy, detailed information about your business. Fortunately, PortfolioCenter can help — assuming you keep your PortfolioCenter database complete and accurate, and you have the right Smart Sets.

FPPad Bits and Bytes for August 10

Posted on August 10, 2012 by Bill Winterberg in Bits & Bytes

A decent pace of technology news has returned, with this week’s Bits & Bytes featuring a variety of worthwhile stories.

First, read Avoid Legacy Portfolio Software Constraints at Morningstar Advisor to learn how you can switch portfolio management software without incurring huge transition times or astronomical fees.

Here are this week’s stories of interest:

The Rise of Robo-Advisors from Financial-Planning.com

[You are not clueless when it comes to the term “robo-advisors.” (watch the two-part video, Competing Against “Robo Advisors:” Delivering Advice in a New World from T3 2012) Personal Capital, Wealthfront, LearnVest, and others have been highlighted here before, and Jonathan Leaf provides a new update in this Financial Planning magazine update.] Imagine being replaced by a robot. That day may be more imminent than many planners believe. In the past two years, a number of online financial platforms for investors have been launched. These sites offer computerized investment guidance aimed not only at the smallest customers, but also at those with upward of $250,000 in investable assets.

iRebal Receives Makeover from Financial Advisor magazine

[The last time I saw significant news concerning TD Ameritrade’s iRebal software was back in August 2010 when RIABiz posted their overview of the product. This week, the growing custodian announced several enhancements to the stalwart application. I’m taking a look at the updates later this afternoon.] ThinkTech Inc., a TD Ameritrade affiliate, recently announced a number of major enhancements to iRebal, its highly-regarded intelligent rebalance and trade order management system.

Schwab Expands Practice Management Consulting Program for RIAs from Financial Advisor magazine

[Custodians continue to ramp up their value-add practice management resources as a competitive differentiator. In this update, Schwab Advisor Services announces new content for its nationwide traveling workshop.] Schwab Advisor Services today is expanding its “Insight to Action” practice management consulting program for its registered investment advisors customers that provides support on growing and managing their businesses.

Work aside; BACK UP your personal data including memories from InvestmentNews.com

[Here’s another reminder how important it is to have a good backup routine and policy, not just for your business information, but your personal data, too. Details of Wired magazine contributor Mat Honan’s loss of photos and other personal files as a result of a hack were syndicated across hundreds of websites this week. So take the prompt as a reminder to back up your files; something bad will eventually happen to your hard drive, so don’t be without a plan. Me? I have a Time Capsule for my Mac.] Please back up your personal computers, especially photos and things of sentimental value, whether you use a Windows-based or Mac system.

[PODCAST] Competing Against “Robo Advisors:” Delivering Advice in a New World from T3 2012

Posted on February 23, 2012 by Bill Winterberg in Podcast, Practice Management, Technology

Yesterday I posted two YouTube videos from the session from T3 2012 titled Competing Against Robo Advisors. I know that many of you prefer to download content like this to your media player of choice (i.e. iPhone) and listen to it on your jog or your commute home.

Using the audio from the Robo Advisor session, I created my first podcast. I’m currently going through the approval process with iTunes, but in the meantime you can listen and download the podcast directly from FPPad.

Podcast: Play in new window | Download | Embed

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[VIDEO] Competing Against “Robo Advisors:” Delivering Advice in a New World from T3 2012

Posted on February 22, 2012 by Bill Winterberg in Conferences, Practice Management

Watch the session from T3 2012 titled Competing Against Robo Advisors to understand how your business must change in the face of disruptive, well-funded startups.

On Saturday, February 18 at the Technology Tools for Today (T3) conference in Dallas, TX, I moderated a panel discussion featuring John Prendergast, Co-founder and CEO of Blueleaf, and Alex Murguia, Co-founder of inStream. The session was titled Competing Against Robo Advisors: Delivering Advice in a New World, which addressed the rising trend of online startups who are launching low-cost financial advice platforms.

Companies like Personal Capital, Wealthfront, and LearnVest are encroaching on the independent financial adviser’s value proposition, and are leveraging their internal talent and well-funded venture capital to disrupt this industry.

I feel that the topic deserves attention from advisers, particularly for those who actively seek to attract wealth accumulators in their 30s and 40s. John sent me a text an hour before our session asking if I could film it to share with you. I did, and uploaded the session in two parts to YouTube so you can watch it.

Here is Part 1:

And here is Part 2:

Robo advisers are here: What you need to do to adapt

Posted on January 31, 2012 by Bill Winterberg in Conferences, Practice Management

January 2015: Note that this was the first instance of “robo adviser” I used on FPPad to refer to the automated ~~advice~~ investment providers emerging in 2011 and early 2012, but it’s not the first utterance of the term according to this Business Insider article.

If you don’t know already, your business is being targeted by online, low-cost financial advice and investment platforms.

Witness the advent of startups and applications like Personal Capital, Wealthfront, LearnVest, and more last year. Some advisers may have dismissed these platforms as “robo advisers,” which will never match the personal attention and relationship a human being can deliver.

While a compelling proposition, I don’t think that dismissing the competition is a wise strategy for advisers. I’m not alone in this line of thinking. Just this week, Alex Murguia, managing principal of McLean Asset Management and CEO and founder of inStream Solutions, said pretty much the same thing.

In an interview for Financial-Planning.com, Murguia had this to say:

While they [online advice platforms] are not currently a direct threat, they are becoming more popular and have significant financial backing. In addition, many advisors are doing themselves a disservice by just providing “set it and forget it” model portfolios. Could you blame consumers for not fully understanding the true value of independent financial advice, in this context?

Competing Against Robo-Advisers

So you want to adapt and separate yourself from the robo adviser competition. Where to begin?

Here is a session from the 2012 Technology Tools for Today conference (T3) held at the Hilton Anatole in Dallas, TX. I moderated a panel discussion featuring Murguia as well as John Prendergast, CEO of Blueleaf on this exact issue. The session is titled Competing Against Robo Advisors: Delivering Advice in a New World and it delivered several gut-checks as you think about where your business is headed in the next five years.

Here is Part 1 of the session:

Here is Part 2:

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