Tag Archives: Motif Investing

FPPad Bits and Bytes for January 15

On today’s broadcast, Jemstep gets acquired by Invesco, rumors fly about a Snapchat robo advisor, FutureAdvisor links up with its first bank, and more.

So get ready, FPPad Bits and Bytes begins now!

(WatchFPPad Bits and Bytes on YouTube)

Invesco acquires Jemstep, a market-leading provider of advisor-focused digital solutions from PRNewswire

[This week’s top story comes from Jemstep, as the B2B online investment platform was acquired by Invesco, the $800 billion dollar asset manager based a stone’s throw away from my studio right here in Atlanta.

Terms of the deal were not disclosed, Jemstep’s leadership will stay onboard to run the Invesco subsidiary, and for now, the company says there won’t be any changes to existing partnerships, custodians, or asset availability in model portfolios.

Ignoring B2C acquisitions of FutureAdvisor and LearnVest, the last twelve months have seen John Hancock acquire Guide Financial and Envestnet acquire Upside.

So who are the independent B2B providers left? I see Autopilot, Trizic, Oranj, Vanare, Betterment Institutional, Motif Investing, and to some extent, the roll-your-own open source platform from Wealthbot.] Invesco Ltd. has acquired Jemstep, a market-leading provider of advisor-focused digital solutions.

Social media firms make ETF push from Reuters

[But hold on! Sending shockwaves in the retail robo space is Snapchat, as rumors were flying this week that the ephemeral chat app might introduce it’s own investment service to its 100 million active daily users.

Uh, let me explain my thoughts in a brief demonstration… Get it, jump the shark?] Snapchat is understood to be at the front of a queue of tech firms developing Robo-Advisory technology – which uses algorithms to help users develop and implement customized investment strategies for retirement planning.

BBVA Compass Teams Up With Robo FutureAdvisor from Forbes

[But wait, there’s more! In its first move after being acquired by BlackRock, FutureAdvisor announced it is partnering with BBVA Compass to roll out the automated investment tools to the bank’s nearly 700 branches in the US.

Bank customers will get access to FutureAdvisors’ digital investment management for the standard fee of 50 basis points, and you can probably bet that new accounts opened up with be held with BBVA’s broker-dealer affiliate, which is how the bank capitalizes on the partnership.] BBVA Compass, the Sunbelt subsidiary of the Spanish banking giant, has announced it will partner with FutureAdvisor to offer its customers digital investment management, popularly known as Robo Advisors. It is the first major bank to sign on with FutureAdvisor since the advisory firm combined forces with BlackRock, the giant asset management company, last year.

Robo Adviser Wealthfront Begins to Offer Free Portfolio Reviews from WSJ.com

[And if you’re not sick of robos by now, let me add news from Wealthfront who this week released a free Portfolio Review service to show investors how bad their current portfolios are and urge them to save a boat load of money by switching to Wealthfront. Whoops, did I say that out loud?

This concept is nothing new, as Personal Capital has offered a similar portfolio analyzer since 2011, and FeeX has been doing it since 2012, but here’s the deal. These VC-backed companies are spending tons of money to target your clients and prospects to get them to try out this tool, and of course, they’re going to tell clients they have suboptimal allocations and are paying high fees to their advisor.

So, expect clients to bring up fees, allocations, and performance in your next meeting, and you need to have a strong answer in the form of your value proposition, which is all the added advice, guidance, and behavior management you deliver that the automated services are incapable of providing.] In a bid to attract more assets, Wealthfront Inc. is joining other robo advisers in providing free advice to investors about their accounts at other financial institutions.

Here are stories that didn’t make this week’s broadcast:

New Laserfiche Release Aims to Improve ECM from CMSWire

Laserfiche just released version 10 of its enterprise content management system (ECM). Speaking at the Laserfiche Empower 2016 Conference in Long Beach, Calif., Laserfiche President Karl Chan said the new version is designed to supercharge content-driven business processes, enabling enterprises to redesign the flow of information throughout the enterprise.

LastPass Revamps Its Interface, Adds Emergency Access and Better Sharing from Lifehacker

LastPass is one of the best password managers around. Today it gets a bit better with an improved interface and a handful of new features.

Dashlane 4 Makes Changing Passwords on Hacked Sites Easier, Adds a New Interface, and More from Lifehacker

Dashlane is one of our favorite password managers, and today the service updated with a new, consistent interface across all devices, an updated “password changer” that lets you change passwords on a site without even visiting it, new languages, and more.

 

Watch FPPad Bits and Bytes for January 15, 2016

Watch FPPad Bits and Bytes for January 15, 2016

Robo advisor is a perfect moniker and here’s why

tl;dr: Algorithms are incapable of giving financial advice, so the oxymoron “robo advisor” is a perfect moniker. Know what you’re getting (and not getting) from automated investment services.

“I am tired of the whole robo thing,” says Motif Investing CEO Hardeep Walia.

Personal Capital CEO Bill Harris bemoans, “We are not a robo advisor.”

Wealthfront CEO Adam Nash retorts, “New tech doesn’t always fit neatly into a bucket.”

Cry Me a Robo River

To the automated investment services, I say,

“Boo hoo.”

NOW these services are beginning to experience how it feels when others, right or wrong, control the conversation about their business.

Most journalists, reporters, TV anchors, correspondents, bloggers and more don’t really know what makes any of the automated investment services different from one another, so most simply package them up into one catch-all term “robo advisor.”

Let’s face it: “robo-advisor” makes for great click bait. If it didn’t work (and generate clicks and eyeballs), editors and producers would stop using it. (You clicked to land here, didn’t you?)

But please, asking everyone to stop using “robo advisor” because it misrepresents what you do or somehow marginalizes your service in some way?

I submit to you Exhibits A and B.

“You don’t need that guy,” gloats Wealthfront’s ad.

Sure, because most financial professionals out there are just glorified psychics, spiritualists, or stock market prognosticators whose only tool for financial advice is a crystal ball!

Please.

The financial services industry has seen this marginalization long before automated investment services arrived.

Living In Glass Houses

The fiduciary financial professionals should be just as upset about this gross characterization of fortune tellers as the automated investment service providers are about the term “robo advisor.” (people who live in glass houses…)

“Stop comparing us to fortune tellers!”

“We are not personal psychic advisors!”

Perhaps Wealthfront paints with too broad a brush. Ok, so here’s Exhibit C:

Wealthfront: Don't Pay For Expensive Financial Advisors

Wealthfront: Don’t Pay For Expensive Financial Advisors

See? “Don’t pay for expensive financial advisors.”

Why not?

Because Wealthfront is the end-all-be-all service that investors need? Because Wealthfront does the exact same thing all fiduciary financial advisors do? Because all your financial needs are met by Wealthfront’s software?

Ask a Question 100 Times…

Go ahead, go to any automated investment service website right now. Wealthfront. Betterment. Future Advisor. Even the anti-“robo-advisor” Personal Capital. (*read my note below)

Fill out their questionnaire. Complete a free “Investment Checkup.”

What is the answer you get?

The answer from ANY of these services is ALWAYS to invest.

ALWAYS.

There is no Plan B, no backup option, no alternate strategy.

There’s no, “You really should first pay off your high interest credit card balances.”

No, “You should save up an emergency fund where you can access the money quickly.”

No, “You should create a will and advance medical directives first in case something were to happen to you.”

But ask automated investment services a question 100 times, “What should I do with my money?” and the answer is always going to be the same:

Invest in a diversified portfolio of low cost ETFs.

It’s the only answer these services have. There’s nothing else.

It’s not financial advice. It’s not wealth advice.

It’s barely investment advice.

It’s an investment recommendation. The output of a calculator.

Sophisticated or not, automated investment services are ALWAYS going to recommend investing your money.

There simply is no other result to offer. The algorithms today are incapable of suggesting anything but investing.

So Why Robo Advisor?

So why robo advisor as a moniker?

Because it is a oxymoron, a name that contradicts itself.

Algorithms, software programs, aka “robots” are incapable of making judgment calls and evaluating emotions or feelings in the calculation process.

Robots can’t give advice.

Robots can only decide based on ones and zeroes. True or false.

Sure, an algorithm’s answer can be associated with a level confidence (recall IBM’s Watson playing Jeopardy), but each discrete answer is associated with a level of confidence based off of a set of discrete factors evaluated in the calculation process.

An algorithm’s output is a result. Functions return arguments.

But don’t call that advice.

Know What You’re Getting

As with most decision-making processes, there’s often a big difference in what you can do and what you should do.

What is important to you? How does a decision make you feel? How do you prioritize your goals?

Can your entire life, your goals, your dreams, your aspirations be captured in a four question survey? A ten question survey? Even a hundred question survey?

For automated investment services to survey the market and say “Hey, we can improve investing outcomes by building a software program that does everything on the cheap!”

The questionnaire is only part of the advice process, it is not the start and finish.

And then there’s the talk of disruption, mainly coming from the media (I don’t recall any of the automated investment services specifically saying they intend “to disrupt” the financial services industry).

What industry are automated investment services attempting to disrupt, anyway?

Vanguard, the mutual fund giant, has been offering diversified, low-cost investment products and services quite successfully since the 1970s.

Just remember that the next time you consider the services of an automated investment service, know what you are getting.

Do your homework.

You are getting the results of a calculator.

The calculator is programmed to give an answer.

Not advice.

Not from a robot.

Don’t assume that the answer you get is the best answer for your situation.

Who you are as a person cannot be summed up in an online questionnaire.

 

*Note: Personal Capital toes the line on the robo advisor definition. Users complete the Investment Checkup and receive a target asset allocation illustration based on answers to the short questionnaire. However, specific mutual funds and ETFs are not recommended, so it’s not explicit. Users do get a basic automated investment allocation recommendation with no human intervention, but it’s up to the user to connect each recommended asset to a specific mutual fund or ETF to purchase. Users who want specific fund and ETF recommendations must engage Personal Capital for traditional investment advice rendered by human advisers and pay Personal Capital’s standard fees. This formal engagement is not robo advice.

FPPad Bits and Bytes for May 16

On today’s broadcast, two financial technology startups raise new rounds of capital. Find out how their solutions have the potential to enhance your business. A popular online document storage provider adds new features. Will they be enough to wean advisors off of consumer services like Dropbox? And this month I say farewell in my final column for Morningstar Advisor, but not before I leave readers with a glimpse of disruptive advisor technology coming in the near future.

So get ready, FPPad Bits and Bytes begins now!

(Watch FPPad Bits and Bytes on YouTube)

This week’s episode is brought to you by Wealth Management Marketing, providers of complete outsourced marketing services for Registered Investment Advisers.

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Here are this week’s top stories:

Motif Investing partners with financial advisors to introduce flat-fee trading and rebalancing platform from Motif Investments

[Leading off this week’s broadcast is news on two financial technology startups, Motif Investing and Addepar, which both announced new rounds of financing this week. Motif Investing, fresh off its second Best of Show award from Finovate, raised $35 million in funding from new investors, bringing its total to $86 million in venture capital.

During its Finovate Spring 2014 demo, Motif unveiled the Motif Advisor Platform, a solution that allows financial advisors to build, manage and rebalance their own motifs on behalf of clients. Motifs can include a combination of up to 30 stocks and ETFs, but instead of paying a commission to trade each individual security, motifs can be traded for one flat fee of just $9.95. Combining your model portfolios into motifs has the potential to save you time when trading, and it undoubtedly saves your clients in transaction fees that can add up quickly.] Motif Investing’s Advisor Platform, which was recently awarded “Best of Show” at the FinovateSpring conference, streamlines how advisors can build, monitor, and rebalance model portfolios.

Motif video thumbnail

Addepar Raises $50M in Series C Financing from BusinessWire.com

[And moving on to Addepar, the company announced a round of Series C financing to the tune of $50 million dollars, bringing its investment total to $66 million. Addepar’s technology is designed to bring better transparency to the world of complex investments, which includes private equity, committed capital, non-traded alternatives, and more. If you need a refresher on Addepar’s technology and its potential to serve the RIA market, you can watch my interview with Addepar’s former president and chief strategy officer Mike Paulus.] Addepar, a leading financial technology platform for the $120 trillion investment management industry, announced that it has raised $50 million in its Series C financing.

Citrix ShareFile Secures Files for Today’s Mobile Workspaces from Citrix.com

[Next is an update on ShareFile, the web-based document storage service now owned by Citrix. At its annual conference in southern California last week, Citrix announced several enhancements to the document storage service popular among financial advisors. First is a new Software Development Kit, or SDK, that enables support for more third-party integrations with the ShareFile service.

Second, a ShareFile Personal Cloud Connector was introduced to facilitate the migration of files stored in other online services like Box, Dropbox, Google Drive, and Microsoft’s OneDrive and consolidate everything in ShareFile. Third, the company announced the upcoming redesign of the ShareFile app for iPhone that will offer a simplified and easier-to-use interface. And finally, all ShareFile users can now review and edit Microsoft Office documents or annotate PDF files on a mobile device, which are features that were once only available to enterprise subscribers.] Today at Citrix Synergy™, Citrix announced new Citrix ShareFile® features that deliver the broadest storage access for users and the most choice for IT.

The Big Trends in Financial Services Technology from Morningstar Advisor

[And finally, if you’re want to stay up to date on the big trends in financial services technology, you should read my farewell column at Morningstar Advisor this month. Yes, after four years of monthly columns, I have decided to hang up my hat, but not before leaving loyal readers with a glimpse of what I feel will be the most significant technology trends to affect the advisory profession. A preview of those trends includes big data and social collaboration in your CRM, first offered by Redtail and Wealthbox respectively, modern on-demand portfolio reports from companies like Blueleaf, Quovo, and Guide Financial, and the disruptive potential of tech-heavy online investment providers like Wealthfront, Betterment, Personal Capital, and more.] In a farewell report, MorningstarAdvisor.com technology columnist Bill Winterberg reflects on the advancements and evolutions in cloud-based and mobile technology, CRM, portfolio management, rebalancing software, and online advice over the last four years.

Here are stories that didn’t make this week’s broadcast:

Advisor Websites & Salesforce – The integration you’ve been waiting for from Advisor Websites

Watch FPPad Bits and Bytes for May 16, 2014

Watch FPPad Bits and Bytes for May 16, 2014