[Disclosure: I provided marketing services to Wealthbox within the last 12 months. See all my disclosures at fppad.com/disclaimer ]
Welcome to a new FPPad fintech briefing, Here are the top fintech stories you need to know today.
Plaid Acquires Quovo
Financial account aggregation provider Plaid started off 2019 with one of the first large #fintech acquisitions, announcing earlier this week that it will acquire Quovo, a competing account aggregation company, in a deal that Bloomberg reported could be worth roughly $200 million dollars after performance bonuses are factored in to the price.
Most consumers aren’t aware of Plaid, as the company focuses on helping other financial applications such as Venmo, Betterment, and Robinhood, connect to customer bank and credit card accounts in order to verify account information. According to a company blog post, Plaid will use the Quovo acquisition to expand its data aggregation capabilities to include investment and brokerage accounts.
SEC Fines Wealthfront and Hedgeable
In regulatory news, the Securities and Exchange Commission took its first enforcement actions on two automated investment services, commonly referred to as robo-advisors, as it fined both Wealthfront and Hedgeable for making false statements in marketing materials to potential customers.
The SEC fined Wealthfront $250,000 dollars for claiming the company would avoid all wash-sale transactions in its tax-loss harvesting algorithms, when three years of trading history showed that wash sales were indeed triggered in at least 31 percent of customer accounts. The SEC also issued an $80,000 fine to Hedgeable for allegedly misleading portfolio performance reports that included performance data from less than 4 percent of client accounts.
Wealthbox Releases All-New Mobile App for iOS
And finally, in CRM news for financial advisers this week, Wealthbox announced the release of an all-new mobile app for iOS devices. The mobile companion to Wealthbox CRM supports Touch ID or Face ID for account authentication, single-tap quick actions for frequently used functions, support for native dictation, and more.
Here’s Steve Carroll, Product Manager for Wealthbox, with more information:
The all-new Wealthbox Mobile app is completely rebuilt and and redesigned for today’s modern financial advisor. This companion app is completely in sync with the full-featured functionality the web-based Wealthbox product, and has many convenient mobile features like bio authentication and native dictation for advisors on the go.
For more information on this news and more, head over to FPPad.com/flashbriefing to find the links to today’s top stories.
On today’s broadcast, Redtail is the beneficiary of two announcements, MoneyGuidePro releases G4, and see the latest audio and video solutions to enhance your online content
[This week’s top story is a two-for-one about Redtail Technology, as the CRM provider was first mentioned by Morningstar as the company is further expanding its integration with the popular CRM for advisors. Two years ago, Redtail users started accessing Morningstar research and analytics directly in the CRM, and with the latest integration, users of both solutions can transfer data between the two systems, reducing the amount of manual data entry as well as synchronizing client and account data viewed in Redtail CRM.
The second story from Redtail is the announcement of a new integration with Zapier, a popular web automation application. The connection with Zapier means that Redtail users can use triggers in Redtail, such as a new activity or a new contact in the CRM, to create an action in another program, which includes over 500 popular services like Slack, Google Docs, MailChimp and many more.
Other providers, including Wealthbox CRM, have been hinting at soon-to-be-released integrations with Zapier and others for several months now. So if you’ve been frustrated with the lack of direct integrations within your CRM, you’ll soon be able to build your own custom trigger and action workflows using apps like Zapier.] Redtail CRM is now available publicly in Zapier’s App Directory in beta version.
[Next up is news from MoneyGuidePro, as the financial planning software provider officially released the fourth generation of its software, aptly named G4. Advisors will definitely notice an updated look and feel to the user interface, but G4 largely retains many of the core features present in the prior version, G3, such as the Play Zone, Social Security Maximization, and the What Are You Afraid Of? modules.
One of the more significant changes is the addition of five pre-built workflows called “conversations” which are used to streamline the creation of an initial financial plan. Advisors can complete the conversation data entry alone or together with clients in a meeting, or decide to grant clients access to an online portal where they enter data completely on their own.
The pre-built workflows limit the amount of data needed to create a plan so that the entire process isn’t overly tedious. With a preliminary plan created, advisors can then drill down into more specific areas of the plan.] PIEtech’s vision, “Everyone needs and deserves a quality financial plan,” has never been truer – for both advisors and clients. Today, PIEtech released the fourth generation of MoneyGuidePro® to help financial advisors develop and deliver quality financial plans on an unprecedented scale.
[And finally, I want to wrap up this week’s broadcast with a heads up about the videos Steve and I made at the NAB Show last week. We featured the top video, audio, and technology gadgets, as well as whatever that thing is, from over 1,800 exhibitors that you can use to start making your own online content. You’ll learn about 360º cameras, wireless microphones, lighting, production resources and more that are all affordable and easy for you to use.]
Here are stories that didn’t make this week’s broadcast:
Advisors striving to improve the client experience by providing offerings tailored to their entire financial picture can now seamlessly aggregate their client’s data into a fully customized online wealth management platform.
Data Points announced today the release of its Predicting Wealth™ platform, which provides the financial services industry a scientific way to identify clients with the highest potential for building wealth across all market segments. The platform delivers analytics on the financial behaviors of clients and predictive assessments to drive financial success.
Today, United Capital Financial Advisers, LLC (“United Capital”), a Financial Life Management firm, announces the launch of FinLife Partners, a turnkey advice and planning platform that allows independent advisers access to the firm’s proprietary Financial Life Management system, including adviser-branded client experience tools, digital workflow technology and personalized on-demand coaching.
The SEC has a long to-do list, but ensuring that advisors and other registrants are protecting clients’ sensitive information from cyber threats is right at the top, and more enforcement actions are expected.
Acorns, the investing app, is announcing a $30 million strategic investment from PayPal, with participation from the Rakuten FinTech Fund. This brings the team’s total funding to $62 million.
After 12 months of building the best way to save and discover mobile live streams, it is with great disappointment that we must announce that Katch will be shutting down.
Docupace Technologies LLC, financial services’ premier digital compliance and cyber security company, announced today that it will pursue growth independently of investment from RCS Capital Corporation
On today’s broadcast, the SEC fines an RIA for cybersecurity oversights, learn the steps you should implement to fight ransomware, and RightCapital is the newest startup in the financial planning software marketplace.
Today’s episode is brought to you by True North Networks, a leading provider of managed IT, hosting, and security services to financial professionals. With the introduction of SecureWorkplace, True North Networks helps advisors combat cybercrime with industry leading technology, monitoring, and employee awareness training.
And if you sign up for SecureWorkplace in October, you’ll receive a free firewall valued up to $2,000. Learn more about True North Networks and SecureWorkplace today by visiting fppad.com/truenorth
[I’ve been under the weather for a few days, but I’m back with this week’s top story that comes from the Securities and Exchange Commission, as the industry watchdog recently settled charges with a St. Louis-based RIA for failing to establish cybersecurity policies and procedures. In its settlement, the SEC said the firm “failed entirely to adopt written policies and procedures reasonably designed to safeguard customer information” and the regulator assessed a $75,000 penalty. As the result of a breach in July 2013, hackers gained access to personally identifiable information for roughly 100,00 individuals.
But the silver lining, if there is one, is that the SEC said that no clients have suffered financial harm as a result of the breach. Well, not yet, at least.
So this is your wake up call if you’re behind on establishing your own cybersecurity policies. You need them, and you need to periodically test them, or you may subject your firm to similar consequences.
Once again, I’ve linked the SEC’s most recent cybersecurity guidance in the show notes or consider hiring a security expert for RIAs like Itegria, Envision RIA, External IT, True North Networks, Right Size Solutions, and others.]
[Next up is more news about cybersecurity, as Shareholders Service Group president Dan Skiles recently addressed the rise in ransomware attacks on RIAs. Skiles notes that RIAs typically come across ransomware in a phishing email or a rogue file attachment, and once it’s mistakenly activated, the ransomware holds your computer and your files hostage unless you pay a ransom amount in bitcoin to unlock everything.
Obviously it’s best to never launch programs from unknown sources, but if ransomware does get activated inside your firm, Skiles recommends you isolate the computer that was attacked and work with an experienced IT professional to limit the damage. Arguably the best protection against ransomware is to have a fully-functional backup of all of your files, so you can literally throw your infected computer in the trash and start from scratch by restoring your files from a good backup.
It’s best if the ransomware never gets launched in the first place, so keeping your cybersecurity policies up to date AND offering periodic training to your firm’s employees will go a long way in protecting the information your clients trust you to keep safe.] When your firm is hit with a ransomware virus, try these steps first
[And finally, I’m wrapping up with a new startup called RightCapital, which announced the introduction of its eponymous financial planning software at the XY Planning Network conference in Charlotte last week. RightCapital joins Advizr, another planning software startup I’ve covered before, to offer an intuitive and attractively-designed platform as an alternative to veteran providers like MoneyGuide Pro, eMoney, and Advicent.
You’ll have to test drive RightCaptial to see if its planning capabilities are up to your standards, but with built-in account aggregation, integrations with Morningstar, Yodlee, and Redtail, and a price tag under $1,000 a year, RightCapital deserves a spot on your radar screen, especially if financial planning is going to play a more prominent role in your business.] Newly launched service provider RightCapital thinks it has created a better mousetrap and is undaunted by the hypercompetitive market
On today’s broadcast, the SEC issues an alert about automated investment tools, see how Envestnet is ready to leverage its recent acquisition of Upside, and, find out which fintech buzzword has huge implications for your business.
Today’s episode is brought to you by Riskalyze, the company that invented the Risk Number™ and named as one of the world’s 10 most innovative companies in finance by Fast Company Magazine.
Advisors use Riskalyze to show prospects they’re invested wrong and prove to clients they’re invested right. See how the Risk Number can grow your business today by visiting riskalyze.com/fppad to book a guided tour.
[This week’s top story comes from the Securities and Exchange Commission, as the industry regulator recently released an investor alert concerning automated investment tools, more commonly known as, well, you know where I’m going.
In its five-point alert, the SEC urges all investors to understand terms and conditions of any online service, know what the limits of automated tools are and assumptions that don’t apply to their situation (say, perhaps, tax illustrations for a married couple living in California who are in the highest tax bracket), be aware that when filling out questionnaires, garbage in equals garbage out, be careful not to assume goals are the same as a generic investment time horizons based on age, and to practice good security hygiene to protect financial accounts.
So how can you use this alert to make your business more appealing to prospective clients? At the very least, be as transparent as possible about your fees and your process. Next, focus on the ongoing relationships you have with clients, because the advice you provide doesn’t end the moment a client fills out a risk tolerance questionnaire.
And finally, emphasize the breadth of your services. Yes, prudent investing is important, but it’s critical to also factor in insurance needs, tax strategies, estate planning and so much more, all of which are areas largely untouched by automated investment tools. Let’s be absolutely clear, this is your value to your clients, and if you’re not broadcasting it at every opportunity you have, you’re in danger of failing to differentiate your business from the competition.] The SEC’s Office of Investor Education and Advocacy (OIEA) and the Financial Industry Regulatory Authority, Inc. (FINRA) are issuing this alert to provide investors with a general overview of automated investment tools.
[Next up is more news from Envestnet in a follow up to the company’s summit held earlier this month in Chicago. Last week I covered Envestnet’s acquisition of Finance Logix, but this week the story is all about Envestnet’s new digital advice portal called Advisor Now™. So what is Advisor Now?
You start with the original Envestnet Advisor Suite™ for portfolio management, add in a serving of the Envestnet | Tamarac Advisor Xi platform for its CRM, portfolio rebalancing, and client portal features, mix in the online automated investment solution from Upside, blend them all together and out comes Advisor Now.
So clearly Envestnet is further positioning itself as a dominant custodian-agnostic all-in-one technology provider, and if you’re an existing Envestnet and/or Tamarac user, you’ll soon experience the benefits of Advisor Now as it gets updated according to the company’s 60-day release cycle.
But if your technology consists of integrations between separate best-of-breed solutions, I think you have some work ahead of you if your objective is to match the Advisor Now portal feature-for-feature.] Envestnet, Inc. announced that it will be launching Advisor Now™, a digital advice portal harnessing Envestnet’s core capabilities to help independent advisors demonstrate more value to clients and improve financial outcomes for investors.
[And finally, I’ve was following the chatter on Twitter this week from the Finovate Spring 2015 conference in San Jose, and one of the buzzwords that lit up the #Finovate hashtag was “frictionless.” The majority of presenters, whether they were mobile payment solutions, peer-to-peer lending networks, or even crowdfunding services to pay off medical bills, focused on eliminating the friction in financial transactions.
In fact, “frictionless” was mentioned so much that one attendee said the word should be purged from the world of banking. But think about your business for a minute. How much friction do you create for your clients? How much paper are you pushing? Are you accessible by text and video chat in addition to phone calls and face-to-face meetings? Can clients access the information they want from a smartphone?
I think it’s time you look at your business from the client’s perspective and identify all the processes that generate friction. For each process, figure out how technology can streamline what you do and reduce the time and effort required to get something done. That sounds like a pretty useful activity for a Friday afternoon if you ask me.
Oh, and if you want to know which three companies from Finovate are worthy of attention on my radar, they are Hedgeable, for their online investment service featuring active management and alternatives, Vanguard, for their clever 3D graphs of diversification illustrations, and Trizic, yet another online investment service that can be white labeled by financial advisors.] It’s time to relegate the phrase ‘frictionless’ to the FinTech trashbin.
Here are stories that didn’t make this week’s broadcast:
As someone who has been a proponent of the paperless office for many, many years, I often feel a sense of frustration at the number of paper-driven activities still prevalent in our industry.
On today’s broadcast, Shareholders Service Group is attracting the attention of independent advisors, and for good reason, Orion Advisor Services announces a new partnership in the robo-advisor arena, and, find out how you can stay one step ahead of the latest cyber attacks that have the potential to cripple your business.
This week’s episode of Bits and Bytes is brought to you by Total Rebalance Expert, the industry’s largest, privately owned portfolio rebalancing software provider.
TRX now offers TRX Edge, a completely rewritten rebalancing platform optimized for the web as well as mobile devices. Sign up for a demo of TRX Edge by visiting http://fppad.com/trx
[This week’s top story comes from Shareholders Service Group, as I spent the end of last week at the company’s annual conference for advisors outside San Diego. SSG is one of those institutions that flies below the radar of most advisors, but now with over 1,400 financial advisors leveraging the resources of SSG, the company is continuing to attract attention.
From a technology standpoint, Shareholders Service Group follows an open architecture approach powered by the custody services of Pershing, and SSG wants advisors to be able to choose the best of breed solutions they want to use, without being told what to do by the institution. While at the conference, I connected with CEOs from content marketing provider Vestorly as well as CRM provider Junxure to learn about the partnerships they recently formed with SSG.
I also connected with XY Planning Network co-founders Michael Kitces and Alan Moore to get their take on important trends advisors need to monitor, which, no surprise, include a number of technology takeaways.
There’s a lot more from the Shareholders Service Group conference, including conversations with CEO Peter Mangan and President Dan Skiles]
[Next up is news from Orion Advisor Services, as the company recently announced a new partnership with online investment provider Jemstep. Jemstep originally formed back in 2008 to deliver online investment solutions to retail investors, but now the company also offers Jemstep Advisor Pro as a solution you can offer to your emerging clients. Here’s a quick summary. You can embed Jemstep Advisor Pro on your website where new clients can complete a self-directed process to open an account, just like Redhawk Wealth Advisors has done.
Clients fill out a basic profile, complete a very simple risk questionnaire, and link investment accounts using account aggregation. Jemstep then generates a simple portfolio analysis using the client’s existing holdings and compares hypothetical performance to a target allocation of a portfolio allocation that you, the advisor, created and Jempstep matches to the client’s risk tolerance. If everything looks promising to the client, they proceed to the account opening stage where they complete account forms electronically.
So where does Orion fit in to the picture? New accounts created by Jemstep are custodied with TD Ameritrade Institutional, and those account details can then be fed into Orion using Veo Open Access. Once in Orion, all kinds of performance and analytics can be performed, which is what Jemstep, as of today, May 1, 2015, doesn’t currently provide. Now do you get it?
But if you’re NOT using Orion, Jemstep delivers the online investment interface, but it lacks the portfolio performance reports found in other solutions. That’s why the partnership with Orion is important, among other reasons.] Orion Advisor Services, LLC (“Orion”), the premier portfolio accounting service provider for advisors, announced that it has partnered with Jemstep, Inc., a leading provider of robo-technology solutions to advisors, to offer a new integrated technology solution for independent financial advisors.
[I need to move on to today’s final story on cybersecurity, as the SEC released new guidance this week with three important takeaways for advisors:
You need to periodically assess your cybersecurity risks, you need to identify how you will detect and respond to attacks, and you actually need implement your written policies and procedures and provide training to your staff.
So to do that, the SEC offered the following tips and resources to … oh, I’m being told they didn’t offer tips and resources, right, so I’m going to help you with the first takeaway which is cybersecurity threat assessment.
Do you want to know what threats advisors are actually facing every day? I set up a page on FPPad to collect threat information from advisors nationwide, and rank the top threats by the number of reports received. Plus, I’m going to highlight new attack techniques as they happen, so you can do your best to stay one step ahead of ever-more-sopisticated attackers. They’ve gone way beyond misspelled emails from Nigerian princes!] The Division has identified the cybersecurity of registered investment companies (“funds”) and registered investment advisers (“advisers”) as an important issue. Both funds and advisers increasingly use technology to conduct their business activities and need to protect confidential and sensitive information related to these activities from third parties, including information concerning fund investors and advisory clients.
Personal Capital revolutionized the free online financial dashboard. In one place you can now automatically track all of your investments, including retirement accounts. It shows your asset allocation and investing costs, and does so with amazing charts and graphs. All for free. Now the dashboard is available on the Apple Watch.
Addepar Inc. is angling to manage a major chunk of a $120 trillion of assets under management on Earth, including pensions, sovereign countries, private wealth and endowments, by attacking the challenge as a data management problem first and a design and analytics problem at a close second.
On today’s broadcast, the rumors are true: eMoney gets acquired by Fidelity Investments, Advent Software gets acquired by SS&C Technologies, and the SEC reveals troubling cybersecurity issues after its first round of broker-dealer and adviser examinations.
Today’s episode is brought to you by Wealthbox CRM. Version 1.7 just released with delectable features like two-way Google Calendar synchronization, support for popular email newsletter services, an integrated Facebook feed, and more!
[This week’s top story that EVERYONE is talking about is eMoney’s acquisition by Fidelity Investments. Sources close to the deal cited a purchase price “north of $250 million” with a valuation around four times eMoney’s revenue. This deal marks the first time I can recall an institutional custodian taking ownership of a financial planning software provider. Nearly a dozen others that I listed on FPPad are all privately held with no custodial affiliation.
So the burning question is: What’s the future of eMoney? Executives from eMoney and Fidelity reaffirmed that the company will continue to operate independently, but have the financial backing of Fidelity to accelerate product development and growth. Now for me, eMoney seemed to be doing just fine on its own, always having a top spot in advisor technology surveys and having just released a big emX update two months ago, so did they really need to make a deal?
But on the other hand, if you read Michael Kitces’ take on Nerd’s Eye View, he believes Fidelity purchased eMoney primarily for its client-facing personal financial management tool, or PFM, that works a lot like Mint.com, and just happened to get eMoney’s financial planning software along with the deal. Robo-investment allocators are raising the stakes on client-facing dashboards, but buying eMoney for its PFM solution just doesn’t add up to me.
There are many other PFM options and client-facing dashboards out there like Aqumulate, Blueleaf, MoneyDesktop (MX), and even Personal Capital, who built their own, probably for a lot less than $250 million. So really, nobody knows what the future holds now that eMoney is under Fidelity’s ownership, and you can add me to the list of speculators that can only guess how this deal will influence your decision on what financial planning software you choose to use.] Fidelity Investments® announced today that it has agreed to acquire eMoney Advisor, a leading wealth planning software company, as part of Fidelity’s commitment to deliver an industry leading suite of innovative and meaningful tools and technology to its customers.
[Next up is news of another deal, as Advent Software is going to be acquired by SS&C Technologies for $2.7 billion. SS and who? I had never heard of them either until this week, because SS&C is primarily focused on institutions and enterprises, not independent RIAs.
So on the institutional side, the deal makes sense because SS&C is already the largest user of Advent’s Geneva solution, with around 2,400 internal users. But what about the Axys and Black Diamond solutions used by you, the independent adviser?
Bill Stone, SS&C’s chairman and CEO, said in a conference call that the company “did not see anything in Advent’s portfolio that we’d want to rationalise” and “killing a product is the last thing you want to do.”
Cough, TechFi.
So, Advent users, you’re in a little bit of limbo, too until we see this deal pan out, but I suspect not a whole lot will change in the near term. These are well-established companies with mature products that collectively have very high user retention.] The acquisitive US-based firm, SS&C, has expanded its presence in the wealth management software market with the all-cash acquisition of rival Advent Software.
[And finally, the SEC released its first Cybersecurity Examination Sweep Summary this week, outlining key findings from over a hundred broker-dealer and RIA examinations. Here are my most important takeaways:
3 out of 4 advisers have been the target of cyber attacks, only 1 out of 5 advisers actually have cybersecurity insurance, and very few advisers know where to identify best practices on cybersecurity. Here’s a hint: THIS SHOW is one of them!
Clearly I should dedicate a show in the future exclusively to cybersecurity, but in the meantime, download my free guide on security at fppad.com/security and connect a vendor that specializes in RIA best practices like Itegria, Envision RIA, External IT, True North Networks, Right Size Solutions, and others.] OCIE’s National Examination Program staff, recently examined 57 registered broker-dealers and 49 registered investment advisers to better understand how broker-dealers and advisers address the legal, regulatory, and compliance issues associated with cybersecurity.
Here are the stories that didn’t make this week’s broadcast:
Advizr, a next generation financial planning software, today announced a strategic partnership with Blueleaf, a leading client engagement, data automation and reporting platform for advisors and clients.
Independent broker-dealer Cambridge Investment Research Inc. plans to have a competitive robo-type offering that works in sync with its 3,000 advisers’ practices in 2016.
On today’s broadcast, Betterment Institutional releases its online investment solution for advisors. Will the industry rush to adopt this new digital solution for emerging clients? The SEC admits it doesn’t know where its laptops are. Could you be at risk of making the same mistakes committed by this industry watchdog? And, hackers claim to have stolen millions of passwords from Dropbox. Find out what you should be doing right now to protect the information you store online.
[This week’s top story highlights Betterment Institutional, who this week announced the official release of an advisor-friendly version of its popular direct-to-consumer service that currently manages over $600 million in customer assets.
No doubt influenced by the guidance and financial investments from Steve Lockshin and Marty Bicknell, Betterment Institutional allows advisors to white label the Betterment platform and offer it to all clients for a cost of 25 basis points per year. Advisors can charge an additional fee if they so choose.
In addition, Fidelity Institutional Wealth Services announced that the company will include Betterment Institutional among a list of practice management resources it offers to advisors. But the use of Betterment Institutional is not exclusive to Fidelity, so whatever your custodial affiliation is today, you can begin to use Betterment Institutional if you’re seeking a low-cost automated investment solution for your emerging clients.
Betterment Institutional joins Upside Advisor, Guide Financial, JemStep and a few others as an advisor-friendly automated investment solution, and you’ll want to stay tuned for news following the Schwab IMPACT conference, as details on that custodian’s much anticipated free investment platform should be made public.] If you can’t beat the robots, join them. That’s what Betterment—the ultra-low cost, computer-driven personal portfolio service—hopes financial professionals will do with its new institutionally focused “robo-advisor” offering.
[Next up is an embarrassing revelation from the Securities and Exchange Commission, as the industry watchdog admitted that somewhere between 24 and 202 laptops were unaccounted for, opening up the risk that private, nonpublic information could be exposed. Is this when I should do a forehead slap?
Alright, so the SEC has its own data security issues to deal with, but I want to take a moment to challenge you about how you’re keeping your business and client information safe. Do you use full disk encryption on the laptops you use for work? You should.
Windows 8.1 Pro and Enterprise offers BitLocker drive encryption for free, and if you use Mac, FileVault 2 disk encryption is built right in to the operating system. All you need to do is turn the feature on and protect your laptop with a strong login password.
And don’t forget about your mobile devices. Every device you use should be protected with a login passcode, the longer the better, and in most cases, requiring a passcode automatically enables device encryption.] The inspector-general of the Securities and Exchange Commission said in a report that there’s at least 24 and as many as 202 laptops that are not accounted for, which risks the release of sensitive, nonpublic information.
[And finally, Dropbox made headlines this week as reports circulated that hackers claimed to have accessed over 7 million usernames and passwords to the popular online file storage service. Dropbox insists that its systems were not hacked, but rather the login credentials were obtained from unrelated companies and services.
Once again, it’s critical that you follow good online account protection practices: Use a unique password for each website, activate multi-factor authentication where possible, and consider managing login credentials in a reputable password management service like LastPass, 1Password, Meldium, and more.] Dropbox was the latest company under the gun on security, when a link on reddit surfaced a claim that hackers have nearly 7 million usernames — plus their passwords — from the storage service on Monday.
Here are the stories that didn’t make this week’s broadcast:
On today’s broadcast, the Office of the Future has arrived. Find out what technology you should buy to be an advisor on the leading edge. Cybersecurity enforcement is coming from the SEC. How will you prepare your firm for this new round of exams? And, retirement illustrations get distilled down to two variables. How one company’s simplified tool can help clients make better investment choices, all in real time.
Today’s episode is brought to you by Laserfiche, a leading document management provider to financial advisors.
Laserfiche helps increase business value by automating client onboarding and document filing processes, all while supporting regulatory compliance. Download a free copy of their ROI for RIAs white paper by visiting fppad.com/laserfiche
Launch the virtual tour of the Office of the Future at Fidelity.com
[This week’s lead story comes from Fidelity Investments, as the company unveiled a radical approach to the advisor’s workplace called the Office of the Future. Fidelity’s Office of the Future is actually a real place you can visit at the company’s campus in Smithfield, Rhode Island.
If you can’t visit the office in person, Fidelity provides a 360-degree virtual tour online, where you can view technology that emphasizes seven trends relevant to advisors, including pervasive video, big data, gamification, and more.
But a part of me feels that the Office of the Future label is bit of a misnomer, as you can buy just about every piece of equipment installed in the Office of the Future today. Nevertheless, if you updated your technology with the kinds of tools and devices seen in Fidelity’s example, I think you’ll have a good chance of attracting new clients that have increased expectations about their advisor’s technology and overall service experience.] Fidelity Institutional, the division of Fidelity Investments® that provides clearing, custody and investment management products to registered investment advisors (RIAs), banks, broker-dealers and family offices, today announced the opening of the Office of the Future on its Smithfield, Rhode Island campus.
[Now as all financial professionals use more technology in their businesses, the SEC is ramping up its oversight of the risks of all this technology through enhanced cybersecurity examinations.
Two weeks ago, the SEC released an extensive document covering dozens of items examiners may request when auditing the cybersecurity policies and procedures of a financial services firm, and that includes SEC-registered investment advisers.
Based on its list of requests, the SEC expects you to have a written security information policy, an inventory of hardware devices and software applications used in your business, details on when and how you conduct risk assessments, and a whole lot more.
It’s clear that enforcement regarding cybersecurity is about to get a lot tougher, which I feel is appropriate given the responsibility you have to keep your clients’ personal and financial account information safe from attacks.
So I recommend that whoever is responsible for addressing security in your firm review the nearly 30 individual items in the SEC’s sample request list and update your policies and procedures accordingly, and do it sooner rather than later.] OCIE is issuing this Risk Alert to provide additional information concerning its initiative to assess cybersecurity preparedness in the securities industry.
[And finally, rounding out this week’s update is a new feature from Riskalyze called Retirement Maps. Now many advisors like to illustrate a client’s probability of success in funding their retirement goals projected many years into the future, but the extensive data entry required and time consuming Monte Carlo calculations performed by most software programs can often be a deterrent of doing so.
So the new Retirement Maps aims to significantly streamline this process. Here’s Riskalyze CEO Aaron Klien with more details:
Best of all, Retirement Maps is being offered as a free upgrade to all existing Riskalyze customers, and for a limited time, new Riskalyze customers will also receive a free lifetime upgrade as well.] After thousands of hours of research and development, our Core Technology team invented a new way to deterministically calculate the 95% probability years into the future. There’s no waiting for a long, slow recalculation: you get an interactive way to build a map for the client’s retirement right in front of their very eyes.
Here are stories that didn’t make the cut this week:
Our Certified Compliance Partners provide expert monitoring, archiving, and management of communications for enterprises in regulated industries. They help your social interactions remain effective while ensuring compliance with corporate governance policies and major regulations.
Wealth Access, a wealth management platform designed for financial advisers and high-net-worth clients, announced Wednesday that it had raised more than $3 million in a financing round that includes investments from a TNInvestco fund and a St. Louis financial technology accelerator.
XY Planning Network, the platform launched in early April by Michael Kitces and Alan Moore, announced Monday its list of “core” technology partners that will be available to current and new members of the platform, which is dedicated to helping young planners build a fee-only business targeting Gen X and Gen Y clients.
Orion Advisor Services, LLC, the premier portfolio accounting service bureau, announces a complete redesign of the functionality and features of the client portal for its financial advisor clients. With this redesign, advisors have new capabilities to communicate more effectively with their clients, and give clients a complete snapshot of all their assets, whether managed by the advisor or not.
On the leading edge of financial services technology innovation, Personal Capital, Motif Investing, and more demo their latest features to change the way consumers engage with financial advisors.
On today’s broadcast, Morningstar acquires ByAllAccounts for $28 million, how this deal might shake up the account aggregation marketplace. The SEC issues new guidance on social media and the testimonial rule. Find out what you can and can’t do online regarding client testimonials. And Wealthfront raises another $35 million in venture capital. Are you ready to take on the new technology funded by this war chest?
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[Leading off this week is an announcement from Morningstar that the company just acquired account aggregation provider ByAllAccounts for $28 million. For over a decade, ByAllAccounts has been feeding, scraping, and otherwise aggregating account data for held-away 401(k)s, annuities, 529 plans, and any other accounts not held at an advisor’s custodian of choice.
Account aggregation makes it possible to generate net worth, asset allocation, and other reports that accurately reflect a client’s total portfolio, not just for those assets held with one custodian. But ByAllAccounts goes one step further by providing reconciliation-ready data, meaning advisors can import transactions into their portfolio management software of choice and actually generate performance reports for client portfolios.
The only other provider of reconciliation-ready data is Aqumulate, formerly Advisor Exchange, so essentially these two hold a monopoly in this space, leading me to wonder why ByAllAccounts would be willing to be acquired by Morningstar at this point in time. There certainly are other aggregation options from Yodlee and Intuit gaining traction among RIAs, but they only provide holding and balance information and not the reconciliation-ready data needed for performance reports.
James Carney, President and CEO of ByAllAccounts, wrote in an email to customers that “for now, it’s business as usual,” so stay tuned to see how this acquisition may alter the playing field in the account aggregation market.] Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today acquired ByAllAccounts, Inc., a provider of innovative data aggregation technology for financial applications.
[Next is an update from the SEC, who this week issued guidance number 2014-4 on the testimonial rule and the use of social media. There’s a lot to this new guidance, but from a technology perspective, it clears the way for advisors to link their website and social media profiles to independent online review sites such as Yelp, Angie’s List, or even WalletHub.com without violating the prohibition against testimonials.
Now you can’t copy and paste select reviews from those sites and post them to your website. You have to copy all of the reviews together, but that requires too much ongoing maintenance to keep up to update.
Instead, you can embed widgets from sites like Yelp that display your average rating from all reviews, and since those widgets stay updated in real time, there’s no ongoing maintenance required on your part once you’ve embedded the code on your website.
Also, the SEC’s guidance clarified that you can include a partial list of clients on your social media profiles without triggering the testimonial rule, as long as the list doesn’t highlight your client’s experience or endorsement of you as an advisor. Just take a look at Wealthfront’s website, which was just updated to include photos of sixteen influential investors from Silicon Valley. You can employ the same tactic if you think posting photos of some of your clients online will help you win future business.
And how does the new guidance affect LinkedIn? It’s clear that LinkedIn recommendations and endorsements still remain off limits to advisors, as you control what does and does not appear publicly next to your profile. That control can lead to cherry picking recommendations which is a definite no-no under the SEC’s guidance.] From time to time, we have been asked questions concerning the nature, scope and application of the rule that prohibits investment advisers from using testimonials in their advertisements.
[And speaking of Wealthfront, this week’s final story highlights the automated investment service’s latest round of venture capital, as the company raised $35 million led by Index Ventures and Ribbit Capital. Wealthfront also updated its Form ADV Part II as the company now manages over $800 million in assets on behalf of its users.
This brings the company’s total funding to $65 million, surpassing Personal Capital’s $54 million, which is a significant war chest to pay for additional development and new tools and techniques to further reduce the cost of managing investment portfolios. This places even more pricing pressure on advisors who charge high fees exclusively for their own investment management services and nothing else.
So if you’re not making investments in your own technology, or don’t clearly differentiate how the services you offer involve a lot more than just investment management, the time to start doing so it right now.] Financial services as an industry is a sector that is rapidly being disrupted from all directions.
And here are stories that didn’t make this week’s broadcast:
Smarsh®, the leading provider of hosted archiving solutions for business communications, today announced the launch of Smarsh Sites, the new website hosting and production platform optimized for the financial services industry.
On today’s broadcast, cybersecurity takes center stage at FINRA and the SEC, what you need to do to protect your business from attacks. Amazon launches its cloud desktop service to the public. Does this mark the end of plain old desktop in your business? And two growing providers form a new joint venture to take your portfolio management efficiency to the next level.
Today’s episode is brought to you by Orion Advisor Services, the nation’s largest privately held portfolio accounting service bureau.
Providing full-service data reconciliation, advisory fee billing, Salesforce integration, mobile apps and more, Orion believes it’s time for you to enjoy your business again. Visit fppad.com/orion for more information.
[Leading off today’s broadcast is an update from FINRA and the SEC highlighting cybersecurity threats faced by advisors and broker-dealers. In a roundtable event held in Washington DC this week, regulators and industry representatives acknowledged that the number one cybersecurity threat to firms of all sizes is the unauthorized account takeover.
This happens when a hacker compromises an investor’s username and password credentials, or manages to take control of an investor’s email account. The hacker then proceeds to liquidate holdings and transfer money to outside accounts, or even poses as a client with a convincing story to get advisors to transfer funds to an outside account, a clever tactic known as spoofing.
Both FINRA and the SEC acknowledge they must play a role in this area, but neither provided details on what exactly that role should be, and if any advisor exams are to include cybersecurity audits, they are likely to start in the fall of 2014 at best.
Until then, here’s what I recommend you do: First, update your compliance manual with policies for what you do when faced with a cybersecurity attack.
Second, train everyone in your organization so they’re familiar with the common tactics from hackers, including phishing, spoofing, and reverse social engineering. And finally, invest in technology to boost your security, like activating multi-factor authentication, deploying firewalls, and even using phishing simulation software that I highlighted in episode number 115.] The top risks broker-dealers face in dealing with cybersecurity threats are operational risk, “insider” risks posed by rogue employees and hackers penetrating BD systems, Daniel Sibears of the Financial Industry Regulatory Authority said Wednesday at the Securities and Exchange Commission’s cybersecurity roundtable.
[Next up is news from Amazon, as the company announced the general release of its virtual desktop solution to the public called WorkSpaces.
WorkSpaces is squarely aimed to take on other virtual desktop providers like Citrix, VMWare, and Microsoft, and with pricing ranging from $35 to $75 per month for each user, WorkSpaces is roughly half the price of the competition. If you’re looking to get rid of your aging server and move all of your core software to the cloud, Amazon WorkSpaces just became a very compelling option.
Plus, with the introduction of a new WorkSpace Sync application, you can backup and synchronize up to 10GB of documents between your WorkSpaces, the Amazon Simple Storage Service, and even your local desktop computer. This gives you a secure and reliable document storage alternative to consumer services like Dropbox, Box, Google Drive, and Microsoft OneDrive that you might be using today.] Amazon WorkSpaces, the company’s virtual desktop computing environment introduced last fall at the AWS re:Invent conference, is today available to the public.
[And finally, two popular providers in portfolio management and rebalancing software, Orion Advisor Services and Total Rebalance Expert, announced a new joint venture this week called the “Total Technology Platform.”
The two companies first integrated their solutions back in October of 2012, enabling the import of account, transaction, and tax lot data from Orion directly into TRX with a single click.
But this latest venture goes beyond bidirectional integration, as users of Orion will now be able to access TRX directly from within the Orion platform. At the same time, both companies said they are committed to maintaining open-architecture platforms rather than hold advisors captive to one bundled solution.
Orion users can still take advantage of integrations with Blaze Portfolio, iRebal from TD Ameritrade Institutional, and Rebalance Express from RedBlack Software, and TRX users can continue to import data from Morningstar Office, Portfolio Center from Schwab Performance Technologies®, Advent’s Black Diamond Performance Reporting and more.] Total Rebalance Expert (TRX) and Orion Advisor Services, LLC (Orion) announced today a joint venture between the two companies to provide a “Total Technology Platform” designed to simplify and streamline the portfolio management process.
Here are stories that didn’t make this week’s broadcast:
