Welcome to the FPPad fintech briefing, Here are the top fintech stories you need to know today.
Fidelity® Announces Advisor Technology Initiatives for 2018
Fidelity, one of the top institutional custodians for financial advisers, recently announced the planned introduction of several new technology solutions for financial advisers. In a recent press release, Fidelity said it will introduce a new account aggregation tool called Consolidated Data, a business analytics tool called Insights + Analytics, new Advanced Modeling & Rebalancing capabilities for its Wealthscape software platform, and the launch of a digital app store called the Wealthscape Integration Xchange.
Pilots of several of these new tools are scheduled to begin in the third quarter of 2018, and no guidance on pricing was provided for any of the new tools announced, so expect quite a bit more concrete information over the coming months as these tools get closer to production.
Orion Advisor Services Launches Alternative Investment Platform
From Orion Advisor Services, the company announced the release of its Alternative Investment Platform tool, allowing financial advisers to offer better reporting to their clients around alternative investments like private equity, venture capital, non-traded real estate, and more.
The company press release also highlighted an update anticipated for May that adds automated data gathering for alternative assets from DTCC and other alternative data vendors.
Captain401 Rebrands as Human Interest, Raises $11 Million Series A
And Captain401 has a new name and new funding, as the company said it’s changing its name to Human Interest on the heels of raising an additional $11 million dollars in a Series A round last week.
Founded in 2015, Human Interest says it helps over 10,000 employees save for their retirement with a focus on the small business retirement plan marketplace, where it will find competition from other providers like Betterment for Business, America’s Best 401(k), as well as large incumbents like Vanguard and Financial Engines.
I’m Bill Winterberg, and those are your fintech headlines for today from FPPad.com. Check back in with me later for more fintech news.
Welcome to the FPPad fintech briefing, Here are the top fintech stories you need to know today.
Brokerage Websites Offline During Market Volatility
With huge increases in market volatility this week, brokerage customers have experienced unresponsive websites from some of the largest providers like Fidelity, Charles Schwab and Vanguard as well as smaller automated investment services Betterment and Wealthfront. According to Bloomberg, brokerage companies acknowledged that customers did lose access for short periods of time on Monday, but as trading activity subsided, account access was restored to all customers by Tuesday morning.
Personal Capital Adds Socially Responsible Personal Strategy®
In socially responsible investing news, Personal Capital is hopping on the responsible investing bandwagon with the addition of its new Socially Responsible Personal Strategy®. The strategy screens US equities based on environmental, social, and governance factors powered by Sustainalytics data to generate investment strategies that align with customers’ socially responsible preferences. Personal Capital joins Betterment, Wealthfront, Motif Investing, OpenInvest, and many others to help investors align their portfolios with their socially conscious preferences.
AdvisoryWorld Update on ACQUIRE Solution
And how do you stay up to date on what’s new this year in fintech? Well if you visit the FPPad YouTube channel, you’ll see the first batch of dozens of interviews filmed with fintech solution providers at last week’s National LINC conference, including a conversation about an updated from Advisory World called ACQUIRE. Here’s AdvisoryWorld COO Mike Wilson with the details.
We continue to work on what we refer to as ACQUIRE, which is our digital onboarding component. With that, advisors are able to embed links on their websites and social media accounts that helps get new business through the doors. It’s a questionnaire that points, again, to a model.
More interviews are being uploaded to the FPPad YouTube channel every day, so visit fppad.com/flashbriefing to get all the links to today’s top 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.
Have you updated your software lately? Security researchers worldwide are recommending that everyone install available software updates on computers and mobile devices in the wake of vulnerabilities called Meltdown and Spectre. The exploit allows malicious software to retrieve data from computer memory used by other programs, potentially exposing things like passwords, instant messages, bank account numbers and more. In addition to updating software, experts recommend installing open source content-filtering software like uBlock Origin in your internet browser to block malicious code.
Vanguard Personal Advisor Services Exceeds $100 billion AUM
In online investment news, Vanguard’s Personal Advisor Services crossed a milestone of $100 billion dollars in assets under management, becoming the first of the low-cost hybrid advice services to do so. While online investing startups have raised hundreds of millions in dollars in venture capital to tackle this market, established incumbents like Vanguard are having the most success in attracting assets to their digital platforms. Here’s Riskalyze CEO Aaron Klein with his thoughts on Vanguard’s milestone.
“Vanguard has found a way to profitably bring hybrid human-robo advice to the market, and there is absolutely a need for better advice among smaller investors,” he adds. “The big realization most advisors have had is that Vanguard is serving a different market — one that will accept simpler, phone-based advice. It’s a rising tide that is lifting the advice boat and that’s a good thing for the industry.”
Reinvest 2017 Year-End Dividends in HSA Accounts
And do you or your clients have investments in you HSA accounts? if so, be sure to check with your HSA administrator to see what happened with dividends paid out at the end of 2017. Not all plans automatically reinvest dividends, so you may have to manually log in to your plan if you want the extra cash reinvested back into your HSA’s investment portfolio.
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.
Betterment adjusts its default fee structure to 25 basis points for accounts of all sizes for what is now called Betterment Digital (the 35bps, 25bps, and 15bps tiers are gone)
Betterment customers who formerly qualified for the 15 basis point tier will see their fees increase 67% to 25 basis points. Some customers are not pleased
New Plus and Premium plans are offered that introduce hybrid advice engagements from human advisers for an additional fee
Betterment Plus includes an annual planning call with the in-house adviser team and support via email. Betterment Plus pricing is 40 basis points and requires a $100,000 account minimum
Betterment Premium include unlimited contact with the in-house adviser team via phone and email. Betterment Premium pricing is 50 basis points and requires a $250,000 account minimum
All Betterment plan fees are capped, charged only on the first $2 million of a customer’s balance.
Betterment is introducing the Betterment Advisor Network™, launching with roughly ten advisers who have complete the Betterment vetting process, all of whom must hold the CFP® certification
There is no fee to be included in the adviser referral network
Betterment receives no referral fees for directing customers to any specific adviser in the referral network
Customers who work with an adviser in the Betterment referral network pay a fee of 25 basis points on their assets in their Betterment account. The adviser can set an additional fee on top of Betterment’s fee for services provided
Betterment introduces hybrid advice plans with access to in-house CFP® professionals
Betterment announced today that the company will introduce hybrid advice offering with access to an in-house team of financial advisers.
For the full details from Betterment, see the post below from the Betterment website:
One unfortunate consequence of the new 25 basis point pricing structure is the elimination of the 15 basis point tier that formerly applied to accounts over $100,000.
Reaction on Twitter was swift, as these customers will see their fees increase by roughly 67%.
@Betterment that's an awfully long email i just got just to say you're raising your fees from 0.15% to 0.25% 🙁
Despite the frustration of customers who formerly qualified for the 15 basis point tier, Betterment Digital’s pricing establishes parity with the pricing offered in the Betterment for Advisors (formerly Betterment Institutional) service.
Since the Betterment for Advisors introduction, I had been critical of the conflict the different pricing tiers presented for advisors who chose to implement Betterment for Advisors for their clients.
I often questioned how an adviser could meet his or her fiduciary obligation to clients with over $100,000 in assets, as that client would pay fees of 15 basis points using a “retail” Betterment account, where a minimum fee of 25 basis points would be charged on a Betterment for Advisors account, for asset management services that I felt were essentially equivalent.
Today, that fee disparity, and the fiduciary quandary, is eliminated, but at the expense of raising fees for customers who qualified for the former 15 basis point tier.
Betterment undercuts Personal Capital
One other observation is Betterment Premium now enters the competitive hybrid advice market, a space dominated by Vanguard Personal Advisor Services, that is also occupied by Personal Capital and the Schwab Intelligent Advisory offering scheduled to debut sometime in the first half of 2017.
Betterment Premium is more expensive than the 30 basis point fee Vanguard Personal Advisor Services and the 28 basis point fee from the upcoming Schwab Intelligent Advisory, but at 50 basis points, the service undercuts Personal Capital’s current 89 basis point pricing.
On today’s broadcast, Schwab announces its Schwab Intelligent Advisory services, Finicity raises $42 million for account aggregation, Envestnet|Tamarac rolls out Yodlee, and more.
Today’s episode is brought to you by eMoney Advisor, featuring a new Client Onboarding process as a part of their leading client experience. Onboarding replaces printed fact-finding documents with an automated, digital workflow, allowing clients to populate their own personal financial information online from anywhere — adding an extra layer of convenience and efficiency to your service.
[Now the big story this week is news from Charles Schwab, as the largest custodian for RIAs announced plans to introduce Schwab Intelligent Advisory™ in the first half of 2017. In the press release, Schwab’s Neesha Hathi said that Schwab Intelligent Advisory is designed for emerging or mass affluent investors who don’t have complex financial situations, features access to CFP® professionals who are available by phone and videoconference, and charges fees of just 28 basis points (disclaimer!) with a maximum of $3,600 a year.
Now this isn’t as much of a technology story as it is a marketing story, because the technology for Schwab Intelligent Advisory portfolio management is that same that powers Schwab Intelligent Portfolios for retail investors and Institutional Intelligent Portfolios™ that you can use in your own RIA if you custody assets with Schwab.
But, how does that make you feel knowing you’re using the same technology that your custodian will use to offer its own human-assisted advisory services to mass affluent clients?
So I was asked if I thought RIAs should be concerned about this announcement, and I said yes, RIAs should absolutely be concerned. Look, when it comes to getting a prospect to buy what you do, most of the time it’s not what you say, it’s what people hear, and I’ve gotta admit, prospects are hearing comprehensive plans by CFP® professionals with 24/7 access, all for 28 basis points (disclaimer!)? Unless your prospects hear something far more different and compelling from you, I just can’t believe they’ll be willing to pay more than three times the price of Schwab Intelligent Advisory for your services.
And I’m not ignoring Vanguard’s Personal Advisor Services, which also employs hundreds of CFP® professionals and charges 30 basis points (thank you!), with more than $40 billion on the platform and growing. A few of you have told me that you’ve lost clients to Vanguard’s service, which is also likely going to happen with Schwab Intelligent Advisory, but the difference with Vanguard is that they’re not also soliciting your custody business while simultaneously soliciting mass affluent clients.
But the executives at Schwab surely know what they’re doing, and I think they know their target RIA client pretty well, which I suspect largely enforces client account minimums of a million dollars or more, so Schwab Intelligent Advisory really isn’t a competitive threat, because it’s not intended for the high-net worth clientele targeted by the largest RIAs that generally choose to custody with Schwab.] Charles Schwab today announced plans to expand its suite of wealth management and advisory services with the launch of Schwab Intelligent Advisory, a hybrid advisory service that combines live credentialed professionals and algorithm driven technology to make financial and investment planning more accessible to consumers.
[Now one of the things not mentioned about Schwab Intelligent Advisory is account aggregation, which is the focus of my next two stories, starting with Finicity, as the company announced it secured $42 million in a new funding round led by Experian.
This is the first time I’ve mentioned Finicity in my broadcast, but I have a popular post on FPPad from March of this year when Intuit announced it was shutting down their Financial Data API and selected Finicity to offer façade APIs to developers who needed to transition off of Intuit’s aggregation.
In the wake of that change, Guide Financial, which was acquired by John Hancock in the summer of 2015, shut down back in October, but other than that I haven’t heard of other significant disruptions among other tech providers.
What remains to be seen is whether or not Finicity makes an attempt to offer aggregation services to advisers, either directly or by partnering with existing technology providers, so if you have some intel you can share with me, I’d appreciate the heads up, otherwise advisers can continue to engage aggregation providers such as Morningstar ByAllAccounts, Aqumulate, eMoney, Quovo Wealth Access, and Envestnet|Yodlee.] Finicity, a leading provider of real-time financial data aggregation and insights, has secured $42 million in new funding. Experian, a global innovator in consumer and business credit reporting, led Finicity’s Series B round, along with a venture debt facility provided by Bridge Bank and participation from existing investors.
[And speaking of Envestnet|Yodlee, my last story highlights the rollout of Envestnet|Yodlee to the Envestnet|Tamarac platform. While at the Schwab IMPACT conference in October, I had a chance to connect with Brandon Rembe to get a quick update on what this new feature means for advisors.
I’ve linked the full interview over here and in the description below, but let me just finish by saying that technology like account aggregation is still a bit of a differentiator for you, since it helps you know as much as you can about your client’s total financial picture, and not just what clients have at one custodian, such as, ohhh, Charles Schwab, which is a complete coincidence.] Envestnet | Tamarac now enables advisors to add assets and liabilities to households in Advisor View™, helping them expand their focus and deliver more holistic advice to clients.
A few parting words:
Before I sign off, you need to know that I have some big plans in the works for FPPad content in 2017. I’m not going to go into the details right now, but what you will notice is that this broadcast, the almost-weekly videos, will be taking a bit of a hiatus for a few months.
But don’t worry, I’ll still be providing my independent insight on financial technology that thousands of you count on as you navigate what I feel is an exciting, unprecedented opportunity in the business of financial advice.
Scottrade® Advisor Services now has agreements with two leading industry solutions providers to help RIAs run their day-to-day routines. Scottrade signed agreements with Morningstar, Inc. and Orion Advisor Services, LLC to offer their services at a discount.
Yahoo, already reeling from its September disclosure that 500 million user accounts had been hacked in 2014, disclosed Wednesday that a different attack in 2013 compromised more than 1 billion accounts.
We recently announced an update to Evernote’s privacy policy that we communicated poorly, and it resulted in some understandable confusion. We’ve heard your concerns, and we apologize for any angst we may have caused.
Advisors have been asking for better ways to visualize portfolio allocations, and we’re excited to announce today that we’re rolling out Asset Class coverage for all portfolios in Riskalyze!
Personal Capital, the leading digital and professional advisor based wealth management firm, today announced that IGM Financial Inc. has completed the firm’s Series E round. Additionally, Silicon Valley Bank has extended $25 million in credit to the firm.
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, IBM flexes its cognitive computing muscles at a World of Watson event, Finance Logix gets acquired by Envestnet, and Vanguard deploys Personal Advisor Services to the masses.
Today’s episode is brought to you by Croesus, the affordable all-in-one portfolio management & CRM software for RIAs. Over 9,500 investment professionals use the Croesus application to manage more than $700 billion in assets, and Croesus is offering a 50% discount on set-up fees for Advent Axys users until June 30th.
To learn more about Croesus or to sign up for a free trial, visit fppad.com/croesus.
[This week’s top story comes from IBM, as the company held a two-day conclave in New York to introduce the IBM Watson Developer Cloud. I attended the event to look for ways cognitive computing from IBM Watson can enhance the financial services industry, so here’s what I found.
First, a company called Quid, which is using Watson to ingest millions of documents to index them based on information around stocks and portfolios. Something like this can significantly streamline your portfolio research workflow. And another company is Pick1, which uses IBM Watson to segment and analyze your clients based on their personality derived from what they write in emails and post on social media.
And on the cybersecurity side, a company called SparkCognition is leveraging IBM Watson to detect, assess, and research external threats that businesses encounter every day from hackers. Tools like these are poised to help you protect the critical information in your business, as well as the assets of your clients, which has become a huge focus for regulators this year.
I filmed a video blog while at World of Watson to give you a sense of the size and scale of the event, offer some of my candid thoughts from presentations, and keep you aware of what your business will need to stay competitive in the future.]
[Next up is news from Envestnet, as the company announced it is acquiring Finance Logix, a financial planning software provider, for around $32.5M of cash and stock as calculated by Nerd’s Eye View blogger Michael Kitces. I was on my flight back from World of Watson when the news broke, so thankfully Michael Kitces cranked out a comprehensive post on the deal. Here are the important takeaways.
In 2012, Envestnet acquired Tamarac for their CRM, portfolio management, client portal and rebalancing software platform, then two months ago, they acquired Upside and their automated investment solution, so one of the few pieces missing in an all-in-one platform was financial planning software. Enter Finance Logix.
This deal and Fidelity’s recent acquisition of eMoney means that fewer potential acquisition targets remain, primarily MoneyGuidePro, MoneyTree, inStream, and private-equity backed Advicent Solutions. But clearly, the pace of acquisitions is accelerating, so it’s likely a question of when, not if, one of the solutions you use today gets acquired by a custodian or a large investment and technology provider.] Envestnet, Inc., announced today that it has acquired Finance Logix, a technology company that provides leading-edge financial planning and wealth management software solutions to banks, broker-dealers and RIA firms.
[And finally, Vanguard is out with news this week that its low-cost Personal Advisor Services, or PAS, is now being rolled out to all investors and the minimum account size has been lowered to just $50,000. With an annual fee of just 0.3%, Vanguard is walking a fine line of putting pressure on the fees advisors charge for investment management services, while simultaneously soliciting advisors to use Vanguard’s low-cost funds and ETFs in their portfolio allocations for clients.
Fortunately, Vanguard officials told Reuters that “Sophisticated investors will still need customized advice on taxes, estate planning and niche areas the new service will not offer,” which is a different stance than others out there who say investors don’t need to pay for expensive financial advisors.
Nevertheless, the pressure is on for you to aggressively price your fees, especially for investment management, but you also need to communicate how your firm goes well beyond offering one-size-fits-all advice.
That means you need to be more efficient and streamlined using technology available today so you have the capacity to establish meaningful relationships with clients and focus on the things that actually matter to their financial success.] Arguing that many of its customers cannot afford to pay high investment advisory fees, The Vanguard Group on Tuesday unveiled a low-cost service combining an automated investment plan with advice from a Vanguard financial planner.
Here are the stories that didn’t make this week’s broadcast:
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.
Trizic, the technology company powering digital wealth advisory solutions for financial institutions and Registered Investment Advisors (RIAs), today announced an additional $2 million in seed funding from Operative Capital, an early-growth stage investor in disruptive financial technology start-ups.
On today’s broadcast, Wealthfront wants you to know they crossed another round number in AUM, ByAllAccounts is now aggregating over $1 trillion dollars in investor assets, and Morningstar is out with a new iPad app for advisors.
Today’s episode is brought to you by IMPLEMENT NOW, the independent advisor’s Practice Management Virtual Summit hosted by Kristin Harad broadcasting online March 16th to the 20th. When you register, you’ll get access to interviews and bonus material from 22 industry thought leaders as they reveal their practice management secrets for success.
And if you register by March 15th, you’ll receive a copy of Carl Richard’s new book The One Page Financial Plan. Find all the details for this high-impact event by visiting fppad.com/implementnow
[First up is news from online investment service Wealthfront, as the company announced this week that it has surpassed the $2 billion dollar mark in assets under management, an increase of 20 times in just over two years. This places the automated investment service just barely in the Top 100 RIA firms measured by assets according to the InvestmentNews RIA database. However, another online provider has also entered this rarefied territory, but with very little fanfare.
That provider is mutual-fund giant Vanguard, as the Vanguard Personal Advisor Services™ reached $10.1 billion dollars in assets as of the end of 2014, and it’s still in a limited pilot program. If you do the math, the company added nearly $8.8 billion to its platform in just nine months, and the company is also considering offering some form of the service to advisers.
So while the startups continue to make headlines and receive face time on cable business TV, the incumbents that the startups say they’re disrupting are putting up some very impressive growth metrics of their own.] Wealthfront managed less than $100 million in client assets when I joined, and had many skeptics. No one outside of the company could have imagined that, just over two years later, we’d celebrate being the first automated investment service to reach $2 Billion in client assets under management.
[Related to online asset tracking is this is news from Morningstar, as the company announced its ByAllAccounts aggregation service now aggregates over $1 trillion dollars in investor assets. You may recall that Morningstar acquired ByAllAccounts back in April of 2014, and since then the number of supported data sources has grown to over 20,000 from 4,500. Can you say Yodlee?
So what does this mean for you? Remember, most of the online investment services don’t take into account the assets users have in their held away accounts. Personal Capital is one exception, but they’re not a pure online service, either. The rest don’t have the complete picture of their users’ net worth, so if you’re on the fence about incorporating account aggregation in your business, this is one area in your value proposition where you can outperform the online competition.] Morningstar, Inc., a leading provider of independent investment research, today announced a number of milestones for its Morningstar® ByAllAccounts aggregation service.
[And finally, Morningstar also rounds out this week’s broadcast as Joel Bruckenstein reviewed their new iPad app built for the needs of financial advisers. I had the opportunity to recently test the app with Morningstar’s Mike Barad as he walked through the market research information, complete with embedded videos from Morningstar analysts, as well as the Clients and Portfolios view that advisors can use to stay up to date on client asset allocations, holdings, and more.
There are a few wish list items that Bruckenstein highlighted, such as the inability to conduct trading or rebalancing activity within the app, or to view Portfolio X-Ray reports on aggregated accounts. Still, for a version 1.0 app, advisors who use Morningstar Office or Workstation in their business should find the app useful for those times they’re away from their desktop computer.] While Morningstar has long been known as a leading provider of independent investment research, the company also produces a number of software applications for advisors.
Here are the stories that didn’t make this week’s broadcast:
On today’s broadcast, Financial Planning magazine’s annual tech survey is here. Find out who makes up this year’s winners and losers in advisor technology. Fidelity announces a new collaboration with LearnVest. How will this partnership help you with your digital advice delivery to clients? And, Wealthfront fires the first salvo at the separately managed account industry. Does this new service have the potential to put pricing pressure on the SMAs you use today?
Today’s episode is brought to you by the 2015 T3 Conference, Advisor Edition, exclusively designed for the technology needs of independent financial advisors.
You can get $50 off the regular registration rate by using the promo code “2015T3FPPAD,” so reserve your spot to the event Michael Kitces calls the Best for Advisor Technology by visiting technologytoolsfortoday.com
Now here are the links to this week’s top stories:
[This week’s top story comes from Financial Planning magazine, as technology columnist Joel Bruckenstein revealed the results of the publication’s annual technology survey of financial professionals. The first surprise of the survey involves tools advisors use to assess client risk tolerance.
For the longest time, the risk assessment category has been dominated by FinaMetrica, the Australian-based firm that launched its client profiling tools back in 1998. Today, assessment tools from Riskalyze and PocketRisk have gained respectable adoption among advisors. But roughly 50% of survey respondents admitted that they don’t use any risk profiling tools, so if you’re part of that 50%, you might want to consider adding one of these solutions to your technology plan for 2015.
Also gaining traction are portfolio rebalancing solutions, as these tools are now in use by more than half of all survey respondents, a first for the category. TD Ameritrade Institutional’s iRebal earned top honors, with Envestnet|Tamarac and Orion Advisor Services rounding out the top three solutions in use today. And with all of the low-cost online investment solutions touting their rebalancing and tax-loss harvesting attributes, I expect to see rebalancing software adoption to continue to grow as advisors match the rebalancing capabilities of the online providers.
Other than that, this year’s survey is pretty similar to the one from 2013, with TD Ameritrade Institutional taking top honors in advisor satisfaction, MoneyGuide Pro cited as the most popular financial planning software, and Junxure, Salesforce, and Redtail duking it out once again for top honors among CRM software depending on how you slice the data.] In the advisor technology sphere, it used to be enough to look for evidence of change. What’s different now is the velocity of the action.
[Speaking of online investment solutions, the next story comes from Fidelity Institutional, as the company recently announced a new collaboration with LearnVest, the online technology-enabled financial planning provider. This news follows Fidelity’s announcement last month of a similar collaboration with Betterment Institutional, where Fidelity will list the online investment service in its list of resources advisors should consider as they contemplate ways to attract the next generation of investors.
Under the collaboration, advisors can publish what’s called a “financial wellness” micro website that features educational content produced by LearnVest. In addition, advisors can offer the LearnVest planning program to their clients under a preferred pricing agreement.
Now I’m all in favor of advisors embracing digital advice delivery at an affordable price, buy why should you be piggybacking off of LearnVest’s content? Shouldn’t YOU be the one delivering valuable financial planning content to your clients and prospects? If you have the resources, you should be building your own website, creating your own content, and training yourself and your colleagues to deliver your message with compelling video content. Yes, it takes time and a nominal financial investment, but I bevel the potential reward is worth it.
However, if you don’t have the talent or the resources to make this happen, then the LearnVest collaboration at least gives you a starting point to bridge the gap between your current service model and the technology-enabled relationships that emerging clients are demanding.] Fidelity Institutional, the division of Fidelity Investments® that provides clearing, custody and investment management products to registered investment advisors (RIAs), retirement recordkeepers, broker-dealers, family offices and banks, today announced a new collaboration with LearnVestTM, as well as additional resources to help advisors explore options to digitize their practices.
[And finally, it seems like I can’t stop talking about online investment services this week, as this time it’s Wealthfront making headlines, as the company just announced a new offering called Direct Index investing. Starting with an account minimum of $100,000, Wealthfront will purchase individual securities and ETFs on behalf of its customers that are benchmarked against the Vanguard Total Stock Market ETF. Holding individual securities instead of funds and ETFs allows Wealthfront to track the performance of the index, but harvest individual gains and losses from individual in securities to be more tax efficient.
If this sounds a lot like separately managed accounts, or SMAs, that advisors use today, that’s because it is. So while Direct Index Investing isn’t anything new, Wealthfront is now able to offer the service with very low account minimums and charges its low annual management fee of just 25 basis points, which could very well put pricing pressure on many of the SMA providers you use like Parametric, Envestnet, Nuveen, and more.] Today, we are very excited to announce the expansion and improvement of our unique direct indexing technology. With this release, the Wealthfront Direct Indexing Platform will extend the benefits of direct indexing to broader sets of clients, with increased tax benefits and lower costs.
Here are the stories that didn’t make this week’s broadcast:
Junxure CRM, an industry-leading practice improvement firm for financial advisors that integrates CRM technology, consulting, and training, today announced the expansion of its relationship with Advent Software, a leading provider of software and services for the global investment management industry. Advent’s Black Diamond(SM) wealth management platform now offers an integrated experience with Junxure Cloud, Junxure’s cloud-based CRM/office management solution.
