Several big milestones were crossed in the last few days, with the XY Planning Network leading off with its announcement that the organization now serves 600 members as a part of the fee-only, fiduciary financial planning network. Founded in 2014, the XY Planning Network provides turnkey technology, compliance, marketing support and business coaching to financial planners looking to serve Gen X and Gen Y clients, many of whom offer financial planning on an hourly basis or a low-cost retainer without requiring substantial assets in a portfolio.
Also crossing another milestone is Envestnet | Tamarac, as the portfolio management, reporting, client portal, trading and CRM software provider recently surpassed $1 trillion dollars in collective assets under management among all the financial advisers that use the company’s technology. According to a recent press release, over one-third of registered investment advisory firms that manage $1 billion dollars are using the Envestnet | Tamarac solution, and the company says it maintains a renewal rate of 97% among its clients as a result of the company’s ongoing support, training, and consulting.
Morningstar Launches Quantitative Rating for Funds
And for a new milestone in mutual fund research, Morningstar just announced that the company has launched the Morningstar Quantitative Rating for funds, which generates ratings of Gold, Silver, Bronze, Neutral, or Negative for mutual funds based on a large set of quantitative factors like fund fees, manager tenure, firm success, and much more. Historically, Morningstar has generated Analyst Ratings for mutual funds, but the number of ratings has been limited by the size of the Morningstar analyst team. The Quantitative Rating uses machine learning models to apply the analyst’s decision-making process to the list of funds not covered by the analyst team, which allows the company to generate ratings on six times more mutual funds in the United States market.
Morningstar is the sponsor of this Flash Briefing for the month of March.
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.
Clarification added February 28, 2018 at 1:38 PM ET: XY Planning Network members can use up to 20 client households in Capitect for no additional fee. Accounts in addition to 20 require additional fees. See Capitect XYPN Pricing for details. Prior versions of this post did not specify how many accounts could be used for free.
Welcome to the FPPad fintech briefing, here are the top fintech stories you need to know today.
Acorns Surpasses 3 Million Accounts
You’ve heard that “mighty oaks from little acorns grow,” right? Well, in the case of Acorns, the micro-investing app for investors, that saying rings true, as the company announced it recently crossed 3 million investment accounts on the platform, adding 500,000 of those in just the last 3 months. Acorns co-founder and CEO Noah Kerner said that the service is differentiated from Betterment and Wealthfront because it isn’t targeted to investors who already have assets to manage, focusing instead on hardworking Americans who are saving roughly 5 to 7 percent of their income each year. Fees for Acorns are $1 a month for account under $5,000 and 25 basis points a year for accounts above $5,000.
XY Planning Network Partners with Capitect
In news from the XY Planning Network, the company announced it recently partnered with Capitect, a portfolio management software provider, to offer the client portal and performance reporting software to its nearly 600 members for no additional fee. Network members will be able to use Capitect to manage portfolios, perform portfolio rebalancing with the Capitect’s Rebalance Architect, deliver performance information to through the client-friendly portal, and more.
What’s New from Capitect
So if Capitect is a name you haven’t heard before among portfolio management software providers, you’re in luck, because I recently connected with Capitect co-founder Edwin Choi to learn a little about what’s new in their technology solution for advisers:
Some of the newest features that we’ve added in the last few months, and are going to be adding in the coming months, are recently introducing fee billing, which has been one of our most-requested features over a long period of time, so we’re very excited to be launching that. We recently added unrealized gain loss and cost basis, that we’re able to capture from the custodians, and some of the things that we’re working on in the coming months are primarily in the integration space, so financial planning integrations, deeper CRM integrations, and essentially any other system that the adviser wants us to connect with, we’re very open about integrating with other tools.
To watch my full interview with Edwin Choi, head over to 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. 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.
Overstock.com Announces Automated Investment Service
You never know when you’ll have the urge to buy a new sofa, portable generator, and, oh I don’t know, a diversified portfolio of low-cost exchange traded funds? Well now you’re in luck, as online discount retailer Overstock.com announced plans to introduce an automated investment service to its customers powered by tZERO Advisors. The service promises to match investors to one of several Adaptive Dynamic Portfolios managed by FusionIQ, or investors can customize their allocation among the portfolios on their own, all for a flat monthly fee of $9.95 instead of a fee based on percentage of investor assets like in other automated providers.
XY Planning Network Offers Affordable Fiduciary Financial Planning to Americans
Speaking of affordable monthly fees, millions of Americans think they need to have hundreds of thousands of dollars in order to qualify for an engagement with a comprehensive financial planner, but that is just not true according to a New York Times article by Ron Lieber published over the weekend. Leiber highlights the XY Planning Network, an organization of nearly 600 financial planners who all agree to act in their clients’ best interest at all times, offer affordable recurring fees simialr to a cable bill, and be willing to work virtually with clients from anywhere in the United States.
Updates from the 2018 TD Ameritrade Institutional National LINC Conference
And to finish last week, I attended the 2018 TD Ameritrade Institutional National LINC Conference and connected with the technology strategy team to learn more about the latest enhancements to the company’s Veo One solution for financial advisors. Here’s Managing Director Jon Patullo with a key takeaway:
The feedback for Veo One ® has been tremendous, advisers really love the platform to be able to come to one place and do everything they need to do is a home run. They’re thrilled with it, we’re in the process of rolling it out to all of our advisers, it’s available to every single adviser today, and they’re continuing to adopt it. It’s been a huge home run and we’re really excited to demo it for advisers this week.
My full interview with Jon is on the FPPad YouTube channel, 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.
Starburst Labs, the creators of Wealthbox CRM, raised $6.25 million in new capital
The XY Planning Network inks an enterprise pricing deal with eMoney Advisor
Morgan Stanley pays a $13 million settlement for billing mistakes across 149,000 customer accounts, and
Document management provider Cabinet Paperless gets acquired by PSIGEN Software
Starburst Labs raises $6.25 million in new capital
This week, Starburst Labs, which is the New York City-based company (formerly known as Gotham Tech Labs) that makes Wealthbox CRM, announced it raised $6.25 million in Series A funding. Back in December when the Financial Planning Magazine technology survey came out, Wealthbox CRM was one of the few movers and shakers in that survey who rose up the ranks in overall adoption. Most of the other companies basically stayed in the same positions as in previous surveys.
So Wealthbox CRM basically launched from zero on February 11th 2014 (which I remember because February 11th is my birthday) and in under three years has ascended to the level of industry adoption to compete with well-known CRMs like Redtail, Salesforce, and Junxure.
What’s interesting, though, is that Starburst has three other products in addition to Wealthbox CRM which are InvestorSay, an online community centered around investing ideas, PaperTrade.io, a plugin for simulated stock trading contests, and Wealthbase, a question and answer website that reminds me a lot of Quora.
So the Series A funding won’t exclusively support Wealthbox CRM, because I’m sure it’ll be allocated across all four products, but at least the new investment will do more than just keep the lights on at Starburst’s SoHo offices. Now, they don’t have a personal chef on site, but the offices are more than adequate to support the work the team needs to get done.
And don’t forget, Wealthbox CRM is included in the technology package for anyone who is a member of the XY Planning Network, which is growing at its own eye-opening pace, so I’m not at all concerned that the product might go away anytime soon. An acquisition is a whole other story, but that’s a risk you take with any independent technology provider you use in your business, and isn’t a risk that’s exclusive to Wealthbox CRM.
So with that, let me just say that I believe Wealthbox CRM deserves a little more respect and recognition in the industry for the adoption it has already earned among advisors in just a few years.
The XY Planning Network inks pricing deal with eMoney Advisor
emX pro is the top of the line package that offers planning modules for cash flow, estate, investment, and retirement illustrations above and beyond the client portal and account aggregation in the less expensive tiers.
Retail pricing for emX pro is around $3800 a year, so enterprise pricing probably knocks off 10 to 20 percent, but it doesn’t bring the price down to the $1000 a year range for planning software like MoneyGuidePro and inStream that offer pricing discounts to XYPN members.
Morgan Stanley pays a $13 million settlement for billing mistakes
I have two more quick stories worth mentioning: First, I saw that Morgan Stanley was ordered to pay $13 million to settle civil charges brought by the SEC after the Commission found that more than 149,000 clients were charged excess fees of more than $16 million between 2002 and 2016 as the result of billing errors. The firm also failed to comply with custody rules by not conducting surprise audits on client accounts for which the firm had custody.
So accurate billing is one of those things than often goes under appreciated inside your advisory business. If you have robust portfolio accounting systems like Orion, Envestnet | Tamarac, Advent, AssetBook, and others, it’s probably built in and pretty seamless. But I know some firms still calculate fees using custom Excel spreadsheets, and if that’s you, this action against Morgan Stanley should be a reminder for you that it’s probably time to replace your Excel spreadsheets with a more robust and less error-prone accounting system.
Cabinet Paperless gets acquired by PSIGEN Software
Someone challenged me last week about why I think advisers are behind on technology adoption, and when I think of document management, this one of the solutions where I think I’m correct in that a minority of advisors have purchased and implemented a robust solution here. Your top contenders here are Laserfiche, Cabinet, NetDocuments, and possibly Sharepoint if you can justify the cost and customization required to make it work right in your firm.
Soapbox: Incremental Care > Acute Care
So moving on, I didn’t come across any cool or disconcerting apps this week to share, so i’ll get right to the soapbox to wrap up this week’s update.
Sometime in the next few days, I hope you’ll take about 20 to 25 minutes to read an essay in the New Yorker by Dr. Atul Gawande about incremental care, or primary care, and the differences and tradeoffs of that kind of physician interaction compared to acute care, or the interaction one might receive from a specialist.
Yes, there are some connections with health insurance and health insurance , but this essay helped me set aside my own political believes and consider what I want from my long-term healthcare interactions.
I’m one of the fortunate ones; my wife works for a big employer that offers a high deductible plan with subsidized premiums and very good coverage. I try not to loose sight of how much of a privilege it is not to have to worry each year about our family’s coverage. But that’s not true for millions of americans nationwide. And I’m sure many of your clients, especially your small business owners, spend a lot of time each year evaluating some very difficult choices around the coverage for their employees, as well as coverage for their own household. Many of you, as owners of independent RIAs, are in the same boat.
So that’s why this essay was a compelling read for me. It was worth 25 minutes of my time, and I hope you’ll find it’s worth your time, too.
I’ve linked to all of this week’s featured stories over on my website, so be sure to check them out over at fppad.com/203
And that wraps up this week’s broadcast on the best in advisor technology and more. If you have something to say, or have a story you think should be featured in a future episode, please send me a tweet on Twitter, I’m @billwinterberg, or if you’re not already receiving my email newsletter, you can sign up at fppad.com/subscribe
Thank you so much for *reading*, I’m Bill Winterberg, see you next time.
Today’s episode is brought to you by Envision Consulting, providers of IT management and support, cloud computing, and cybersecurity services to RIAs. This October, Envision is hosting a cybersecurity event with Kevin Mitnick, the World’s Most Famous Hacker, where you can find out how to leverage Kevin’s knowledge of the latest hacking techniques to protect your business from attack.
Space is limited, so secure your registration today by visiting topsecurityshow.com, and if you use my promo code, FPPad, you’ll save 15% off the price of your registration.
[Get ready for the robo news, as this week’s top stories come from Fidelity Investments and TD Ameritrade, as both financial institutions recently announced online investing solutions for the retail investor. A few days ago, Fidelity officially rolled out Fidelity Go, specifically targeting digitally savvy customers in their 20s, 30s, and 40s, with investment assets in the low six figures.
When asked by Investor’s Business Daily what happens when Fidelity Go customers get older and wealthier, Rich Compson, head of managed accounts at Fidelity, responded that customers would be referred “to other services like Fidelity’s Portfolio Advisory Services.”
Ok, ok, but advisors aren’t completely left out, as Fidelity did promise details about an automated service it’s developing for financial advisers by year-end. That’s, details, by year-end.
And a few weeks ago, TD Ameritrade announced it had completed updates to its Amerivest Managed Portfolios retail offering, including a digital overhaul for better goal setting, performance tracking, and more.
In ThinkAdvisor’s interview with incoming CEO Tim Hockey, he said that the company will be using Amerivest’s tech enhancements “to launch a new robo for the self-directed client’s needs” scheduled for sometime in 2017.
When asked about referrals to RIAs who custody with TD Ameritrade Institutional, Hockey added that retail clients with $1 million dollars or more are the “target referral” for affiliated RIAs.
That comment came out at the same time the company announced a program with the XY Planning Network to provide dedicated service and no minimum asset requirement to use TD Ameritrade Institutional’s custody services. That’s good, it’s gotta be awkward knowing TD Ameritrade is going to target digitally savvy investors, aka potential XYPN clients, with their own retail robo solution.
On top of all that, Wells Fargo also announced that it, too, is entering the robo market, with a solution expected also sometime in 2017.
And if you don’t like today’s current robo solutions, you can go build your own robo algorithm with Quantopian, who just received fresh venture capital this week from hedge fund investor Steve Cohen.
That’s it, all I hear all day long is how great robos do this, or how wonderful robos do that: robo, robo, robo!]
[Now in NON-robo news, how about an update from Envestnet | Tamarac, as the company released the latest version of its client portal to advisors who use the Advisor View™ application. If you watched my coverage of the Envestnet Advisor Summit earlier this year, you would have seen a preview of the updated client portal, plus the key enhancements highlighted by Brandon Rembe. So click right here so you can watch that video.] Envestnet | Tamarac has completely redesigned the client portal in its Advisor View™ portfolio management and performance reporting application. The new client portal will be implemented as part of Tamarac’s July 2016 technology release, and seeks to help RIAs create highly customizable client portal experiences to engage their clients and appeal to the next generation of investors.
[Also, MoneyGuidePro recently released a utility called Best Interest Scout, intended to gather information about client goals, expectations, and investment details in one place. This should help you from a workflow perspective, but the tool should also be helpful in identifying when you must engage in a Best Interests Contract with a client. If you’re concerned about compliance with the pending fiduciary rule from the DoL, expect more tools like Best Interest Scout to come to market.] PIEtech, the creator of financial planning software MoneyGuidePro, has built a tool to see how well clients’ portfolios are aligned with their best interests, including retirement goals and concerns, insurance needs, and health-care costs.
Now since I took a few weeks off, I just don’t have time to cover all the stories in my backlog, including news on the talent exodus at Wealthfront, the Betterment for Business 401(k) offering surpassing 200 plan sponsors and $5 billion in AUM, Quovo, Riskalyze and more, so links to those stories are below:
Wealthfront, founded in 2008, is experiencing its first big talent exodus — a flurry of departures that includes some C-suite titles and a Unicorn shepherd.
Betterment for Business, the only turnkey 401(k) service that includes personalized investment advice for all participants, announced today that it has successfully added 200 plan sponsors to the platform in the last six months.
Betterment announced today that it is the first independent robo-advisor to reach $5 billion in assets under management. The company now helps more than 175,000 customers intelligently manage and grow their wealth.
Apex Clearing Corporation will begin offering to its broker dealer and RIA clients the ability to digitally manage investments using Vanare’s digital advice platform. Vanare offers a wealth management technology platform with a highly customizable white labeled Roboadvisor.
Advisor Software, Inc. has teamed up with Quovo to provide wealth managers with seamless access to aggregated client financial data, which can help put together an all-encompassing financial picture for every client.
Marstone, an innovative digital wealth company, and Quovo, a financial data science company for the wealth management industry, today announced that they have completed a partnership to enhance Marstone’s digital wealth solutions with Quovo’s industry-leading data aggregation.
On today’s broadcast, Michael Kitces highlights a roadmap for location independent advisors, several new tech tools emerge that are worthy of your attention, and what are all these videos about something called FPPad Tech Tour?
Today’s episode is brought to you by Laser App Software, host of the Laser App Financial Services Conference coming this August in San Diego.
This year’s conference is all about adoption, delivering strategies for broker-dealers, enterprises, and more to increase stakeholder adoption and get the most out of their technology platform. Space is limited, so secure your free registration today by visiting fppad.com/laserapp2015.
[Now on to this week’s top story which comes from Michael Kitces over at Nerd’s Eye View, as Kitces writes about the growing trend of location-independent financial advisors. This business model of the virtual financial advisor is still relatively new, enabled by the nearly ubiquitous access we all have to the Internet coupled with technology solutions based exclusively in the cloud. It wasn’t that long ago that most of us couldn’t even read business email while out of the office!
So in his post, Kitces highlights an eBook called “The Virtual Advisor” written by XY Planning Network co-founder Alan Moore. By the way, Kitces is the other co-founder of XYPN. Anyway, the 41-page eBook is loaded with dozens of technologies, apps, and solutions that can help you work from anywhere along with several profiles of XY Planning Network members and the systems they use to run a location-independent business.
Now you don’t have to be an advisor to Gen X and Gen Y clients or even meet the age criteria of Gen X or Gen Y to benefit from these tools and techniques. I think you should take a look at the resources in this book and see if anything can complement or outright replace some of your existing legacy systems to improve the way you work.
The best news is that The Virtual Advisor eBook is free provided you’re willing to give up your email address, so you can head over to fppad.com/168 to get the link to download the ebook today.] Yet the rise of technology is creating a new service model for financial planning – the “virtual” advisor, who uses web-based tools and technology to serve clients, regardless of where the client (or advisor) happens to be.
[Next up is news from Dave Grant of Finance for Teachers, as Grant recently highlighted five smart tech tools for advisors in his column for Financial Planning magazine this month. Some of these tools I’ve mentioned on the show before, including Advizr from episode 146, which Grant complimented for it’s attractive, easy to use basic financial planning capabilities, and Schwab Intelligent Portfolios from episode 153, as Grant mentioned the potential time savings from the low-cost automatic allocation and rebalancing solution.
But Grant covered three other solutions that I haven’t covered before, leading off with MyPlanMap. This tool takes your action items and todos from your planning meetings and places them on a timeline so clients can see what’s ahead, and they can also see what you’ve done for them in the past. I think that’s pretty cool.
Second is Twenty Over Ten, a website provider that offers a variety of attractive themes that are responsive for all kinds of devices, simple editing tools, and a built-in archiving for compliance. At $49 a month after a one-time setup fee, it’s definitely an attractive option.
And finally, Grant highlights ClickDesk which is a plugin for your existing website that reveals a chat box for your website visitors. If your website visitor wants to ask you a question, they can start a live chat right from your website, and completed chats are emailed to you so you can save the record for compliance. I covered a similar service called Olark two years ago in one of my columns for Morningstar, which I’ve linked to over at the FPPad website.] I am always on the lookout for new technology to use in my practice. Here are some of the platforms that have recently caught my eye.
[And finally, you might have seen a few videos from me this week about something called FPPad Tech Tour. That’s right, starting Monday, I’m going on tour!
FPPad Tech Tour kicks off next week with an epic three week road trip from Atlanta to New York City and back, stopping in seven cities along the way. My executive producer Steve Biermann and I are going on tour to capture the stories of people who are working so hard to build technology solutions for you, the financial advisor, so you can run a better, more effective business.
There’s already a lively discussion happening on Twitter using the #fppadtechtour hashtag, so I invite you to join us and follow along as we work to capture the passion each individual has to make you a better advisor.
Make sure you’re subscribed to FPPad newsletter for updates from the tour.]
