Holistiplan Launches Estate Plan Document Extraction Tool (And More Of The Latest In Financial #AdvisorTech – November 2024)

The Next "Holistiplan For Estate Planning" Might Be…Holistiplan?

Historically, a large amount of advisors' time has been spent not on meeting with clients or analyzing financial planning data, but simply on parsing client documentation – tax returns, investment statements, estate planning documents, etc. – for the important bits of information they provide. Because while advisors may not necessarily enjoy poring over pages of paper documents or PDF files, those documents can yield much of the key information that helps advisors understand the nuances of their clients' financial situation, like income sources, investment details, and notable estate planning figures like trustees or executors.

In 2019, Holistiplan came onto the scene, to much excitement in the advisor community, as a tool that could automatically "read" clients' tax returns, extract key information, and put it into client-friendly summaries and planning projections (or transfer it to any one of a number of Holistiplan's integration partners for further analysis). Holistiplan quickly gained wide adoption among the advisor community, both by automating a task that many advisors performed already (reviewing and summarizing client tax returns), and by offering an easy-to-implement value-add for advisors who didn't already do so (as at a base level it really can be as simple as just uploading the client's return and exporting Holistiplan's preformatted tax report to review with the client).

But while reading tax returns and generating summaries was the first and most obvious use case for automated document extraction (both because of the recurring annual cadence of tax filing as well as the standardized format of tax returns that makes it easy to locate which data the technology should extract), Holistiplan's initial success raised the question about whether it might be possible for tools to read and pull information from other document types, like investment statements, insurance documents, and estate documents. In practice, however, those documents have historically proven more of a challenge for technology developers, since unlike tax returns they lack a consistent or standardized format. But as Artificial Intelligence (AI) technology has advanced in the last 2-3 years, it's become more feasible to create technology that can "teach" itself where to find a given piece of information in almost any type of document. And so a number of startups have more recently emerged that aim to be the "Holistiplan for X" and replicate Holistiplan's success, either in the area of investment statements (as tools like VRGL and Powder have built) or insurance and estate documents (as FP Alpha launched in addition to its own tax return scanning tool).

But as Holistiplan's name implies, it was never necessarily intended to focus solely on the tax component of clients' financial plans. And so it's notable (although not entirely surprising) that last month Holistiplan announced that it will be rolling out a new Estate Module to stand alongside its enormously popular tax planning and analysis software, marking its biggest product rollout since its original tax return scanning tool in 2019.

At first glance, Holistiplan's estate planning module appears to mirror the approach of its original tax planning product, which digests the client's uploaded documents and outputs a client-friendly report illustrating the key components of client's current situation – except in this case, the output will be a visualization of how the client's assets will be distributed upon their death, and a report of the named beneficiaries on the client's retirement accounts and other transfer-on-death assets. Which makes sense to the extent that, in estate planning as well as tax planning, there's value in helping clients simply understand where they stand today and identify glaring issues like missing or out-of-date beneficiaries, and even a basic summary can serve as a jumping-off point for further conversations on how to improve the situation. That being said, it remains to be seen how Holistiplan will be able to handle more complex estate situations, e.g., with irrevocable trusts, business assets, multiple generations of beneficiaries, that have typically required more advanced software like Wealth.com, Vanilla, or EncorEstate Plans to deliver. (And Holistiplan's framing of the new product as "unlocking estate planning for the mass affluent" further suggests that its main use case will be in summarizing comparatively simple estate situations.)

From an industry perspective, what's notable is that unlike in 2019 when Holistiplan launched its original tax planning solution, they're not the only player on the market to offer data extraction or analysis of clients' estate planning documents. FP Alpha and Powder have both already launched their own estate document extraction tools, which means that Holistiplan doesn't get to benefit from a lack of competition at the outset – instead, it needs to convince advisors that it's the best solution among several already-existing options. Fortunately for them, it seems that most advisors haven't yet adopted a standalone estate planning solution: Per the most recent Kitces Research on AdvisorTech, only about 11% of advisors have adopted standalone estate planning tools outside of their core financial planning software. But what that could also suggest is that there may simply be less pent-up demand for estate plan document extraction than there was for tax returns (which makes at least some sense given that tax returns are filed – and can be reviewed – every year, while most clients might only update their estate planning documents every 10-15 years or so, leading to much more potential time savings per client for tax returns than for estate documents).

In the end, as the technology for reading and analyzing text and images continues to improve, the distinction between different tools will become less about what kinds of documents they will be able to parse, and more about what they do with that information. Which might be summarizing key information into client-friendly reports (as Holistiplan does with tax and intends to do with estate planning), building proposals that aim to show how the advisor can improve on the client's current situation (as VRGL's investment analysis and proposal generation tools do), or running the data through more advanced analytics for complex planning scenarios. On that last point, it's possible to imagine some interesting partnerships that could develop between Holistiplan and specialized estate planning and document preparation tools like Wealth.com or Vanilla – because while Holistiplan may be inclined to keep its own estate plan summaries fairly simple, its document extraction technology could certainly serve to enhance the efficiency of an existing solution that can go deeper into planning for more complex high-net-worth clients. But for now, the question will be whether Holistiplan's approach of providing an easy-to-implement value-add by converting a stack of documents into client-friendly summaries will prove as popular for estate planning as it did for tax planning.

Nitrogen Launches AI Statement Reading As Document Extraction Begins To Move "In-House"

The last couple of years have been an exciting time for technology startups building AI tools. In the wake of ChatGPT's launch in late 2022, a massive amount of media attention has been directed towards AI, along with an equally massive influx of venture capital investment. Which in turn has led to a large crop of startups building new tools around the Large Language Models (LLMs) that underlay ChatGPT and its ilk, many of which have been rapidly iterating and evolving their offerings over time to find use cases that can gain enough user adoption to end up with a profitable product. Because once there is a viable use case, then the startup can work to build and scale the product in that direction, and refine its pricing and service structures to end up with a successful business model. But most often the point is to get the product on the market as soon as possible, so its builders can find out whether people actually want to use it – and either keep building in that direction, or move on to the next idea.

By contrast, the process of building new features into an established product can be much slower. With an already-existing user base, established providers can afford to take more time to plan, build, and test new features before they're released, while facing less pressure for immediate results than a startup whose operations are entirely funded by venture capital dollars (or the founder's own savings). Established firms also have to split their resources between building out new features and maintaining/improving their core product (while also ensuring that any new features don't "break" the existing product's functionality), with the end result being that it can take years to get from the "idea" stage to the day when a new feature is finally rolled out.

And so when new technology like AI first appears, its most common providers tend to be startups doing "AI-for-X", who start with the AI model and then work to hone in on which version of "X" will translate into a profitable business idea. Which has led, for example, to a host of new tools on the Kitces AdvisorTech Map that are essentially standalone "AI-for-X" tools, including 9 new standalone AI notetaking tools in the Client Meeting Support category, 8 AI-powered prospecting tools, and 5 general-purpose "AI Assistant" tools.

But eventually, however, the more established platforms tend to catch up with the startups in integrating the newest technology into their existing solutions. Which presents a problem for the standalone tools, since by and large, advisors usually prefer any new technological capabilities to live within the solutions they already use (and perhaps more importantly, already pay for), rather than having to go out and buy a new tool to benefit from the technology. And so when an established platform rolls out a "feature" that exists somewhere else as a standalone product, advisors who use both might decide it's not worth paying for the standalone product if they can get it from the platform that they already use.

It's notable, then, that Nitrogen, one of the most established providers in the category of sales enablement for financial advisors (as the company turned its risk-tolerance-software roots into a powerful Proposal Generation tool), has announced the rollout of several new AI-powered features – including, perhaps most significantly, a new "AI Statement Capture" feature that scans client investment statements and runs them through Nitrogen's portfolio analytics and proposal generation processes, and which directly competes with solutions like VRGL's standalone platform that has built its whole value proposition around extracting information from clients' investment statements that can be used to generate an investment proposal.

Nitrogen plans to bundle AI Statement Capture (which is still in beta mode) into the platform's popular Risk Center module. Which, for advisors who don't already use another tool to extract information from investment statements, represents a pure value-add in the time savings from inputting data manually from clients' paper or PDF statements.

But for advisors who also use a tool like VRGL that has its own automated investment statement extraction capabilities, Nitrogen's new feature might lead to a decision about whether it's worth paying for both tools when they both provide some version of statement extraction and proposal generation. Although notably, Nitrogen and VRGL don't do exactly the same thing with the investment data they extract: Nitrogen's analysis is focused primarily on its proprietary "Risk Number", while VRGL runs portfolios through a "5-Pillar" analysis including risk as well as performance, diversification, fees, and tax efficiency. So advisors' preferences between the two might simply come down to which type of analysis they prefer their clients' portfolios to go through (and perhaps more importantly, which method best illustrates their value proposition as an advisor).

From an industry perspective, Nitrogen's rollout of AI Statement Capture represents one of the first explicitly AI-powered features added by an established AdvisorTech platform to compete with a separate standalone solution, even as standalone AI tools have proliferated over the last two years. And similar rollouts seem certain to come, as more platforms' product roadmaps catch up with the state of technology (and advisors, perhaps, begin to slowly let their guard down and become more comfortable with integrating AI into their firms). It wouldn't be surprising, for instance, to see a CRM platform like Wealthbox or Redtail integrate an AI note-taking solution (either by building it in-house or by acquiring one of the existing standalone tools), since logging client meeting notes is already a core function of CRM software. And YCharts has similarly rolled out its own AI-driven statement extraction capabilities that reduce the need for relying on integrations with third-party tools (and potential competitors) like VRGL. All of which expands how AI is being increasingly used in AdvisorTech… and could spell trouble for the standalone AI tools on the market, which risk being made redundant in advisors' tech stacks by having their technology incorporated into the platforms that advisors already use (and already pay for).

And so the question going forward will be how extensively advisors' core technology platforms like CRM, financial planning, and investment management will adopt AI technology that's currently offered mainly through standalone tools – and if so, whether they'll build their own in-house versions, or opt to acquire a standalone solution that has already gone through the building and product iteration phases. Because ultimately, while "AI-for-X" is exciting to early adopters, there's a lot less friction in implementing "X, but with AI", if X is a tool that the advisor is already using.

CurrentClient Wins "Best In Show" Award At XYPN Live AdviceTech Competition As A More Modern (Compliant-)Texting Platform

In the early days of financial planning, the vast majority of advisors' interactions with clients happened in meetings, save for the occasional phone call or handwritten memo. Which meant that in those days, before electronic communications had infiltrated our lives, there wasn't much "client engagement" to speak of outside the meeting itself.

But as the Internet took over and email became an accepted means of communication, more of advisors' client interactions began to take place outside the standard meeting cadence. Eventually email became a means to schedule and confirm meetings or request client information, to answer clients' planning questions as they came up, to send informational newsletters and firm updates, and even as an extension of the meeting itself to follow up (sometimes repeatedly) on the action items that were discussed in person. All of which gave advisors many more opportunities to connect with their clients than had been available in the old (pre-email) days.

But the problem with email is that, as much as it allows advisors to connect with their clients, it also allows everyone else to do so too. And so as peoples' inboxes became increasingly inundated with junk mail, spam, and a neverending flood of updates, email began to be supplanted by text messaging as the means for communicating what was truly important. Both in terms of informal messaging among people with close relationships (like a group chat with friends or family), as well as important notifications that could easily be lost in the clutter of an email inbox (like doctor appointment reminders or flight status alerts).

In the context of financial advisors, texting has largely broken down along similar lines. Initially, firms that did adopt texting usually used it in a more informational context (e.g., as a way to send scheduling reminders). But gradually, texting has morphed into a communication medium where advisors can communicate with their clients less formally than via email, allowing for closer connection. For example, a client may text an advisor to ask a quick question, or to inform them they're running late for a meeting, because it's easier than sending an email. Or the advisor might text a client a link to an article they think the client will find interesting.

But the caveat is that, because (like email) texting is a form of written communication, it needs to be archived under state and SEC rules. Which at first meant that many advisors simply avoided texting with their clients altogether, on account of the lack of solutions for compliantly archiving and monitoring texts for compliance purposes. But even as dedicated solutions like MyRepChat emerged to address the need for text message archiving, advisors often found them cumbersome to use (e.g., by requiring a separate phone numbers for calling vs. texting, or by not being able to use Caller ID on incoming calls). And so for many advisors, it became a choice between using one of the less-than-perfect texting services for advisors, migrating to a non-advisor-specific service like Google Voice, RingCentral, or Celltrust, or just forgoing texting entirely.

Into this environment came CurrentClient, which positioned itself as a more modern and streamlined phone and texting system for financial advisors – and which recently won the XYPN AdviceTech Competition's "Best In Show" award at the 2024 XYPN Live conference.

At a high level, CurrentClient functions similarly to other text archiving tools like MyRepChat by capturing messages sent or received through a dedicated app on the advisor's phone (or via a web-based browser interface) and sending them to the advisor's CRM or a separate archiving solution for compliance oversight (although messages can also be sent via a desktop interface). Like other services, it requires the use of a dedicated "business-only" phone line separate from the advisor's personal phone number (although in most cases, that number can be the advisor's existing work line that they already use to take calls). And while some advisors might find it annoying to have to manage a second phone number to text with their clients, others might appreciate the separation between business and personal lines (and the reasonable assurance it gives that regulators won't request to go through all of the advisor's personal text messages during an audit).

Beyond message archiving, however, CurrentClient is also built to support advisors' use of text messaging as a communications channel to more effectively engage clients throughout the year. It includes capabilities such as one-to-many messages (e.g., to announce an upcoming webinar or client event and send a registration link), auto-scheduling text to be sent at a desired time (e.g., prescheduled to deliver on a client's birthday or anniversary), and AI-driven features like call transcription and summaries and an embedded AI "writing assistant" to expedite the process of composing a message with your thumbs on a smartphone. All of which is integrated into the advisor's CRM system, enabling everything from mail merges that insert client details into messages to sending targeted messages to specific (CRM-defined) segments of clients or prospects. All of which can help to facilitate the ongoing shift of texting into a core communication channel that, while unlikely to supplant email entirely (because some messages are simply too long or detailed to send as a text), can at least stand alongside it as a way to send less formal communications that are more likely than an email to receive a quick reply.

In a moment when text message archiving has a tremendous regulatory catalyst (with the SEC having levied around $2.7 billion in cumulative fines on financial firms for "off-channel" communications since 2021), and with the category of texting-specific solutions remaining relatively sparse (e.g., MyRepChat for a dedicated solution, or adding text-message archiving onto a broader social media archiving platform like MessageWatcher), there's an opportunity for a more streamlined and advisor-friendly system for text communication that CurrentClient is aiming to capture. Additionally, as advisors put more and more emphasis on keeping clients engaged year-round to validate their ongoing planning fees, CurrentClient's engagement focus speaks to advisors who are looking to connect more closely with their clients. Sitting at the nexus of these two AdvisorTech trends, CurrentClient seems well poised to repeat the success of other XYPN "Best In Show" winners like Snappy Kraken, Vestwell, Holistiplan, and Income Lab – if it can deliver on its promise to be a more modern texting and communications platform for advisors.

Quivr Wins "Advicer's Choice" Award At XYPN Live AdviceTech Competition As A Workflow-First CRM

Before financial advisors had CRM systems, they had Rolodexes, where a client's contact information and any other ancillary information the advisor wanted to keep on them were limited to a space the size of an index card. As computers began to take over the workplace, early CRM systems were little more than digital versions of the Rolodexes they replaced, and were likewise largely limited to storing clients' contact information along with some rudimentary data points like birthdays and Social Security numbers. However, as computing power and data storage capabilities grew – and particularly after the rise of cloud-based CRM systems in the 2000s – CRMs' duties grew far beyond storing client contact information. They became repositories of a vast trove of client data (like employer, marital status, and important dates like anniversaries); a place to archive client meeting notes as well as email and text communications with clients for later retrieval; and a way to track prospects' progress through the sales pipeline.

In more recent years, as advisory firms have grown and scaled from single-person operations or small teams into more and more multi-advisor firms with centralized back office and client support teams, CRM systems have taken on yet another role. Advisors are increasingly relying on their CRMs as not just data warehouses but also as task management systems – both for assigning tasks to other team members, and for designing and implementing workflows for common processes like money movements and client meeting preparation. Which makes sense, as much of the client information needed to perform those tasks is housed in the CRM anyway, and having standardized and repeatable workflows for common tasks helps to ensure that no steps are dropped along the way.

The caveat, however, is that even as advisors have become more reliant on their CRM systems for task management and workflows, they've remained mostly unsatisfied with their CRMs' ability to actually deliver those capabilities. In some cases, the CRMs simply weren't built with workflows in mind, and so to the extent they did integrate workflows, they weren't as full-functioned or customizable "out of the box" as advisors would have liked. And while advisors could always transition to Salesforce (which does have robust workflow and automation capabilities), that transition requires a massive investment in time and dollars to set up in a way that advisors can actually use, making it really only practical for the largest advisory firms. All of which has led to an emergent category of "CRM overlay" technology, such as XLR8 and Salentica, which exists solely to fill the gap between advisors' needs for effective workflows and what their actual CRM systems are capable of delivering.

Against this backdrop, it's notable that Quivr, one of the newest CRM solutions on the AdvisorTech Map, recently won the "Advicer's Choice" Award at XYPN Live's AdviceTech competition as voted on by advisors attending the conference.

Founded by financial advisor Steve Drost, Quivr's main selling point is that it was built specifically around advisor-specific workflows and process automation. To that end, it comes pre-loaded with 35 different workflows (e.g., for meeting prep, money movement, or changes of address), for which Quivr's team provides team support and a community forum for customizing the platform to an advisor's own needs. And being built on the Salesforce chassis, it comes with countless other avenues for customization, including custom data fields, report filters, and client deliverables such as a report of all of the beneficiary designations named on a client's retirement accounts. And so while Quivr's feature set and Salesforce foundation make it, at $250/month, a more expensive option for smaller firms than other platforms like Redtail or Wealthbox, the extra cost could be well worth it for advisors who value task management and process automation (especially since it also eliminates the need to bring in a separate CRM overlay solution or a workflow support tool like Hubly or Asana to supplement those other platforms).

In an AdvisorTech landscape that is dominated by 3 main players (with the most recent Kitces Research on AdvisorTech showing that over 2/3 of advisors use either Wealthbox, Redtail, or Salesforce for their CRM), and with CRM being one of the hardest systems for advisors to change vendors due to the immense amount of data needing to be migrated and scrubbed in the new system, the question going forward is whether Quivr's functionality and high regard among its users will be enough to either convert users from other systems or to win business from newly-launched advisory firms. That said, advisors' satisfaction with their existing CRM platforms' capabilities has historically been so-so at best, which means that a solution that comes along that can effectively address advisors' frustrations with their current systems (namely, their lack of workflow and task management functionality) could conceivably win a meaningful amount of users from the incumbents (and given that almost all advisors use a CRM of some form, it wouldn't take a large amount of market share for Quivr to become a successful solution). And although Quivr is still too new to have been included in the most recent AdvisorTech study, there's evidence that the advisors who do use it are highly satisfied – up to and including the voting that gave it this year's Advicer's Choice Award.

And so in a CRM category that has seen little change over the last decade – and where the existing players have largely struggled to adapt to the changing needs and increasing complexity of advisory firms during that time – Quivr's newly affirmed status as an advisor favorite is evidence that there's a clear desire among advisors for a CRM built with workflows and task management at its center rather than on the periphery. It will be worth watching to find out if Quivr's workflow-centric approach is enough to bring some disruption to the CRM category at long last.

Farther Raises $72M In Series C Funding, But Will Building In-House Tech Really Lead To Higher Profit Margins For "Digital RIAs"?

Almost 30 years ago, Mark Tibergien of Moss Adams began doing benchmarking studies for the nascent independent RIA channel to understand how advice-based businesses earn profits and scale their growth. What he found was that the typical advisory firm followed what became known as the "40-30-30" rule: Of a firm's gross revenue, around 40% went to direct expenses (the advisors and portfolio managers who generate the revenue to begin with), and 30% went to other overhead expenses, with the remaining 30% represented the firm's profit margin.

The years since those first benchmarking studies have seen tremendous advances in technology: first with the Internet and email taking over the workplace; then with the emergence of smartphones; then with the rise of "robo" technology to automate portfolio management; then with remote work and meeting capabilities; and most recently the explosion in AI tools. All of which promised to make advisory firms more tech-efficient, which would in turn allow them to scale up their growth while maintaining (or increasing) their profitability.

And yet, what's happened in practice, as subsequent benchmarking studies have revealed, is that the average profitability of advisory firms has decreased: Rather than following the 40-30-30 rule, it's now closer to 35-40-25. In other words, for all the promises of technology to streamline firms' back office operations and cut overhead costs, overhead expenses have actually gone up instead. Which raises the question of why nearly 30 years of mind-blowing advances in technology (e.g., who in the late 1990s would have really imagined the smartphone-driven world of today?) have failed to actually improve firms' efficiency and profitability – and in fact, have even slightly diminished it?

The answer is what happens at a meta level when an industry becomes more "efficient". When the time it takes to produce a product or service goes down, there are two possible responses. One is to simply "bank" the efficiency, producing the same amount and charging the same price while doing less work, and earning the difference as a greater profit margin. The other is to reinvest that time into improving the product in some way, to create more value for the same cost (and the same margin) in the hopes of winning market share instead. And in a competitive industry, those who take the second approach (reinvestment) tend to win customers from those who take the first ("banking" the efficiency), since their customers will get more for their money – or as Jeff Bezos famously said, "Your margins are my opportunity". And so what this means at an advisor level is that even though technology meaningfully reduced the amount of time it took to serve each client, advisory firms have collectively reinvested those margins into additional services, either to attract more (or more profitable) clients, or just to avoid losing their existing clients to firms that offer more value for the fees they charge.

Nonetheless, the allure persists of chasing efficiency gains through technological advancement. Which in part stems from the perceived inefficiency of the technology advisors are already using: As the most recent Kitces Research on Advisor Technology revealed, advisors were on average more satisfied with each individual piece of technology they were using than they were with their tech stack as a whole, suggesting that as individual technology solutions have advanced over time, there's still room for improvement in how they integrate and fit together into a cohesive whole. Which has led to the emergence of a number of "all-in-one" platforms (e.g., Orion, Envestnet, and Advyzon) that purport to solve the integration problem by packaging everything together in an integrated whole – except that with the diverse needs of advisors and their clients, no software can be truly "all-in-one" for everyone. Firms will inevitably need to either fit extra tools in (which reintroduces the problem of integrating with everything else) or won't need every solution offered by the all-in-one (which raises the question of whether it's worth paying for the whole thing when they aren't using all its components).

A different approach, as an alternative to trying to build technology to serve every RIA firm, has been to build an RIA along with the technology it runs on. Which has led to the rise of a new crop of venture capital-funded "digital RIAs", including Savvy, Compound, and Farther, that build their own in-house tech stacks to ideally ensure that the firm's needs fully aligns with the technology it uses, that everything integrates together seamlessly, and that there will thus be none of the "leakage" of efficiency that is common among firms that try to cobble together multiple third-party solutions.

Which makes it notable that last month Farther, one of the early leaders in the digital RIA movement, announced a whopping $72 million Series C fundraising round, in tandem with also cresting the $5 billion of AUM milestone (which is up from $1 billion as of just over a year ago, in September 2023).

Farther's success and momentum so far signals that there's still an ongoing demand among advisors for a better, fully integrated tech stack that simply does what the advisor asks it to do so they can focus on the work they do for their clients. Which is one of Farther's main selling points, as they've positioned themselves as "where high-touch service meets cutting-edge tech" and even make the bold claim that their tech-enabled efficiency allows their advisors to spend up to 80% of their time meeting with clients (though notably, Kitces Research shows that even high-productivity advisors "only" spend about 1/3 of their time in actual client meetings, as at some point the sheer number of meetings just gets exhausting!).

However, it's notable that much of Farther's growth over the last year has come primarily from recruiting advisors with existing books of business – so while their technology platform might be part of what compels advisors to sign on, another significant portion of that allure is likely the recruiting incentives (in the form of cash, and equity in Farther itself) those advisors are being offered. And so as Farther has raised increasingly massive fundraising rounds from investors such as CapitalG (the PE arm of Google's parent Alphabet) predicated on the idea that in the long term Farther will be able to run at tech-like scale and profit margins thanks to its in-house tech, in reality it appears that much of those dollars have been paid out in the form of the same recruiting incentives and bonuses that wirehouses and mega-RIAs have offered to attract talent since time immemorial (while operating at advisory-firm margins, not "tech" margins).

Or stated more simply: it's hard to raise $118M of venture capital funding, as Farther has cumulatively raised, "just" to recruit advisors into the traditional advisory model, for traditional advisor profits. And so digital RIAs like Farther appear to be raising capital on the premise that they can build technology that will allow those recruited advisors to also run at higher-than-industry-average profit margins (to justify their venture valuations).

And so the question going forward is, if the advisory industry hasn't seen any improvements in profit margins after the past 30 years of such incredible technological advancement, how will Farther be able to do any better? Or in the end, will they face the same dynamic that all advisory firms have to navigate, which is that as technology makes advisors incrementally more efficient, the firms that rest on the laurels of their higher margins will find their clients poached by the firms that reinvest into doing more and better work for their clients, and once firms reinvest their efficiencies into expanded capabilities for clients their profit margins fall back to where they have been all along?

In the long run, while there's no question that investments into technology can and do reshape advisory firms' value propositions over time, it's much less clear whether finding or building the "right" technology will finally create the margin breakthrough that has evaded advisory firms for the last 30 years. Because in reality, the evidence has shown time and again that advisory firms don't get more "efficient" with better technology – they simply evolve their value proposition to be better, allowing them to continue to stand out in an increasingly competitive marketplace.

Freewill Launches Estately To Help Advisors Scale Estate Document Preparation Across Large And Small Clients

Estate planning has been a core domain of the financial planning process for as long as financial planning has existed. Which was originally driven in part by the industry's roots in selling insurance, as when the estate tax exemption was much lower prior to the mid-2000s and many more households were subject to estate tax, estate planning went hand-in-hand with recommending life insurance policies whose death benefits could have otherwise created estate tax problems for a clients' heirs. But since rules around the unauthorized practice of law prevented advisors from preparing clients' estate documents themselves, they tended to build relationships with local estate planning attorneys to whom they could refer clients to get documents prepared.

Over the past decade, though, a new trend around estate planning has started to emerge. As firms became increasingly efficient in their core investment operations thanks to technology and "robo" automation, they reinvested that time into going deeper with their planning capabilities, particularly in the retirement, tax, and estate planning domains. But at the same time, some firms have also begun to expand beyond "just" planning capabilities, and into actually preparing tax returns and estate documents (using either in-house professionals or outsourced services), as a way to add value and further cement their status at the center of their clients' financial lives.

From the tax preparation perspective, this is particularly appealing because of the annual cadence of tax filing. Even a smaller firm, with "just" a few dozen clients, will have a segment of clients who their taxes done and will happily hand over that task to a firm to which they already entrust their financial planning and investment management. And so the firm can hire a CPA – or, for solo or smaller RIAs, the advisor themselves can even get their own EA license – to do the returns in-house.

But when it comes to estate planning, the in-house approach can be far more challenging. While tax prep has an annual cadence and can be managed and systematized on a calendar cycle, clients update their estate documents far more sporadically, going perhaps 10-15 years between updates (if they even do so at all). Which means that an advisor with 60-80 clients may have only half a dozen or fewer per year who need estate planning documents, some of whom might already have an established relationship with an attorney or are comfortable with doing it themselves with a service like LegalZoom. And on average, the distribution of estate planning needs among clients – with a relative few having complex irrevocable trust-based plans, and more "mass affluent" clients only needing simple will and health care directive – means that, while an in-house attorney can add significant value to the few clients with complex needs, it would be more cost-efficient to outsource the simpler documents that the majority of clients are likelier to need.

And so it's notable that last month, Freewill – a direct-to-consumer estate document preparation service – is rolling out an advisor-facing version of their platform called Estately. With the idea being that advisors can guide their clients through the estate document creation process, either by sending them through Estately's self-directed document creation tools for less complex estate situations, or to Estately's network of live attorneys who can help with drafting more complex plans.

From an advisor perspective, Estately's self-directed offering is largely akin to other estate planning solutions for advisors like Trust & Will, Wealth.com, and Vanilla, which largely allow clients to self-prepare their own documents while the advisor guides them through the planning process and keeps them on track to implement their plans. More notable, however, is Estately's network of human attorneys, which not only allows for the creation of plans that are more complex than self-guided software tends to be capable of, but can also address some of the lingering uncertainty that advisors have with other estate planning platforms that don't have a "real" attorney who can stand behind (and be professionally liable for) the documents that their clients receive.

All of which makes sense for advisory firms without their own in-house estate planning attorneys, but for larger firms that do have their own attorneys on staff, a platform like Estately could still have value by creating an efficient method for providing estate documents for the majority of clients who don't have particularly complex estate planning needs. Which in turn allows the attorneys on staff to allocate their time to the most complex clients who need that expertise the most. And so a firm like, for example, Mercer Advisors (which is one of Estately's launch partners), can use Estately to offer estate documents to clients up and down the wealth spectrum without dragging down the productivity of their in-house attorneys.

In the industry at large, the landscape of estate document preparation has largely diverged towards separate paths depending on how (and to which clients) advisors want to offer document preparation. Solutions like Trust & Will, Wealth.com, and Vanilla are aiming to solve for creating relatively simple estate documents at scale through a largely self-directed process. Meanwhile, others like EncorEstate Plans are leaning more into a "partnership"-style relationship by having their own on-staff attorneys who can support and interact with advisors and clients, offering a more high-touch service. Estately appears to split the difference by offering self-directed document preparation for less-complex clients and attorney-led preparation (either by the advisory firm's own in-house attorneys or through Estately's network) to allow firms to scale up their document preparation across a wide ranging client base. Which seems to be a trend that will likely continue as advisory firms increasingly expand the breadth of their services to justify their fees and value propositions, even though only the largest advisory firms might be able to keep their own estate planning attorneys on staff.

The key point is that as advisory firms increasingly fulfill their longstanding promise to be the "financial quarterback" directing everything across their clients' households, there's an increasing opportunity for those who can help advisors grow and scale their expanding service offerings. Because while it doesn't make sense for every firm to keep a tax preparer and estate attorney on staff, technology-facilitated partnerships can make it easier for both large and small firms to efficiently offer those services across a diverse client base. 

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In the meantime, we've rolled out a beta version of our new AdvisorTech Directory, along with making updates to the latest version of our Financial AdvisorTech Solutions Map (produced in collaboration with Craig Iskowitz of Ezra Group)!

So what do you think? Will Holistiplan's entry into estate planning document extraction entice more advisors to adopt standalone estate planning software? Will more AdvisorTech tools offering "in-house" document extraction reduce the need for tools that do it on a standalone basis? Will a modern, workflow-centric CRM be worth the hassle of switching form an existing platform? Let us know your thoughts by sharing in the comments below!