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    Highlights From The 2020 T3 Advisor Conference

    3 Comments CATEGORY: Conferences

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    Executive Summary

    The 2020 Technology Tools for Today (T3) Advisor Conference, held last month in San Diego, California, featured a large gathering of financial advisors and representatives across the fintech industry attending the two-and-a-half-day conference, which showcased this year’s theme of “Acceleration and the Pace of Change.” Hosted by Joel Bruckenstein and his team from T3 Consulting, the conference covered everything from how custodians are keeping ahead of the technology curve to the latest in portfolio management and reporting solutions, and from the latest in financial planning software innovations, to marketing tools, billing applications, and the importance of a solid cybersecurity plan.

    In this guest post, Craig Iskowitz – CEO and founder of Ezra Group, a financial technology consulting firm –  summarizes this year’s conference highlights with his signature Twitter-driven recap, kicking off with presentation highlights from custodial innovators such as Altruist CEO/Founder Jason Wenk, TD Ameritrade’s Director of Innovation Dani Fava, and TradePMR CEO Robb Baldwin, and from industry thought leaders from Fidelity, TD Ameritrade, BNY Mellon/Pershing, and Schwab, who gathered for a panel discussion to delve into the importance of understanding the needs of a diverse client base and maintaining gender equity in the workplace.

    The annual T3 Tech survey, which assesses the software programs used by financial advisors, was also released at this year’s T3 Advisor Conference, and revealed that only 64% of advisors surveyed actually use financial planning software tools and even fewer (41%) use risk tolerance instruments, but that 81% use portfolio management tools, suggesting that many advisors are still not actually providing financial planning and remain focused mainly on asset management, instead. Other interesting results show Redtail capturing 62% of overall market share of all CRMs reported, with Wealthbox scoring at second place with less than 7% overall market share! Interestingly, though, more people indicated they were considering using Salesforce Financial Services Cloud than Redtail. And it’s not entirely clear how representative the survey really is of the broader advisor industry (as the survey link was simply open to any company that could encourage its users to participate and ‘turn out the vote’).

    Other major highlights from the T3 Advisor Technology Conference included:

    • Betterment For Advisors made its first T3 conference appearance, with Head of Business Development Tom Moore discussing the firm’s automated investing and custodial services, along with its rapid growth (suspected to be bolstered by the recent inclusion of DFA funds to their investment lineup).
    • Broker-Dealer presentations included Cambridge CTO Nick Graham, who talked about digital transformation and emphasized the importance of creating a strategy before investing in new technology, and Burt White, LPL Financial Chief Investment Officer, who gave a keynote talk on the difference between running a business and growing a business.
    • Several new and emerging Portfolio Management vendors attended and offered demonstrations of their full-featured application solutions, including AdvisorPeak, Advyzon, D1g1t, Envestnet Tamarac, and several others.
    • Automated marketing tools are on the rise for financial advisors, as they often need help understanding it and improving their marketing processes. Vendors that attended and presented demonstrations include Snappy Kraken, AdvisorStream, FMG Suite, and TwentyOverTen.
    • Vendors showcasing financial planning solutions included Advicent (provider of Naviplan and Profiles financial planning tools), Apprise Labs (creator of Lifestyle Studio by former eMoney Advisor founder Edmond Walters), BlackRock (creator of iRetire, providing retirement income analyses), Covisum, Envestnet MoneyGuide, FinMason, FP Alpha, PlantechHub, Income Conductor, and LifeYield.
    • The conference also hosted a student competition, featuring university CFP programs from across the country. A mix of students studying financial planning and information technology teamed up with mentoring technology firms and were tasked to create RIA technology solutions addressing real, current financial planning problems. BYU Idaho (which was paired with AdvicePay) won the competition with a public-facing version of AdvicePay’s retainer-fee calculator for clients to use directly on an advisor’s website to calculate their own fees.
    • Brian Hamburger of Hamburger Law Firm and Founder/CEO of MarketCounsel, talked about cybersecurity, and stressed the importance of adequate training and adherence to compliance as good business practices, and also as basic requirements to simply maintain goodwill with clients.
    • Fidelity’s ESG Product Manager Hannah Lippe explained the similarities and differences between Environmental, Social, Governance (ESG) Investing, Socially Responsible Investing (SRI) and Impact Investing, and how advisors can use these practices to strengthen client relationships.

    Ultimately, the 2020 T3 Advisor Conference brought together vendors, industry thought leaders, financial advisors, and students with the shared goal of gaining insight into the fast-paced growth and change of the financial planning industry, along with learning about new technology tools available to help financial planning businesses flourish efficiently and profitably. In line with this year’s theme, there was an expansive array of new and upcoming technology solutions for current and emerging issues faced by today’s financial advisors, no matter the size of the firm.

    Author: Craig Iskowitz

    Guest Contributor

    Craig Iskowitz is CEO and founder of Ezra Group, a management consulting firm providing advice to the financial services industry on marketing and technology strategy. Ezra Group works with RIA’s, broker-dealers and banks to help them make sound technology decisions, identify growth opportunities and energize their marketing.  Craig is also the publisher of the blog Wealth Management Today, which provides in-depth analysis of trends and issues facing the wealth management industry. Craig can be reached at [email protected].

    Read more of Craig’s articles here.

    To improve is to change; to be perfect is to change often.

    -- Sir Winston Churchill, former Prime Minister of England

    Recently, I had a conversation with a friend about how much our careers have changed since we started out. We're both doing completely different work from what we were doing 20 years ago. The key point is that no one told us we had to change. Instead, we saw that the industry was changing… and we changed along with it.

    I was reminded of this conversation when I saw the theme for this year's T3 Advisor Conference, "Acceleration and the Pace of Change". A study by Cerulli Associates found that 40% of advisors aren't taking full advantage of technology – if these advisors had attended this conference, they could have gotten schooled on technology ideas from dozens of the leading and most innovative vendors in the space.

    That was also my goal in flying across the country to enjoy the San Diego sunshine, or at least what little I could see of it from inside the Marriott Marquis convention with 800 other participants and 130 exhibitors. Between the non-stop sessions, the packed T3 exhibit hall, seemingly endless product demos, and running the Podcast Station, I was busier than I’ve ever been at a conference.

    But, of course, I’ve brought it all to you here in my summary that was spread across two full and two half-days of events. Please post a comment at the end and share your favorite part of the conference (if you were there) or your favorite part of this summary (if you missed it).

    Enjoy!

    Innovations in Custody

    This heading sounds like an oxymoron. Since when is custody innovative? Maybe it’s because they're feeling the pressure of the pending arrival of Schwabitrade or perhaps because they see opportunities on the horizon, but custodians seem to be trying a bit harder to stay ahead of the technology curve.

    Altruist

    I could write an entire article on how Altruist founder Jason Wenk is the anti-CEO. He's nothing like the CEOs of almost every other custodian or technology vendor in our space. You'll never catch him in a suit and tie, except maybe at a funeral. He much prefers casual shirts and hiking boots. Plus, he doesn't talk like a CEO, with lots of buzzwords and generalities. He gets right to the point when he says that he believes his new custodian can reduce RIA technology costs by 90-95%.

    Talking about the Altruist goal around the commitment to building a community, Wenk said, "You can't call your company Altruist if you're a bunch of $#%*’s.” And he was on stage when he said it.

    Altruist, which clears through DriveWealth, offers commission-free trading for equity, ETFs, and mutual funds. They've also built a proprietary technology stack that includes speedy account opening (under two minutes, according to Wenk), billing, and performance reporting. Advisors will pay $1 a month per account for custody, with the first 100 accounts being free.

    Custody Leaders Panel

    The moderator was Suzanne Siracuse, Founder and CEO of Suzanne Siracuse Consulting and former CEO and publisher of InvestmentNews.

    This panel was packed with the best minds in advisor technology from all major custodians:

    • Lisa Burns, Head of Platform Technology, Fidelity Institutional
    • Dani Fava, Director of Innovation at TD Ameritrade Institutional
    • Christina Townsend, Director and Head of Advisor Solutions Platform Strategy for Advisor Solutions at BNY Mellon | Pershing
    • Lauren Wilkinson, VP, Digital Advisor Experience at Charles Schwab

    Wilkinson pointed out that advisors must learn how to serve the financial needs of a diverse client base. 48% of US millionaires are women, and 43% of US Millennials are non-white versus only 12% of RIA staff.

    Women are over-mentored, but under-sponsored reported Pershing's Townsend. More champions are required to ensure that women are ready to move into their next role. Sometimes they just need that nudge from a trusted source. I spoke with the entire panel on my podcast before their session, and they all agreed that every woman they have ever met at work would not apply for a job opening unless they met 100% of the requirements. Whereas, most men would try even if they only met 50-60%. That's a wide gap that keeps many women from moving up the management ranks.

    Along those same lines, Fidelity's Burns advised, "It’s important to be the best advocate for yourself." While it's good to have supporters, it's critical to be the one to drive your own career, as many women are hesitant to toot their own horn even as they are some of the most productive and innovative employees.

    Without more women in leadership roles, firms will have difficulty recruiting, Burns warned. 77% of GenZ said diversity is important to their next job decision, she stated.

    Sometimes it's a hidden bias that stifles diversity. Many firms that rely on artificial intelligence-based systems for screening resumes must vet the algorithms since some tools have an implicit bias that can skew the candidate pool, Fava noted. On the flip side, machine learning has been applied to job postings to screen out language that is not welcoming or is unintentionally excluding certain communities, she said.

    [More: Fidelity launches digital marketplace for technology integrations]

    E*Trade Advisor Services

    I have heard a lot of presentations that used 30 years as the length of client relationships, so 7 years was surprising to me. According to the E*Trade report, the first two years are the most important since those years have the highest client churn rate of around 25%. If you can get through those, the likelihood of the client staying longer than 7 years is high.

    A study by Bain & Company found that, in financial services, a 5% increase in customer retention can produce up to a 25% increase in profit.

    61% of millionaires said they left their old financial advisor due to not returning phone calls promptly. It doesn't take much to turn a client off.

    The news that Morgan Stanley was buying E*Trade broke on the last day of the conference when most people had already left. The combined platforms will have $3.1 trillion in client assets, 8.2 million retail client relationships and accounts, and 4.6 million stock plan participants. I think the stock plan participants make up the most important data point here based on the acquisition last year of Solium, a provider of stock plan administration and workplace wealth solutions.

    Solium had 3,000 stock plan clients, with one million participants, including brand names like Instacart, Levi Strauss, Shopify, Stripe, and a range of fast-growing private companies, as well as newly public companies. At the time (February of 2019), Morgan Stanley had 320 stock plan clients, with 1.5 million participants, of which a quarter was in the Fortune 500. A back-of-the-envelope calculation shows that the E*Trade purchase almost doubled their participant total.

    This quote from James Gorman, Chairman and CEO, gives some indication of the value that Morgan Stanley places on this channel:

    The acquisition provides Morgan Stanley with broader access to corporate clients and a direct channel to their employees, as well as a greater opportunity to establish and develop relationships with a younger demographic and service this population early in their wealth accumulation years.

    TD Ameritrade

    I think TD Ameritrade has one of the best speakers in the industry in Dani Fava. She's their secret weapon to build their image as thought leaders. While other custodians prattle on about their current technology, Dani is looking 50 years into the future to tell us what our great-grandchildren will see as commonplace.

    Best Dani Career Advice: Have your kids learn to code in Python since it's one of the most popular programming languages for artificial intelligence.

    Best Dani Factoid: 45% of podcast listeners have a household income of over $75K.

    TradePMR

    TradePMR CEO Robb Baldwin was not shy about sharing his opinions about the impending Schwab-TD Ameritrade merger and its impact on RIAs.

    Baldwin pointed out that RIA clients of E*Trade who came over with the acquisition of TCA still haven't been converted yet even as the announcement of the Morgan Stanley acquisition has been made public. This is a big unknown for these advisors, in Baldwin's opinion, since they might have to go through two conversions.

    He pointed out that any custody transition will have some impact on advisors, and it could be challenging for the 7,000 TD Ameritrade RIAs when they convert to Schwab. Also, Baldwin recommended that every RIA perform due diligence on its key software providers to ensure that they can support Schwab custody at the same level of service and with the same set of features as they do through TDA.

    Financial due diligence of vendors is an area that many RIAs skip over but should not be ignored in this case, according to Baldwin. Especially for smaller vendors, who might feel the pinch if a large portion of their RIA clients start calling for support or if significant technical work must be accomplished to support the new custodial connections. Verifying that your vendors have a strong balance sheet or enough financial backing to get through a year or more of difficulties.

    We know that it is in the best interest of TradePMR to encourage RIA clients of both TD Ameritrade and Schwab to look around before their conversion. Therefore, his warnings must be considered with the source in mind.

    T3 Tech Survey

    There is a complete lack of reliable data on market share for Advisor technology. It's just too hard to get, and no one has the time or money to sample advisors according to statistical analysis in all these different categories and across all different advisor types.

    Fortunately, we have Joel Bruckenstein, Bob Veres, and the T3 Tech Survey! While it's not statistically accurate, since it is voluntary and some vendors have been known to try and game the system, it is still a useful snapshot of a cross-section of advisors and their usage of a wide variety of technologies.

    Some overall findings:

    Here are the custodian results:

    The Big 4 are still the Big 4… until they become the Big 3. These numbers seem skewed towards TD advisors since Schwab clearly has the number one market share. But that's the nature of an exercise like this.

    I think the reason for the confusion is that the survey is just a snapshot of a voluntary population of advisors, so there will be a lot of selection bias influencing the results. Also, many advisors don't always know exactly what technology they're using. If they have paperless onboarding then they are most likely using some kind of document management system. They are just unaware of what it is. Which is actually a very good sign that the technology is mature and doing its job. Because you don't even know it's there.

    I would ignore the weird trading/rebalancing data. We know that Rep-as-PM (RPM) assets are still growing and make up 70-80% of assets at some broker-dealers. They have to be using a rebalancer!

    No surprise that Riskalyze is dominant in a category they single-handedly revived from the dead and turned into a growth area a few years ago.

    I would prefer to combine a lot of separate products from the same vendor to show top-level stats for each. But I agree that usage of "lite" financial planning is growing and has been for a while now.

    This list doesn't include applications that include some financial planning features like Advyzon, AdvisorEngine, Orion Advisor, and Riskalyze. (See Is BlackRock-Envestnet Deal a Tipping Point for Lite Financial Planning.)

    Redtail CRM has increased market share to 63% from 57% last year, becoming even more dominant in the space. I think the survey participants are skewed to the small RIA side, which would benefit Redtail here. Most broker-dealers we work with use Salesforce, and that's over 50,000+ advisors, just for us.

    Digital Advice

    Not a lot of news or buzz around robo-advisors this year. Thankfully, the bubble has burst and the hype has died down. Self-directed account opening and portfolio management have become just other items in the checklist of table stakes that you look for when selecting a wealth management platform vendor.

    Betterment for Advisors

    550 firms with only 2,000 advisors? That's an average of fewer than 4 advisors per firm. It sounds like they are working with a lot of solo practices if they also have broker-dealers and banks. As of April 2019, they reported 450 firms, so that's decent growth in just three quarters. This growth should be spurred since they launched access to Dimensional Fund Advisors funds in the second half of last year.

    Broker-Dealers

    Not wanting to be left out of the advisortech fun, a few broker-dealers squeezed their way into the exhibit hall and main stage to showcase their integrated technology platforms and visions for improved advisor and client experiences.

    Cambridge

    Cambridge CTO Nick Graham took the stage to discuss digital transformation.

    Graham offered some good advice for any advisory firm: Create a strategy before investing in new technology. I would agree!

    Cambridge has 86 internal software tools and processes, and Graham has been attacking paper-driven, error-prone manual activities by replacing them with digital transformation. He recommended continuous monitoring of technology adoption to manage exposure and risk. You can’t just throw tech out there and expect advisors to use it. There must be leadership and understanding from the top down.

    LPL Financial

    Burt White, Chief Investment Officer of LPL Financial, was a keynote speaker and knocked the audience's socks off with his high energy, data-packed presentation.

    It's the difference between running a business and growing it. What got you here won't get you there. Change is the theme of this conference! Everyone talks a good game, but at Ezra Group, we find that it's hard for companies to walk the talk without outside help. We bring in dynamic teams that can help nudge firms in the right direction.

    "The pace of technology change will never be as slow as it is today." The first reference that I could find to someone saying this was from 2010, but it is certainly still relevant today.

    In other news, LPL announced the completion of their integration of AdvisoryWorld's proposal-generation app with their new account opening process, making it even easier for advisors to move through the process of turning prospects into clients.

    Raymond James

    Raymond James has been working on a refresh of their RIA platform for a number of years (at least this is what I heard on the grapevine). It looks like they're finally taking the wraps off of it. Although they're only showing screenshots and mockups rather than live demos, so maybe it's not ready for prime time just yet.

    Fabulous Fee Billing

    Billing is a section of wealth management technology that doesn't get a lot of airtime but is pretty important. There would be no revenue to pay for all of the other technology without billing!

    Billfin from Redi2

    Many vendors bundle fee billing along with their wealth management platforms, but they don't always do a good job of providing the power, flexibility, and ease of use of a dedicated application.

    Over the past six years, the SEC has been on an examination streak, boosting the number of audits by an incredible 137%, according to their 2018 fiscal year annual report. One area that regulators have been paying special attention to is billing practices, so a lot of firms choose a standalone billing program to ensure that they're compliant, according to Seth Johnson, CEO of Redi2 Technologies.

    Johnson shared the results of an InvestmentNews survey that showed that client experience is still the #1 driver of technology decisions.

    UMA market share continues to grow as advisors shift to fee-based business. This is pushing vendors to build out their UMA capabilities, although some claim UMA support when they don't really have it. Ezra Group Research requires an application to have at least these three features to claim UMA support:

    • Portfolio rebalancing that supports multiple investment strategies in a single account (either sleeve-based or strategy-based);
    • Support for overlay management (tax-loss harvesting, client restrictions, trade netting, transitions); and
    • Support for third-party-manager strategies with a manager interface and internal processes for updating models.

    Portfolio Management

    The number of solutions in this category keeps growing and growing every year, with no end in sight. It's a veritable cornucopia of choices for advisory firms. Every year I say we've got enough vendors in this space and that it's time for some consolidation. And then more products appear!

    Two years ago, I published an article titled, Comparing The Best Digital Advice “Robo-Advisor” Platforms For RIAs. In it, I said that this would probably be my last article about digital advice because every one of the vendors was expanding its functionality to become end-to-end wealth management platforms!

    Two of those vendors, AdvisorEngine and RobustWealth, were at T3 demoing their full-featured portfolio management solutions. A third, Riskalyze, is getting pretty close to the total package and is adding more functionality all the time.

    Here is the list of portfolio management vendors (with full or partial solutions) who were at T3 this year:

    1. AdvisorEngine
    2. AdvisorPeak
    3. Advyzon
    4. D1g1t
    5. Envestnet Tamarac
    6. Morningstar Office
    7. Orion Advisor Tech
    8. Portfolio Pathway
    9. Riskalyze AutoPilot
    10. RobustWealth
    11. Summit Wealth Systems (New!)
    12. Tegra118 (The vendor formerly known as Fiserv)

    And this list doesn't include firms that didn't make it to the conference as well as custodians that offer essentially (kind of) free portfolio management software that provides a lot of core functionality (minus multi-custody, of course). So that's 7 or 8 more options.

    The question I keep asking is, "Are there enough clients to support all of these vendors?"

    AdvisorPeak

    Jordan Deru is VP of Sales at AdvisorPeak, a vendor of portfolio rebalancing software founded in 2018 by his brother, Damon Deru. Coincidentally, Damon was also the founder and CEO of TradeWarrior, which also developed and sold a rebalancer targeted at RIA firms, which was purchased by technology provider Oranj in 2017.

    Deru brought in Pete Giza, another experienced industry veteran, to be their Chief Product Officer. Pete knows his way around rebalancing, having previously been founder and CTO of RedBlack Software, which was just taken off the market by Invesco.

    My first opinion when these guys started was that the world didn't need another portfolio rebalancing application, no matter what the pedigree of the founders was. But AdvisorPeak seems to be getting some traction and we will be taking a deeper look at their functionality in our Ezra Group Research Comparison Report on Portfolio Rebalancers late this year.

    AdvisorPeak made a couple of announcements during the conference, including one with StratiFi to enable their clients to access the StratiFi PRISM Rating™ to quantify a portfolio's correlation, volatility, tail, and concentrated stock risk into a single number, which is more easily understood by clients. Another integration the firm announced was with retirement income and tax planning software provider LifeYield, which will provide asset location functionality in their rebalancer.

    Asset location enables the rebalancer to reduce the tax footprint of a portfolio by evaluating the tax efficiency of securities and then buying them in either taxable or non-taxable accounts.

    Advyzon

    John Mackowiak, Chief Business Development Officer for Advyzon, presented at this session.

    https://twitter.com/advyzon/status/1230260338035085312

    Advyzon is a cloud-based platform that includes portfolio management, client reporting, CRM, fee billing, a client portal, document management, and business intelligence capabilities. They brought along a few of their clients to T3 to give testimonials about how the software has improved the operations and increased the growth of their practices.

    Last year, they announced an integration with Riskalyze that provided Single Sign-On (SSO) to both apps and enabled clients to view their Risk Number from within the Advyzon portal. This year, they added Business Intelligence Capabilities; configurable dashboards at the contact, client, and account levels; a new global report menu; and enhanced global searches. The system also includes a new firm-level dashboard, allowing users to create multiple dashboards of their choosing to see high-level data about their practices and giving them insights into how their businesses are performing.

    Also added this year is support for custody at Schwab via their OpenView Gateway. This enables Single Sign-On (SSO) capabilities; totally digital account opening; a direct upload of the fee file, Schwab statements, and tax documents into Advyzon; along with intra-day market updates and Schwab operational alerts.

    Advyzon launched their own portfolio rebalancer late last year which is supposed to be in pilot around this time.

    D1g1t

    There were definitely a lot of portfolio management tools to see at T3. d1g1t is a relatively new entrant from Canada founded by Dan Rosen , who has a doctorate in chemical engineering and had previously worked at risk management tech vendor Algorithmics (acquired by SS&C) and S&P Capital IQ.

    Canadian wealth management platforms have not had much success penetrating the US market. This is often due to their lack of features that don’t meet the needs of US firms, which require features such as proposal generation, digital onboarding, and tax-aware rebalancing. But Canadian vendors are closing the gap quickly.

    I have yet to see a demo of the d1g1t offering, but they did win the Deloitte Canada's award for Technology Fast 50 “Companies to Watch”. They say they have a complete end-to-end platform, including portfolio monitoring, rebalancing, and advance risk management and analytics, which play to the experience of their founder.

    Envestnet Tamarac

    The Envestnet Wealth Strategic Roadmap starts with Yodlee (referred to as the Envestnet Data Utility), which feeds the Financial Planning + Decision Engine (MoneyGuide with additional analytics), which feeds consulting services and overlay of investments, insurance, credit and retirement products, feeding into their Client Portal, Advisor Portal, and Enterprise Portals, which finally feeds into the Financial Wellness Scorecard.

    I'm interested to see how this all plays out in upcoming releases. How tightly will they integrate MoneyGuide into ENV2 and Tamarac? Will MoneyGuide become a default UI for insurance and credit, or will components be duplicated in other parts of the platform?

    "Data is the fuel that powers the financial planning engine," explained interim Envestnet CEO Bill Crager. I noted this when they announced their acquisition of industry leader MoneyGuidePro last year. The industry should go beyond just designing bar charts and instead focus on how data can add context for clients. ‘We’re getting fancy with our design and color, but we’re not really depicting the progress that an individual is making in a meaningful way,’ he stated in an interview with Citywire.

    Orion Advisor Tech

    George Svagera, SVP of Business Development, and Dylan Mahler, Product Designer for Orion Advisor Tech, did a terrific presentation on stage where they gave us a little behind-the-scenes peek into the design process for their new advisor dashboard. It will act as a central control point for advisors and enable them to access every part of the system, without having to switch between modules.

    They only had mockups available at the conference, which was a bit disappointing, but they are planning to go into production later this year. An integrated dashboard that is configurable would be a big boost to the Orion platform and would save a lot of clients from having to build or buy tools to consolidate data from different sources. It could be a move to push back against vendors like AI Labs who have been selling similar products since Orion might feel they are being disintermediated and separated from advisors.

    Portfolio Pathway

    Still, a relatively small player in the portfolio management space, PortfolioPathway recently made some headlines when they were acquired by asset management giant Invesco last August.

    Simon Roy, President and CEO of Jemstep, a digital wealth provider which was also snapped up by Invesco, in 2016, indicated that “the addition of Portfolio Pathway complements Jemstep’s platform, adding cost-efficient trading and rebalancing, portfolio accounting, billing and performance reporting technology for advisory firms. We are excited to support Portfolio Pathway in expanding their capabilities to continue to serve the RIA market with their market-tested solutions.”

    Up until now, Jemstep had to rely on integration with other vendors. Portfolio Pathway, with over $37B in assets under administration and over 850,000 accounts, will assist in Jemstep’s ability to address the needs of financial institutions, advisors, and individual investors.

    Portfolio Pathway's platform will also provide independent RIAs that do business with SSG, a complete suite of portfolio reporting tools, billing, document management, client tools, and more. Additionally, Portfolio Pathway provides rebalancing and trading through its SMA and UMA capabilities, composite reporting, and comprehensive operational workflows.

    RobustWealth

    Don’t put your clients into buckets, let them interact with your firm the way they want to, was how Michael Kerins, founder and CEO of RobustWealth, led off his session. He was referring to the common method of segmenting clients by assets or demographics and forcing them to use specific screens or digital tools.

    Kerins founded RobustWealth back in 2015 based on his feeling that wealth management was way too complex, and the industry needed a platform that made all of the key processes as simple as possible for everyone involved.

    Someone must have thought they were making decent progress towards that goal since, on just their third anniversary, they were acquired by Principal Financial Group, the third-largest record keeper in the US.

    RobustWealth offers three interfaces: client-facing, advisor-facing, and enterprise for larger firms with a home office structure. They have an end-to-end platform that covers almost everything an advisory firm would need, including a goals-based investing module that is integrated into the account opening process.

    Summit Wealth Systems

    Summit Wealth Systems is Reed Colley's next wealthtech adventure. His first wild ride with a startup was performance reporting technology firm, BlackDiamond, which ended successfully with a sale to Advent in 2011.

    We're not sure what his platform capabilities are, or even what it looks like since it is still under development. Colley promised me a demo in the Spring when it is expected to be ready for beta testing. But he's out kickstarting his marketing efforts as a sponsor at T3.

    Colley mentioned during his stage time that one reason he re-entered the wealth management space was that reporting has digressed over the past few years to the point that some advisors have switched back to using Microsoft Excel!

    Tegra118 (What Was Once Fiserv, Now New & Improved)

    According to Wiktionary, Tegra is an Icelandic word meaning "to integrate" and comes from the Latin verb integro , which means renew, restore or make whole.

    Tegra118 is the new name for the wealth management technology vendor formerly known as Fiserv Investment Services, the change being announced during the conference to great fanfare.

    The new firm, Tegra118, is one of the largest providers of cloud-based technology and business services to the managed accounts industry. Their clients include the largest wirehouses, banks, broker-dealers, and asset managers who rely on their systems to process trillions of dollars of orders and move terabytes of data between sponsors, managers, and custodians.

    Tegra118 is 60% owned by private equity firm Motive Partners and 40% by Fiserv.I'm excited to see if Motive can release a lot of the potential in both the Tegra118 technology and people to reach new heights in the industry.

    Conference Attendee Tips

    We're taking a break from our regularly scheduled conference summary to present this Public Service Announcement from Dani Fava, TD Ameritrade:

    Portfolio Reporting

    Addepar

    Addepar is known for their expertise in data aggregation, portfolio analytics and performance reporting for alternative investments such as partnerships, private equity, and other complex, illiquid assets. They added around $400 billion in AUA last year when they hit $1.7 trillion in assets on their platform with around 1/3 in alternatives.

    Mostly targeting the family office space for much of their beginning, Addepar has branched out to HNW RIAs and private banks with 400+ clients. They have also been working on partnerships with a number of wealth management platforms to be able to import data into their reporting engine.

    All of this functionality and data quality come at a price. Besides their high annual cost, Addepar implementations require a lot of time and resources from external consultants.

    There have been rumors that Addepar is building out their own Investment Book Of Record (IBOR) to provide intraday reporting rather than waiting for the EOD custodian files.

    Automated Marketing Tools

    At Ezra Group Research, there are three reasons why we believe that marketing automation software for advisors has huge opportunities for growth:

    • Advisors are generally not very good at marketing. They don't understand it. They don't have time for it. When they do make some time, they expect instant results and often give up after a half-hearted effort;
    • Advisors desperately need better marketing! Their business is under attack from multiple directions. Robo-advisors, financial apps, and just plain old Vanguard and DIY outlets that are stealing chunks of client assets as tempting the next generation of investors; and
    • Marketing automation software is becoming much more user-friendly and easier to implement and manage. This reduces the fear factor for advisors to take the plunge without having to worry about it sucking up too much of their time.

    Snappy Kraken

    The Snapmeister General, Robert Sofia, CEO of Snappy Kraken, was in the house to share some truth about advisor marketing. His firm published an incredibly detailed benchmarking study based on over 14,000 digital campaigns run on their platform.

    Advisors must realize that they need to provide content that their clients want to read, not what they think clients should be reading. This list is an excellent resource to mine when planning your next marketing campaign.

    You can hate them, but you still love them. Facebook has surpassed 2.5 billion monthly active users. Not surprising that they're still the #1 source of campaign traffic for advisors. Facebook is simply too big to ignore as an ongoing part of any digital marketing communications program.

    AdvisorStream

    AdvisorStream CEO Kevin Mulhern shared the stat that 40% of current investors are open to switching advisors. Not a good sign!

    If these many clients are turning over every three years, that's an incredibly high annual churn rate! Coincidentally, 33% of Americans say they would consider switching companies after just a single instance of poor service.

    We're seeing more broker-dealers and RIA aggregators integrating marketing automation tools into their offerings. AdvisorStream has a cool feature where it can generate a weekly customer newsletter that can be sent to clients and prospects. Email marketing still delivers 40:1 ROI compared to social media, Mulhern noted.

    FMG Suite

    FMG Suite focuses on lead generation and client engagement for RIAs and enterprises.

    Their new Curator feature looks like a rebrand of content provided through their partnership with Vestorly. This sounds like a good idea to combine their curated content with FMG's marketing automation system.

    Wealth management enterprises want to deal with fewer vendors, so if multiple similar services can be combined and purchased from a single source, it reduces operational overhead. Many firms don't see marketing tools as core components of their advisor infrastructure (yet), so making it easier to deliver multiple services from the same source makes sense.

    Twenty Over Ten

    This is a big step for TwentyOverTen to move into the marketing automation space. Up until now, they were known as website builders for advisors with integrated content management and compliance tools for under $100 a month.

    Launching Lead Pilot is a good way to branch out and expand their product set to cross-sell to their existing client base. Right now, it is a standalone product, but I would expect them to add integrations from Lead Pilot into advisor websites soon.

    Cybersecurity

    Brian Hamburger is the founder of the Hamburger Law Firm and founder and CEO of MarketCounsel, a regulatory and compliance consulting firm for RIAs.

    The soft underbelly of any company's security is their people, Hamburger noted, since most lack training in how to spot social engineering and other methods that hackers use to gain access to confidential information.

    Advisory firms face cyber threats from sophisticated attackers, including nation-state and criminal syndicates, who target them for their corporate IP, sensitive information, and access to client accounts.

    Being proactive about cybersecurity is the first step towards lowering your firm's risk profile and closing common gaps before a real hacker gets through first.

    The motive behind taking action shouldn’t be just about adhering to compliance, Hamburger recommended. Advisory firms should be looking to run a good business and maintain goodwill with their clients.

    It's only a matter of time before we read about a major breach at a large RIA somewhere. Maybe that will spur more firms into taking action. Everyone is freaking out about coronavirus, but 93% of advisors can't be bothered to protect their clients from computer viruses that could devastate their business.

    Financial Planning

    Only 65% of advisory firms are using financial planning software, according to the T3 Tech Survey. While this may be true for standalone financial planning applications, at Ezra Group Research, we believe this understates the use of the myriad of niche planning applications that have exploded onto the market in recent years.

    We cover a few of those in this section, including innovative tools from BlackRock, Covisum, and IncomeConductor.

    Advicent

    Very few people in our industry can light up a stage like Advicent COO Tony Stich, affectionately known as Mr. Purple. Advicent offers two planning tools, Naviplan for HNW/UHNW clients and Profiles for mass affluent goals-based planning. (See Winners of Wealthtech: Advicent CEO Angela Pecoraro.)

    NaviPlan’s platform plans for 2020 include helping day one users deliver financial plans as well as enabling self-directed planning experiences.

    Advisors can uncover missed opportunities by reassessing how they’re using financial planning in their practices now that we’re in the third wave of planning, combining goals- and cash flow-based with more digital engagement.

    Advisors who are heavy users of technology have more than twice the AUM of light users, according to Stich. But is this correlation or causation? Firms with more AUM would need more technology to support it. This is not necessarily a reason for RIAs to go out and just spend more.

    Apprise Labs

    CEO Edmond Walters took the stage at #T32020 and described Apprise Labs’ mission to create a planning solution that both engages the client in an experience and allows the advisor to elevate their position to that of teacher and coach.

    Walters said he designed Lifestyle Studio to help advisors answer clients' real-world questions. Clients don’t call to hear about ROR or Beta, he said; they call because they have questions about moving or selling a business.

    Besides gorgeous-looking screens, Apprise Labs is also providing Hollywood-production-quality videos that advisors can white-label to drive engagement. They could be used across everything from seminars to on-hold music to always-running lobby videos.

    BlackRock iRetire

    Retirement income analysis from the world's largest asset manager, BlackRock's iRetire, was designed to enable advisors to have more efficient conversations about retirement with their clients. The functionality focuses on how best to illustrate the trade-offs between client needs, preferences for risk, retirement date, saving, and spending.

    There's got to be some reason why BlackRock is investing millions in building high-quality planning tools and giving them away for free. Of course, there is no obligation to use their ETFs, but they have to be seeing a huge uptick in usage, or they would have shut this down years ago.

    And let me say that these free tools are really good! They’re well-designed, make good use of screen real estate, have sharp graphics, and offer a smooth workflow. The demo showed how an advisor could run a complete portfolio analysis for a prospect in under two minutes on iRetire. Note: The menu options include text-based ads for iShares right up front. Subtle.

    Covisum

    I liked the presentation from Covisum CEO Joe Elsasser since he didn't bore the audience with another product demo. He shared stats and insights into marketing, which is an area you wouldn't normally associate with financial planning.

    An insightful discussion on client acquisition costs was kicked off by Elsasser during his presentation when he quoted financial planning guru Michael Kitces that the average client acquisition cost for advisors is $3,119, with 83% of that from labor.

    Covisum sells a suite of planning tools rather than all-in-one software. These include retirement income, tax optimization, Social Security timing, and portfolio risk analysis. They were also early in the game to offer marketing content to advisors as a free service along with their software.

    This experience came through in Elsasser's talk, which was mostly marketing tips and best practices rather than another boring product demo. Good job, Joe!

    Three of the most actionable takeaways from Elsasser:

    • If you want more referrals, be more referable;
    • Build systematic ways to answer common client questions; and
    • Compare each prospect with your best client.

    Envestnet MoneyGuide

    Kevin Hughes, Chief Growth Officer for Envestnet MoneyGuide, gave an overview of some new topics for Blocks coming out soon. Blocks are educational widgets/mini-apps that advisors can host on their website.

    I love the concept that Blocks brings to advisors. It's the revolutionary idea that clients should be offered educational, interactive content that teaches them about complex concepts such as long-term care insurance, retirement income, and healthcare costs. It's better than a client portal that just shows positions, performance, and reports because it encourages clients to keep coming back to learn more.

    This is a serious problem with the client relationship model of most financial advisors. Clients want to talk to their advisors a few times a year, at most. If advisors notice that clients are logging into the website too often, they wonder what's wrong? Blocks are the first step in changing that paradigm.

    FinMason

    Phil Taylor, FinMason's Chief Analytics Officer (how many companies have one of these?), spoke about how advisors can explain complicated planning topics to people who have no financial training. That's just about every prospect and client out there.

    FinMason isn't well known, but they have quietly built a nice business being the analytics engine for a broad array of industry apps. This includes Orion Advisor Tech , who integrated FinMason's Five-Minute Financial Plan (before buying their own financial planning software), AdvisorEngine, Addepar, and BNY Mellon Eagle Investment Systems. Many of these integrations are enabled via their FinRiver Investment Analytics Application Programming Interfaces (APIs).

    Late in 2019, FinMason announced that its software had been used to analyze 10 million portfolios since it launched its APIs in 2017. They offer 700+ analytics on every publicly-traded security worldwide, which partners can use to enrich holdings data, measure potential risk of models, and guide research to better align with client goals.

    FP Alpha

    The T3 Advisor Conference is not only the place where you can find established vendors and industry leaders but innovative startups as well. FP Alpha claims to be the first AI-driven wealth management tool. I'm not sure how much actual AI is involved, but the demo was impressive!

    What was cool about the demo was when CEO Andrew Altfest showed how you could drag and drop a legal document onto the app, and in just a few seconds, it processes it and generates recommendations for the advisor. There is a wide range of areas where it can recommend, including tax planning, divorce planning, insurance, and even estate planning.

    Michael Kitces noted his appreciation of advisor software that was developed by an actual advisor. Altfest runs a $1.3 billion RIA based in New York City. His goal for FP Alpha is to help human advisors ‘kick robo-advisors to the curb’. The problem with this is that technology is fungible. Anything that can be built for an advisor to use can one day be adapted for use by a self-directed client.

    It's a never-ending arms race. Can FP Alpha help advisors get a head start on the competition?

    PlantechHub

    PlantechHub is another newcomer to the space and has developed what they believe is a more modern approach to financial planning.

    The demo of their beta product (which PlantechHub said would be available for purchase in April) looks like an advisor dashboard that's been infused with planning data. PlantechHub says their tool will be used as service-driven modules that are based on a continuous planning process and monitoring rather than a one-off-plan-creation event. They envision planning to become a never-ending workflow that would bolster the experience and create a tighter relationship between advisors and clients.

    Income Conductor

    Sheryl O'Connor is the founder and CEO of WealthConductor, which is the vendor behind the IncomeConductor product.

    IncomeConductor is a proprietary cloud-based tool that allows advisors to create customized time-segmented income plans that can be tracked and managed throughout retirement. We see apps like IncomeConductor becoming more embedded in advisors' workflows as they look for tools that can enhance specific planning aspects and also provide some ways for advisors to differentiate themselves.

    Smaller vendors like O'Connor's are more nimble and can design and release innovative features quicker than monolithic competitors. While more of the top planning systems are expanding into retirement income, we hope that they can continue to bring new ideas into their software.

    A unique feature of IncomeConductor is that they are multi-currency so they can adapt to any country's retirement structure. This has enabled them to land some international clients.

    LifeYield

    Steve Zuschin is the EVP of Advisor Success at LifeYield and the "Loch Ness monster of Advisor Alpha".

    LifeYield democratized the concept of tax optimization of withdrawals in retirement and have worked to integrate their software into many of the biggest platforms around. They've been building out their suite of services that now include household tax-aware trading, asset location, and Social Security planning.

    One great marketing idea they came up with was branding their tax scoring algorithm as the Taxficient Score(R). This enables them to provide a recognizable tool to advisors and a way to explain dense, complex topics (like tax alpha) to clients.

    LifeYield has announced partnerships with Russell Investments, Allianz Life, Envestnet Yodlee, United Planners, and Morgan Stanley, to name just a few.

    Student Competition

    This was the third year of the Student Competition at T3 Advisor with CFP programs from around the country competing for dominance in RIA technology development. Each team was comprised of a mix of information technology and financial planning students that have been paired with one of the mentoring technology firms. The teams were​:

    1. Orion + Utah Valley University
    2. Robust Wealth + Winthrop University
    3. TD Ameritrade Institutional + San Diego State University
    4. eMoney + University of Georgia
    5. AdvicePay + BYU Idaho

    And the winning team was from BYU Idaho that built a public-facing version of AdvicePay's retainer-fee calculator.

    The esteemed panel of judges included Edmund Walters from Apprise Labs, Dani Fava from TD Ameritrade, and Ian McKenna from Financial Technology Research Centre in the UK.

    ESG Investing

    This data came from a research paper published by Morningstar that also showed that there was no statistical difference between men and women or between different generations when it came to preferences for sustainable investments. This is contrary to conventional wisdom that women and younger people are more likely to choose ESG for their portfolios.

    Fidelity

    Hannah Lippe, ESG Product Manager for Fidelity, explained that ESG, SRI, and Impact Investing are all similar, but still have their differences:

    • Environmental, Social, Governance (ESG). Data about how companies are run
    • Socially Responsible Investing (SRI). Data about the business companies are in
    • Impact Investing. Direct, private investments that rely on ESG and SRI to make decisions

    Podcasting

    It was crazy, non-stop, stand-up interviewing for two-and-a-half days, but it was fantastic! Thanks to Joel Bruckenstein and Marie Swift for inviting me to host the conference podcast station. This was my second shot at T3 mobile podcasting (See #ItzOnWealthTech Ep. 32: Speed Podcasting at the T3 Enterprise Conference)

    It's become a tradition that my last podcast interview at the conference is Joel. He was the guest on my very first podcast last year!

    It was great to spend some time chatting with Molly and Brandon when they weren’t on stage! Envestnet is working on features that take advantage of AI-based hyper-personalization to enhance consumer experiences. This will deliver more focused alerts as well as more holistic views of clients’ financial lives, including credit card spending, student loans, and insurance.

    They also rolled out a new integrated account opening process that can be launched from Salesforce using overlay software provided by Skience.

    Closing

    It's not all hard work as a conference attendee. Even the vendors get some time to blow off some steam.

    The after-party was a blast!

    If you weren't able to attend the conference this year, I hope to catch you there in 2021!

    Quality? Nerdy? Relevant?

    We really do use your feedback to shape our future content!

    Quality? Nerdy? Relevant?

    We really do use your feedback to shape our future content!

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    Comments

    1. Mike Palmer says

      Curious if there were any vendors that specialize in digital lead generation products? Specifically website lead widgets that provide some basic analysis in exchange for prospect’s personal info.

      Reply

      • Samantha R says

        Mike – check out Twenty Over Ten (twentyoverten.com) and their latest tool, Lead Pilot (Leadpilot.io).

        Reply

        • Mike Palmer says

          I assume this is Samantha Russell with Twenty over Ten. Samantha, I was part of the beta test group of Lead Pilot. When it was first demoed last OCT a lead generation widget was promoted as being in the works. Unless I’ve missed something, I haven’t seen that rolled out. Did I miss something?

          Reply

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