Executive Summary
As technology plays an increasingly central role in the business of financial advice, the pace of change is accelerating. After years of limited development and progress – from 2002 to 2012, the biggest “news” for most advisor technology providers was simply that they had finally moved from server-based to a cloud-based platform – the arrival of “robo-advisors” highlighted how far financial services technology had fallen behind. The end result: while robo-advisors aren’t competing much with financial advisors directly, they have set off an arms race of technology firms aiming to serve financial advisors.
To help my fellow financial advisor community keep up with the most important developments, I’m launching what will become a new regular column on the first Monday of every month: the latest in Financial #AdvisorTech.
The goal here will be to highlight the significant news and developments in advisor-related technology over the past month, from major software releases, to big news on new integrations, companies raising capital (or shutting down), and highlighting new #AdvisorTech providers coming to the forefront with new solutions that advisors might want to check out.
In this month’s inaugural issue, we look at the news that RightCapital (a new financial planning software provider) has raised $1M in seed funding to grow their tax-savvy planning solution for advisors, the announcement from EverPlans (an estate planning document value that advisors offer as a perk to their clients) that they have raised $6M in their Series A round (even as some other new estate planning tools like Yourefolio and EstateGen have appeared on the scene), Microsoft’s launch of a new online scheduling tool called “Bookings”, the merger of Citrix and LogMeIn (which may eventually combine together the popular advisor video meeting apps GoToMeeting and Join.Me), how we may truly be past the “peak robo” moment as several more robo-advisors have either shut down or are struggling to retain talent, and a quick look at whether Apex Clearing may be trying to get their foot in the door as a new RIA alternative to Schwab, Fidelity, and especially TD Ameritrade.
I hope you find this new column helpful! Please share your comments at the end and let me know what you think!
*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!
RightCapital FP Software Raises $1M Seed Funding. For much of the past decade, financial planning software for advisors has been dominated by three major players: MoneyGuidePro, eMoney Advisor, and NaviPlan (from Advicent). New entrants to the financial planning marketplace were few and far between, and struggled for market share (e.g., Goalgami Pro, InStream). Over the past year, though, the landscape is being newly invigorated, first with Advizr raising a $1.74M seed round last year, and today the news is out that RightCapital, the newest addition to the financial planning software landscape, has raised a $1M seed round of funding. RightCapital’s software has gained popularity amongst early adherents for its integrated client PFM capabilities (including the ability to track and categorize spending), and unique capabilities to do more sophisticated tax analyses than their competitors (e.g., showing the impact of doing systematic partial Roth conversions in retirement). The new funding is intended to continue adding new financial planning and tax planning modules, along with some tools to facilitate compliance with DoL fiduciary rules, and expanded lead-generation capabilities. For more details on RightCapital, see the demo on their website.
EverPlans Estate Planning Vault Solution Raises $6.4M Series A. While many financial advisors have “vaults” to share clients with clients, the primary focus of EverPlans is to facilitate the (secure) sharing of key (estate planning and other) documents to next generation heirs (at a cost of $75/year). Users can securely upload a wide range of important documents, including wills and trusts, insurance policies, medical information and advanced directives, and even digital account logins and passwords, and designate a “deputy” who can receive shared access to the information (to be used if/when/as necessary). The software started out as a direct-to-consumer solution, but last year launched an EverPlans Professional version that advisors can make available on a private white-label version to their clients (at ‘bulk’ pricing of $2,500 for up to 200 individual clients). And with more than 100 advisory firms on board, EverPlans has now raised a substantial $6.4M Series A round to continue expanding both its Consumer and Professional platforms. Given the other “document vault” solutions available to clients (e.g., via client portals from Orion to eMoney Advisor to standalone solutions like Citrix ShareFile), the primary appeal of EverPlans is not to facilitate the sharing of documents between the advisor and client, but as a “client perk” to help clients make important information available to family members (and also the advisor, if granted deputy permission), particularly to facilitate the transition of key documents and information if the client dies or becomes disabled. More details on EverPlans Professional available on their website.
Microsoft Debuts Online Scheduling Tool “Bookings”. In the past two years, financial advisors have increasingly been adopting “online scheduling” tools like Calendly and TimeTrade, which pull availability information directly from the advisors calendar to offer available time slots for clients or prospects to meet. The solutions can be embedded directly in the financial advisor’s website, or sent via a scheduling link, and represent a significant efficiency improvement over the usual back-and-forth process of trying to set the time for a call or meeting (“Are you available at this time?” “Nope, how about this other time?” “I can’t do that, how about THIS other time…”). And given their popularity, Microsoft has decided to launch its own solution, Bookings, which will be fully integrated into Office365 (which may be especially appealing for advisors still working in the Microsoft Office ecosystem and using an Exchange Server for email, though Bookings will apparently sync to Google Calendar as well). Although not specifically made for financial advisors, Bookings appears to have similar capabilities to the competitors, including offering clients a series of dates and times based on current availability, automating meeting confirmations and reminders, and even facilitating cancellations and rescheduling.
Citrix’s GoToMeeting Merges With LogMeIn’s Join.Me Video Conferencing Tools. LogMeIn, which makes both a remote desktop access solution, and also the popular video conferencing solution Join.me, will be merging with Citrix (making of the competing video conferencing tool GoToMeeting), in a massive deal valued at $1.8B. Citrix, the larger of the two, will be blending the combined tools into a new wholly owned subsidiary called GetGo, which may soon be spun off into a standalone entity in response to activist investor pressure (separating it from Citrix’s other unrelated enterprise solutions). From the financial advisor perspective, the question raised by the deal is whether or how long GoToMeeting and Join.me will continue to be available as separate video conferencing solutions for client meetings, and whether the ultimate goal of the deal was for Citrix to acquire Join.me customers and merge/shift them into being GoToMeeting users instead. There’s no reason to jump ship yet if you’re a Join.me user, but you might start looking around for alternatives (like the recently popular Zoom.Us), in the coming months, just to be safe.
Quovo Account Aggregation Is On The Rise. As personal financial management (PFM) software becomes increasingly popular as a way to deepen client relationships, startup Quovo has been announcing a spate of deals, at the pace of several per month, with a wide range of financial institutions. This month’s announcements included partnerships with wealth management software platform Advisor Software, B2B “robo” solution Marstone, and portfolio management and performance reporting software Panoramix, on the heels of last month’s Totum Wealth deal and Riskalyze’s Asset Sync solution. The word on the street is that Quovo is winning deals on the strength of not only its clean reconciled data, but also its growing capabilities to assist with Business Intelligence and Data Visualizations. Will Quovo become the account aggregation 2.0 provider that eventually overtakes the early players like FiServ’s CashEdge and ByAllAccounts? Will Envestnet be able to scale up Yodlee’s applicability for financial advisors to compete? We’ll see in the next 12-24 months…
Early Stage Tech Solutions For DoL Compliance Are Emerging. The buzz around the industry for the past 4 months is that major investments in technology by financial institutions will be necessary to comply with the Department of Labor’s fiduciary rule. Except there’s been little agreement about what, exactly, the technology needs to do to actually help with compliance. This month, some early solutions have started to emerge. Salesforce announced the addition of its “Salesforce Shield” solution as an extension of Financial Services Cloud, which provides a better audit trail (and historical record retention) of any actions taken in a client’s record, along with easing the documentation of any/all client communications and recommendations. And MoneyGuidePro announced its new “Best Interest Scout”, which will help financial institutions verify that advisors have gathered all the relevant information to make a potential retirement rollover recommendation. Notably, though, Salesforce Shield actually already existed, and the new announcement is simply its addition to the Financial Services Cloud platform in particular, and Best Interest Scout is still only a relatively simple extension of MoneyGuidePro, not a full advice supervision platform. Expect a growing drumbeat of compliance-related technology announcements, of increasing substance, in the coming months though, as the implementation deadline nears. In fact, we may even see the emergence of a new category of advisor technology, #RegTech (or perhaps #ComplianceTech?), by the end of 2017!
Is Apex Clearing Making A New Play For RIA Business? Last week, Apex Clearing announced a partnership with robo-advisor-for-advisors solution Vanare, to make Vanare’s white-label robo tools available to RIAs (and broker-dealers) on the Apex clearing platform. Apex is little known in the world of financial advisors, but is extremely popular in the robo-advisor FinTech world, as the “behind-the-scenes” platform that helps to power Wealthfront, Betterment, and Motif Investing (before it later switched to Pershing), as well as more recent players like WiseBanyan and Robinhood. The company itself, which was borne from the ashes of Penson Worldwide (the Apex parent company that blew itself up after questionable trades in illiquid bonds tied to one of its directors), has been on the rise thanks to its highly scaled and low cost clearing capabilities, and the availability of extensive APIs. However, while those raw APIs have been highly appealing to tech startups looking to compete with advisors, the capabilities are too “raw” for most traditional financial advisory firms to build upon, so Apex appears to be partnering with Vanare to provide a more advisor-ready layer. This would make it easier for financial institutions that want to “build their own robo” solution, to be able to deploy radically faster than building from scratch with Apex alone. From Apex’s perspective, this means the Vanare deal is a potential path to compete more directly with “tech-savvy” custodial/clearing alternatives like Folio and TD Ameritrade. Though given that Vanare has also recently announced integrations with FolioDynamix and Pershing, and TD Ameritrade, the deal with Apex merely puts them on even footing with the competition. On the other hand, given the recent departure of Vanare’s COO Lex Sokolin, it’s not entirely clear if Vanare is expanding custodial partners due to the volume of demand, or if demand and adoption is so poor on those platforms that it’s hoping an Apex deal will open new doors.
Riskalyze Makes A Push Into Qualified Plans. This month, Riskalyze announced the launch of its “Autopilot for Retirement Plans” solution, allowing those who work with qualified plans to offer the popular risk assessment tool to plan participants. The basic concept is similar to Riskalyze’s existing solution – where clients can complete a risk tolerance questionnaire, and then receive both an evaluation on their existing investments, and an understanding of how the advisor’s recommendation would change/improve the situation – but in the qualified plan context, this may be a popular tool to help facilitate plan participant onboarding and (regular) portfolio reviews. And the capabilities of Riskalyze to account-aggregate in outside assets to do a more holistic portfolio risk assessment also helps the qualified plan advisor understand which plan participants may have additional investment opportunities with held-away assets – akin to how Fidelity may soon use eMoney Advisor’s account aggregation tools in their own 401(k) channel.
The Robo-Advisor Marketplace Is Still Churning. As the flow of dollars to robo-advisors continues to shrink to an ever-narrower pool of players, the biggest are getting bigger, and the rest are struggling more and more. Accordingly, Betterment announced that it had crossed the $5B AUM threshold this month, and Schwab Intelligent Portfolios reached $8.2B of AUM. However, women-focused SheCapital announced it was shutting down (after getting just 6 clients in a year!), iBillionaire announced it was pivoting from B2C to B2B, and even Wealthfront appears to be struggling to retain talent amidst slower growth as its heads of product, marketing, and compliance have all recently departed. And other robo-advisors are being forced to stretch further to find growth opportunities, with Personal Capital announcing a deal with BancAllince to license their digital tools (which up until now were used purely for Personal Capital’s own client acquisition), and Hedgeable pivoting to begin facilitating peer-to-peer loan investing as a way to add a new asset class to its robo-managed portfolios. Nonetheless, major asset managers are undaunted by the robo opportunity, with this month witnessing the launch of Fidelity Go, and Legg Mason acquiring an 82% stake in formerly-B2C-and-likely-soon-B2B robo-advisor FinancialGuard. In the meantime, though, regulators are also taking increasing notice of the B2B robo-advisor trend, with Massachusetts regulators issuing new guidelines about how financial advisors should disclose their use of third-party robo-advisor tools, and some Senators calling on regulators to step up their efforts to oversee the rapidly growing FinTech industry.
New Product Watch: Estate Planning Software For Advisors. While this month’s EverPlans announcement, tied to its EverPlans Professional solution, is the big news, it’s notable that in recent months there have been several new technology solutions that have hit my radar screen, specifically to help with estate planning. One option worth checking out is YourEfolio, which has similar-to-EverPlans estate document storage capabilities, but can also help advisors actually analyze and evaluate a client’s estate planning documents to make recommendations. And EstateGen is a new software solution created to make it easier to diagram the flow of assets in a client’s estate plan – while written originally for lawyers, the software may be very appealing for financial advisors who regularly assist clients in the estate planning process, and are tired of trying to produce estate flowcharts in PowerPoint or Prezi! Or course, the reality is that the volume of “complex” estate plans has crashed in the past 15 years, with the availability of portability drastically curtailing the need for even a bypass trust, so it remains to be seen whether “estate planning software” will catch on for any advisors beyond those who work with the most ultra-high-net-worth clientele who still have a Federal estate tax problem.
For further coverage of AdvisorTech news, be certain to also check out Bill Winterberg’s FPPad, Joel Bruckenstein’s T3TechnologyHub, and Craig Iskowitz’ Wealth Management Today.
And if you’re an #AdvisorTech company who wants to submit a tech announcement for consideration in future issues, please submit to [email protected]!
So what do you think? Have you checked out RightCapital or EverPlans? What do you use for video meetings and online scheduling? Was there another announcement in the past month that we should have covered but didn’t!? Please share your thoughts in the comments below!
Michael, I love the idea of recurring blog posts on the technology side of the business! I still wonder how you have the time to churn out so much writing and speaking content while still seeing your family. 🙂
– Elliott Weir, III Financial