Nerd's Eye View blog

Weekend Reading for Financial Planners (July 15-16)

July 14, 2017 02:50 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with a new Schwab RIA Benchmarking study, that finds despite the hubbub of robo- and other competitive threats, the independent RIA community has continued to grow assets at 10%/year over the past 5 years, although the fastest-growing firms are increasingly combining referral-based marketing with other forms of marketing and business development beyond referrals alone. Also in the news this week is a Boston Consulting Group study finding that in the aggregate, gross revenues of the asset management industry declined in 2016 (for the first time since 2008), even though total industry assets were up by 7% to $69 trillion, as the shift to low-cost products continues to take its toll. And the SEC has approved the FINRA proposal to revamp its traditional "Series" licensing exams, and roll out a new Securities Industry Essentials (SIA) exam that prospective new brokers can take, even if they're not yet sponsored with a broker-dealer.

From there, we have several articles on the theme of health insurance and Medicare, including a look at how uncertainty over health care policy in Washington is making it harder for advisors to craft effective recommendations for clients considering early retirement (who are uncertain whether they will still be able to access cost-effective health insurance without being limited for pre-existing conditions in the future), how the Social Security COLA is likely to be 2% this year but will be mostly consumed by the unwind of 2015's "Hold Harmless" provisions on Medicare Part B premiums, and proactive planning strategies and talking points for (prospective or current) retirees who are approaching age 65 and need to make decisions about Medicare.

We also feature several articles specifically focused on financial advisor marketing, from advice on how to sharpen up your core marketing messages to prospective clients (without needing to spend money on a marketing expert), to a series of marketing tips from a wide-ranging interview of advisor marketing experts, and a look at the concept of a "marketing nest" and how it differs from a "marketing niche" as a way to accelerate near-term growth for the firm (though while the nest may be best in the short term, the niche is still best strategically in the long run).

We wrap up with three interesting articles, all looking at the ongoing evolution of the "soft skills" of financial planners, and what it takes to be successful: the first is a Journal of Financial Planning study, looking at how "behavioral finance" and financial therapy techniques can be incorporated into the 6-step financial planning process; the second is a discussion of "active listening" and how developing the skill (yes, it is a skill) can improve your communication (with clients, and even with your spouse!); and the last is a look at what it takes to gain more confidence as a financial advisor, recognizing that if you don't truly believe in what you do and that you can help your clients, that lack of confidence means your clients probably won't believe in your value, either, so building personal confidence is crucial for business success (whether that means finding support at home, joining a study group, gaining education or experience, or whatever else it takes!)!

Enjoy the "light" reading!

How Should You Split Equity And Compensation When Multiple Advisors Partner Together?

July 13, 2017 01:06 pm 2 Comments CATEGORY: Practice Management

One of the "luxuries" of operating as a solo financial advisor is the simplicity of dealing with advisor compensation: the gross revenue of the business, minus your costs, is your net income as the advisor/owner. However, at some point in time, many advisors will consider launching a multi-advisor partnership – either as a means to share (and split) growing overhead costs, or perhaps to try to build a multi-advisor "ensemble" firm that is bigger than what any one advisor can create on his/her own. Yet in the process of shifting to a multi-advisor firm, especially when merging together multiple existing firms with varying numbers of existing clients and revenue, it's necessary to navigate the messy process of determining how to split equity and partner compensation in the new business entity!

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we discuss ways in which financial advisors choose to split equity and partner compensation when forming a multi-advisor business, and why the structure of the arrangement depends on heavily what type of firm you're ultimately trying to grow in the first place!

Historically, the most common reason to form a multi-advisor firm – whether as an RIA, or more often on an independent broker-dealer platform – was to share and split overhead costs (e.g., office rent, administrative staff, and perhaps gain some bargaining power to get a better payout rate as a group of advisors). In this context, all of the advisors still took their "own" revenue from their own clients, and the primary or sole purpose of the business was really just to split the costs. As a result, the "equity" split was really just a reflection of how to split the costs themselves, and all partners were compensated based on their own individual client revenue (reduced by those shared costs).

On the other hand, with some multi-advisor firms, the goal is actually to build a true standalone business, in which all the advisors contribute to the growth and success of the business (i.e., an "ensemble" firm) that is larger than any one of them alone. With this type of partnership, equity and compensation dynamics are different: the primary driver of value and wealth creation is not client revenue (less expenses), but net business profits and the (slice of) equity value of the aggregate business. Which means taking uniform salaries based on job descriptions (not revenue-based compensation from clients), plus perhaps a bonus for business development, and deriving most long-term value directly from the equity itself.

If the ensemble firm is being created from scratch, this typically results in an even equity split amongst all the partners. However, in most cases, at least some of the advisors already have existing clients and revenue, which may be uneven when they come to the table. Which means it's necessary to either set the ownership percentages based on the relative amount of revenue that’s being brought to the table in the first place (e.g., if a partner brings 70% of the revenue they receive 70% of the equity), or to equalize ownership at the start through a buy-out (e.g., if one partner brings 70% of the revenue the other partner buys them out of 20% and each gets 50% equity). The advantage to the latter strategy is that if growth between partners is relatively equal going forward, then each partner has an equal incentive to grow the firm, and receives an equal benefit for doing so.

The key point in all of this, though, is simply to recognize that there’s a big difference between forming a “let’s share the overhead costs” multi-advisor partnership, where each advisor keeps their own client revenue and their goal and upside is to build their own client base, versus a true “ensemble practice” where you’re trying to build the shared equity value and the upside isn’t your client revenue but your participation in the bottom line profits of a growing business entity. Because if you want to build an ensemble business, and the other partners just thought of this as a cost-sharing partnership… the visions are so different that, regardless of how equity and compensation are split, this partnership isn’t likely to go well!

Why The Net Unrealized Appreciation (NUA) Rules Aren’t Always A Great Deal

July 12, 2017 07:02 am 69 Comments CATEGORY: Taxes

In many large (publicly traded) businesses, it’s common to reward employees with employer stock, often granted directly in/through a profit-sharing or ESOP plan, or at least by allowing employees to purchase shares themselves inside of their 401(k) plan. The advantage of this strategy is that it helps to encourage an “ownership mentality” of the employees – who literally become (small) shareholders of the business. The disadvantage, however, is that when employer stock is purchased/owned inside of a retirement account, it is ultimately taxed as ordinary income when withdrawn (as is the case for any distribution from a retirement account), and loses the opportunity to take advantage of favorable long-term capital gains rates.

To help resolve the situation, though, the Internal Revenue Code allows employees a special election to distribute appreciated employer stock out of an employer retirement plan, and have the “Net Unrealized Appreciation” (i.e., the embedded capital gain) taxed at favorable capital gains rates outside of the account. However, to take advantage of these special NUA rules, there are specific requirements – that the stock must be distributed in-kind, as part of a lump sum distribution, after a specific triggering event.

The good news of the NUA strategy is that it creates an opportunity to convert unrealized gains from ordinary income rates into lower tax rates on long-term capital gains instead. However, the caveat is that in order to use the NUA rules, the account owner must report the cost basis of the stock immediately in income for tax purposes, and pay taxes at ordinary income rates. In addition, if the NUA stock is quickly sold, that long-term capital gains bill immediately comes due, too.

Which means in reality, the NUA rules don’t merely allow for the gains to be taxed at lower rates. They cause the gains to be taxed at lower rates immediately (at least if the stock is sold immediately), in addition to triggering ordinary income taxation of the cost basis immediately, when all of those tax liabilities might otherwise have been deferred for years or even decades. Which means deciding whether to take advantage of the NUA strategy or not is really more of a trade-off, than a guaranteed tax savings success.

As a result, the best practice for NUA distributions is to really scrutinize the cost basis of the employer stock inside the qualified plan, and if necessary cherry pick only the lowest-basis shares for the NUA distribution to ensure the most favorable tax consequences. Fortunately, the NUA rules do allow such flexibility – to take some shares in-kind, and roll over the rest – but that still means it’s necessary to actually do the analysis to determine whether or how many of the NUA-eligible shares should actually be distributed to take advantage of the strategy (or not)!

#FASuccess Ep 028: Scaling Up A $6B Independent RIA Using A Full-Time CEO As Chief Inspiration Officer with Michael Nathanson

July 11, 2017 07:01 am 4 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the twenty-eighth episode of the Financial Advisor Success podcast!

My guest on today's podcast is Michael Nathanson. Michael is the CEO of The Colony Group, a private wealth management firm based in the Boston area that has nearly $6 billion of assets under management. The Colony Group has managed to systematize its wealth management and investment solutions to the point of driving a whopping 39% profit margin, and nearly quadruple the size of the firm in just the past 5 years alone, through a combination of both a series of major acquisitions, and organic growth across multiple niches - including corporate executives, athletes and entertainers, and an ultra-high-net-worth family office division.

What's unique about Michael, though, is how he functions as a true CEO of the Colony Group - where as he puts it, his primary job is to be the "Chief Inspiration Officer" that sets the vision for the firm, and tries to get their more-than-100 employees excited about achieving it, with a focused strategy to attract, develop, engage, and retain the top talent in the industry.

In this episode, Michael gives a behind-the-scenes look at how a large independent RIA thinks and operates, where the investment management duties are entirely separated from the wealth managers (who help clients select strategies, formalized in an Investment Policy Statement, but let the investment management team actually run and manage the portfolio), the firm has formalized its career track into a progression from associate to senior associate to financial counselor to senior financial counselor, and partners have formalized criteria to buy units of their LLC entity (with financing arranged by the firm).

We also talk about how Colony Group built its core technology stack with a combination of Tamarac, Junxure, and eMoney Advisor, its compensation policy for all the advisors in the firm, and how the Colony Group differentiates itself with prospective clients its four Es - Expertise, the Entirety of its comprehensive services, its Enhanced open architecture, and its ability to execute as an Enterprise.

And be certain to listen to the end, where Michael talks about what he sees as the true threat for advisory firms in the future - where it's not about fee-compression, robo-advisors, DoL fiduciary compliance, or the generational shift to Millennials... but instead is all about the ability of the firm to keep its people inspired to achieve the vision of the firm. Because if the team doesn't believe, then the firm won't be able to execute.

So whether you’re trying to grow your own advisory firm to become a mega-RIA, or simply want some perspective on what it’s like inside a large independent advisory firm, and the role of a true CEO, I hope you enjoy this latest episode of the Financial Advisor Success podcast!

Optimal Design Of A Financial Advisor’s Office: Insights from the Financial Planning Performance Lab

July 10, 2017 07:01 am 16 Comments CATEGORY: Practice Management

The traditional financial advisor's office is setup with a desk that the advisor sits behind, and chairs for clients to sit across. Alternatively, many financial advisors use an office conference room to meet with clients, but the arrangement is similar: a large conference room table, with the financial advisor sitting on one side, and clients sitting on the other. To the extent that any further thought goes into the office design, it's mostly focused on which type of furniture to buy, what paintings should go on the wall, and other classic elements of office interior design.

Except as it turns out, the look of a financial advisor's office goes far beyond just setting the interior design decor, and establishing a sense of perceived professionalism for clients. In this guest post, Dr. John Grable of the University of Georgia shares some thoughts, ideas, and research on how to best design a financial advisory office... all the way down to some specifics on the use of light, sound, smell, texture, and temperature to create a more comfortable atmosphere for clients that is conducive to helping them make good financial decisions!

Because it turns out the reality is that how an advisor's office is arranged really does impact their ability and comfort level to make decisions. In fact, everything from the color of the walls, to the kinds of artwork that hang on the walls, and even the type and configuration of office furniture, has been found to have an impact on client stress levels, which in turn can adversely affect their willingness to make a decision!

So whether you've given a lot of thought to your office environment as a tool in the planning process, or none at all (but now realize that perhaps you should have!), I hope Dr. Grable's exploration of some of the scientific evidence can help guide you to design (or update) your advisory office environment… and that, in turn, can help you make your office more comfortable to clients, allowing them to make better financial decisions, and increase client satisfaction!

Weekend Reading for Financial Planners (July 8-9)

July 7, 2017 02:55 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the latest of DoL fiduciary news, including the revelation that the Justice Department does not intend to defend the "class action lawsuit" provision of the fiduciary rule in the current Appeals lawsuit that fiduciary opponents have filed, a memo from LPL that indicates it expects the DoL fiduciary rule to stick and will be limiting the ability of its brokers (but not those on its RIA platform) to solicit 401(k) rollovers (suggesting that LPL may be pivoting its entire business to be more RIA-centric), and an announcement from Raymond James that it will be converting the payout grid for its independent channel to be entirely "product-neutral" with just a straight revenue-based payout (starting at 81% and rising as high as 90% for top producers).

From there, we have a few practice management articles this week, including a look at when to think about using debt proactively as a business management tool in advisory firms (especially since private equity investors often demand more in dividend payments than lenders demand in interest payments!), when you consider soliciting input from clients when making a potentially significant business decision, and how to create a "Client Retreat" event to deepen the relationship (and the breadth of solutions) for your clients.

We also feature several articles specifically focused on finding work-life balance, whether as an advisory firm owner or an advisor employee, including how to approach the work-life balance question as an employer (it's all about setting clear expectations of what it takes to succeed in the firm), how to change your situation if you're an employee unhappy with your balance (it's all about starting the conversation with your firm/supervisor about what you want to change, and discussing ways to make it work for both parties), and how financially successful "lifestyle practices" can actually be (the idea that a lifestyle practice with good work/life balance can't also be profitable is a myth... at least when done right!).

We wrap up with three interesting articles, all from people who have experienced early retirement or extended sabbaticals, talking about what they learned that surprised them about retirement (or a "faux retirement" sabbatical) in their first year. Key points included that more time at home makes it far easier to eat healthy and exercise more, but that the "best" days are still the ones where there's something to "do" when you wake up, that you may find even more opportunities coming to you once you're retired (which means you need to be careful to figure out what filters you will use to decide whether to say "yes" or "no" when they come along!), and that while you'll have more time to deepen spousal and other family relationships, don't underestimate how much you may miss the social environment and camaraderie of your "work family" as well!

Enjoy the "light" reading!

What’s Your Filter For Saying “No” To Prospective Clients?

July 6, 2017 02:52 pm 6 Comments CATEGORY: Practice Management

Being a financial advisor is about helping people with their finances. Which makes it very hard for most financial advisors to say "no" to those who ask for help. Especially given the business reality that at least some growth is usually essential to keep the advisory firm economically viable and sustaining. And for most financial advisors, growth opportunities and new prospective clients don't come along very often.

Yet the challenge is that we are all constrained to the same limited number of hours in the day, week, month, and year... which means it's simply not possible to say "yes" to everyone, forever. At some point, continuing to say "yes" simply means we take on so much that we can't even do everything we said "yes" to. Or we end up saying "no" once we feel overwhelmed and out of time - where there's no choice but to say "no". Which means our “filter” for figuring out what to say yes and “no” to is “whoever asks me first gets a yes, and whoever asks me last gets a no”. And when you think about it, “who asks first” is not really a good way to decide how to allocate your precious limited time!

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we discuss why as financial advisors, we need to actively think about what kind of filters we use to say "no" to prospective clients and business opportunities, and how those filters tend to change over the course of our career and business growth as a financial advisor!

Of course, when most financial advisors get started, the reality is... you have a lot of time, and not a lot of clients. As a result, the filter for who to accept is usually little more than "anyone who can actually pay me anything". However, as an advisory business continues to grow, eventually you reach a point where you’re seeing about all the clients that anyone has time to see (perhaps 75-100 clients?), and once you hit capacity, you simply can't take on any new clients. At this point, revenue stops growing, and if you want to get it to start growing again, the optimal solution changes: now, it's about getting paid more for each client you work with. Which means the second filter for deciding what to say "no" to, often becomes "am I getting paid enough for my time to work with this client?" At this stage, advisors typically start to target a value of their time (e.g., $150/hour, or $200/hour, or more), and use that as a filter to decide whether a relationship is profitable.

For a lot of advisors, the filter of “will this client pay me enough to be worth my time” is the last filter they’ll ever use or need (and they simply keep raising the dollar amount over time). But for advisors who are thinking longer term about how to build a business, this isn’t necessarily tje best filter. Because sometimes the client who pays the most or is the most profitable now isn't necessarily the best long-term value for the business. For instance, clients who pay one-time commissions or planning fees aren't necessarily as valuable as those who pay smaller-but-ongoing recurring retainer or AUM fees, and clients who have strong referral networks can similarly generate more long-term value for the business (through their referrals) even if they don't pay as much for your time today. Which means considering that "long-term multiplier effect" of some prospective clients over others becomes an important filter to decide who to say yes or "no" to!

But eventually, the challenge that comes for some advisors is that we get to the point where we have the money we need to have "enough". And suddenly, these filters about getting paid enough money, or generating long-term business value, stop "working" as effective filters to make us happy with how we're spending our time. Instead, the filter shifts... often to a focus on an "ideal client profile"... such as those who not only pay you well, but those who are willing and happy to delegate, and actually show their appreciation for the value of your advice. In other words, the filter is no longer about whether it's an economically viable client, but also whether it's one who is fun and pleasant to work with in the first place. And some advisors even go a step further, applying an additional filter of their own core values, and filtering out any prospective client who doesn't fit the advisor's own core values.

Of course, much of the progression only happens as an advisor's business becomes successful enough to enable it. Filtering based on core values won't work very well for an advisor just getting started and who needs to grow their revenue, just as a filter based on revenue doesn't work very well for those who already have the income they want and need. But ultimately, it is important to acknowledge that our time is limited, and we need some filter to determine what we say "no" to! If we don't we'll end up allocating our time based on saying "yes" to whoever asks first, which doesn't work very well regardless of what stage our business is in!

Does Monte Carlo Analysis Actually Overstate Tail Risk In Retirement Projections?

July 5, 2017 07:01 am 44 Comments CATEGORY: Retirement Planning

The most common criticism of using Monte Carlo analysis for retirement planning projections is that it may not fully account for occasional bouts of extreme market volatility, and that it understates the risk of "fat tails" that can derail a retirement plan. As a result, many advisors still advocate using rolling historical time periods to evaluate the health of a prospective retirement plan, or rely on actual-historical-return-based research like safe withdrawal rates, or simply eschew Monte Carlo analysis altogether and project conservative straight-line returns instead.

In this guest post, Derek Tharp – our Research Associate at Kitces.com, and a Ph.D. candidate in the financial planning program at Kansas State University – analyzes Monte Carlo projection scenarios relative to actual historical scenarios, to compare which does a better job of evaluating sequence of return risk and the potential for an "unexpected" bear market... and finds that in reality, Monte Carlo projections of a long-term retirement plan using typical return and standard deviation assumptions are actually far more extreme than real-world historical market scenarios have ever been!

For instance, when comparing a Monte Carlo analysis of 10,000 scenarios based on historical 60/40 annual return parameters to historical returns, it turns out that 6.5% of Monte Carlo scenarios are actually worse than even the worst case historical scenario has ever been! Or viewed another way, a 93.5% probability of success in Monte Carlo is actually akin to a 100% success rate using actual historical scenarios! And if the advisor assumes lower-return assumptions instead, given today's high market valuation and low yields, a whopping 50% to 82% of Monte Carlo scenarios were worse than any actual historically-bad sequence has ever been! As a result, despite the common criticism that Monte Carlo understates the risk of fat tails and volatility relative to using rolling historical scenarios, the reality seems to be the opposite – that Monte Carlo projections show more long-term volatility, resulting in faster and more catastrophic failures (to the downside), and more excess wealth in good scenarios (to the upside)!

So how is it that Monte Carlo analysis overstates long-term volatility when all criticism has been to the contrary (that it understates fat tails)? The gap emerges because of a difference in time horizons. When looking at daily or weekly or monthly data - the kind that leveraged investors like hedge funds often rely upon - market returns do exhibit fat tails and substantial short-term momentum effects. However, in the long run - e.g., when looking at annual data - not only do the fat tails entirely disappear, but long-term volatility actually has a lack of any tails at all! The reason is that in the long-run, returns seem to exhibit “negative serial correlation” (i.e., mean reversion – whereby longer-term periods of low performance are followed by periods of higher performance, and vice-versa). Yet by default, Monte Carlo analysis assumes each year is entirely independent, and that the risk of a bear market decline is exactly the same from one year to the next, regardless of whether the market was up or down for the past 1, 3, or 5 years already. In other words, Monte Carlo analysis (as typically implemented in financial planning software) doesn't recognize that bear markets are typically followed by bull markets (as stocks get cheaper and eventually rally), and this failure to account for long-term mean reversion ends out projecting the tails of long-term returns to be more volatile than they have ever actually been!

The bottom line, though, is simply to recognize that despite the common criticism that Monte Carlo analysis and normal distributions understate “fat tails”, when it comes to long-term retirement projections, Monte Carlo analysis actually overstates the risk of extreme drawdowns relative to the actual historical record – yielding a material number of projections that are worse (or better) than any sequence that has actually occurred in history. On the one hand, this suggests that Monte Carlo analysis is actually a more conservative way of projecting the safety of a retirement plan than "just" relying on rolling historical returns. Yet on the other hand, it may actually lead prospective retirees to wait too long to retire (and/or spend less than they really can), by overstating the actual risk of long-term volatility and sequence of return risk!

#FASuccess Ep 027: Reaching HNW Prospects Leveraging Targeted Research and Introductions with Amy Parvaneh

July 4, 2017 07:01 am 2 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the twenty-seventh episode of the Financial Advisor Success podcast!

My guest on this week’s podcast is Amy Parvaneh. Amy is the founder of Select Advisors Institute, a practice management consulting firm with a focus on helping financial advisors to grow through targeted referrals of high-net-worth prospects, and providing them the sales and business development coaching that's needed to ensure those prospects actually close when the opportunities come.

What's fascinating about Amy, though, is how she put these techniques to use in growing her own career as a financial advisor. Because Amy started out as a 26-year-old working in wealth management at Goldman Sachs, and managed to grow her asset base to more than $50M in just 18 months, primarily through COLD-calling and COLD-emailing! But Amy didn't just target anyone with her cold-calling efforts; instead, she spent her Sundays every week preparing to execute a highly targeted, research-based effort to network her way directly to high-net-worth prospects, by figuring out exactly what it would take to reach them, and how to get to them.

In this episode, Amy talks about the exact strategies that she used to succeed in business development with ultra-high-net-worth prospects from such a young age, how she identified the potential prospects she could reach out to, the way she researched them to figure out what the best way was to actually work around their gatekeepers and reach them, how she leveraged not just referrals but targeted introductions from her personal network and growing client base to reach the exact prospects she wanted to reach, and how she used that information to craft a cold message to them that still got a whopping 80% response rate.

And be certain to listen to the end, where Amy talks about how she's expanded her success in sales and business development with high-net-worth prospects into a program she calls Referralytics, where she trains advisors on how to utilize her system of targeted, research-based referral introductions to grow their own advisory firms.

So whether you’re struggling to figure out how to even reach ultra high net worth prospects, or even where to find them in your local market, or want ideas about how what it takes to actually sell to and close high net worth clients – even and especially when they weren’t already referred to you – I hope you enjoy this latest episode of the Financial Advisor Success podcast!

The Latest In Financial Advisor #FinTech (July 2017)

July 3, 2017 07:01 am 4 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the July issue of the Latest News in Financial Advisor #FinTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors and wealth management!

This month's edition kicks off with the big release of Riskalyze’s new Autopilot platform, which has morphed from “just” a robo-onboarding tool for a TAMP, into a full trading and rebalancing solution that operates as a “Model Marketplace” allowing advisors access to third-party managers and their models for a cost of 10 – 15bps. But the real news is that Riskalyze is also launching a series of its own proprietary “Risk Number Models”, which will be made available for “free” to advisors… because their clients using those models will then be invested at least in part into a series of new Riskalyze “smart beta” proprietary ETFs charging 0.50% to 0.77% expense ratios, as Riskalyze uses its big $20M Series A round to pivot from being “just” a FinTech solution into a proprietary ETF manufacturer that uses its technology to help distribute its own asset management products.

From there, the latest highlights also include a slew of new venture capital announcements, including:

Advizr financial planning software raises a whopping $7M Series A from Franklin Templeton and SEI, despite having only 400 independent advisory firms (and reporting another 500 firms via enterprise) and what is likely no more than $1M to $2M in estimated annual revenue after 2.5 years of growth (admirable growth for a start-up, but seemingly small for the amount of capital being raised... unless the company is planning a pivot?).
RightCapital financial planning software raises a second $1.6M seed round, as the upstart gains momentum with 800 advisory firms, a series of new RIA enterprise deals, and positive word of mouth as it earns the top User Rating from the recent T3 Tech Hub Advisor Software survey, and also a TD Ameritrade Advisor Satisfaction Award.
Addepar raises a monstrous $140M Series D round, as the high-net-worth portfolio accounting and performance reporting tool appears to be making a high-stakes bet that the future of high-net-worth investing will increasingly be a combination of publicly-traded securities and hard-to-value private market stocks.
Trizic adds another $2.5M seed investment from PEAK6, the owner of Apex Clearing, as Apex secures its third robo-advisor-for-advisors platform as a distribution channel to compete for RIA custody business against Schwab, Fidelity, and TD Ameritrade.

You can view analysis of these announcements and more trends in advisor technology in this month's column, including Morningstar’s growing focus on incorporating behavioral finance into its software, a new retirement planning software solution that allows advisors to quickly create a Withdrawal Policy Statement for clients, the use of “video performance reports” to humanize the robo-advisor experience, and the news that beginning in 2019 the CFA Institute will be incorporating a wide range of FinTech topics into its CFA exam and curriculum as FinTech begins to change the very nature of financial services jobs themselves!

I hope you're continuing to find this new column on financial advisor technology to be 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]!