Big-name advisers jump into data aggregation arena to back Quovo

Ron Carson, Steve Lockshin and Marty Bicknell among those investing as the personal financial information market heats up

Sep 1, 2015 @ 9:00 am

By Alessandra Malito

Lowell Putnam, co-founder and CEO of Quovo
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Lowell Putnam, co-founder and CEO of Quovo

Some of the wealth management industry's biggest entrepreneurs have put their faith — and their money — behind Quovo, a data-analytics and account-aggregation platform.

Fintech Collective led the data company's latest funding round of $4.75 million. Long Light Capital, which lead Quovo's seed funding, participated, along with wealth management industry heavy hitters Ron Carson, founder of Peak Advisor Alliance; Steven Lockshin, founder of AdvicePeriod and partner at Betterment; and Marty Bicknell, chief executive of Mariner Wealth.

This vote of confidence in Quovo's business model is yet another example solidifying the notion that personal financial data aggregation — part of the larger “big data” trend — will be the next push for advisers. They will be able to analyze personal financial data and aggregate client accounts to manage portfolios with each individual's bigger picture in mind. They can also use it to upgrade their own firm's software and client-facing websites and apps.

Mr. Carson said account aggregation is not mainstream among registered investment advisers and broker-dealers just yet, nor will it be for a while — however, it will provide that competitive edge for advisers who are early adopters.

"[This] is going to give the ultimate transparency to the adviser and the investor," Mr. Carson said. "I believe our future is going to be driven by meritocracy. If we aren't providing value, we aren't going to get paid."

Data aggregation entails not only collecting the information from various personal accounts, but also working with clients to focus on their cash flow, spending habits and the structure of their investments.

"Instead of passing off data about accounts, it is giving richer, deeper insights," said Lowell Putnam, co-founder and chief executive of Quovo. "It's continuing to move business intelligence, so we don't just tell you what the data is but what it means for your practice."

Using personal financial data through account aggregation is not a new concept in the industry, though advisers have taken their time to implement it in their practices. Mr. Lockshin said the industry is only scratching the surface with data aggregation usage.

"That's typical for our industry," he said. "We are totally late at adopting technologies."

Last year, Morningstar acquired ByAllAccounts, a data aggregator.

Last month, Envestnet, another large technology provider for the financial services industry, acquired Yodlee, a direct competitor of Quovo.

Financial planning software programs also include data analytics. For example, MoneyGuidePro integrated with Wealth Access, a personal financial management platform.

"There's no lack of great technology, just a lack of great execution," said Paul Cloutier, founder of Levanto Financial, a service that gauges personal financial information for high-income earners and creates a plan of action for those clients. He said he started his company because people needed a way to act on personal financial data for the future, not just see it all in one place, like Mint.com offers.

"It is not something a planner or adviser would do," Mr. Cloutier said. "They're not going to roll up their sleeves or dive into a budget or credit card debt ... It's not AUM."

Neal Quon, co-founder of QuonWarrene, a technology consulting firm for the financial services industry, said data-aggregation initiatives have been met with challenges in the past, due in part to the fact that the process was never seamless and there was a lack of data standardization enabling data to flow smoothly across a firm. All the data in the world is of no use if advisers can't access the information and use it easily.

Still, companies across the industry have either been created or integrated with start-ups to offer greater insight into clients' held-away assets and liabilities.

"The value of aggregation is really important now, especially as the conversation about robo-advisers evolves," Mr. Quon said. "There's always a constant dialogue around advisers continuing to add extra value to that client relationship."

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