Outside voices and views for advisers

The latest in financial adviser #FinTech

This month's edition kicks off with the big news that Personal Capital has crossed $5B of AUM

Sep 5, 2017 @ 4:00 pm

By Michael Kitces

Welcome to the September 2017 issue of the Latest News in Financial adviser #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 advisers and wealth management!

This month's edition kicks off with the big news that Personal Capital has crossed $5B of AUM, and raised another $40M of venture capital as it looks to expand by hiring more financial advisers in multiple major cities across the U.S., as the revenue growth of "cyborg" (tech-augmented human) advisers continues to outpace pure robo-advisers, and Personal Capital's revenue continues to stay ahead of all other major robo-advisers combined, thanks in large part to its innovative Personal Financial Management (PFM) app that serves as the company's client acquisition funnel (even as banks continue to struggle to monetize PFM software solutions at all!).

And also in big news this month is the announcement that Canadian financial planning software company PlanPlus has acquired risk tolerance assessment provider FinaMetrica, raising the question of whether PlanPlus is about to make a push into the U.S. financial planning software market to compete against the likes of eMoney adviser, MoneyGuidePro and NaviPlan.

From there, the latest highlights also include a number of major new partnership announcements this month, including:

• JemStep picks up two major enterprise deals, with the adviser Group broker-dealers, and KeyBank's Investment Services division, as its efforts to integrate with the Pershing platform is finally beginning to pay dividends with its Invesco parent backing;

• Apex Clearing announces yet another partnership, this time with tech-savvy TAMP provider FolioDynamix, setting up a new RIA custodian pricing war in 2018;

• Advicent's NaviPlan rolls out a new integration with Envestnet, and expands the APIs in its Narrator platform; and

• Envestnet's Tamarac announces a new in-depth integration available in the Salesforce App Exchange, despite the fact that Tamarac's own adviser CRM is built on Dynamics!

You can view analysis of these announcements and more trends in adviser technology in this month's column, including Vestwell being selected as the winner of the recent XY Planning Network FinTech competition, WealthAccess rolling out a new Business Intelligence dashboard to roll up adviser/client PFM data into a consolidated business reporting tool, TD Ameritrade rolls out a Facebook Messenger Chatbot as a sign of the future of client service and communication, and the emergence of a new category of "client financial profiling" tools, including ROL Advisor, DataPoints and Whealthcare, that aim to deepen the client relationship far beyond what a mere risk-tolerance profile alone can reveal about a client's attitudes about money.

I hope you're continuing to find this new column on financial adviser technology to be helpful! Please share your comments at the end and let me know what you think!

*And for #adviserTech companies who want to submit their tech announcements for consideration in future issues, please submit to TechNews@kitces.com!

Personal Capital Raises $40M Of Funding, Crosses $5B Of AUM. This month, cyborg advisery platform Personal Capital announced another $40M round of capital, an extension of the prior $75M commitment that IGM made as part of the company's Series E round last year (released in tranches last May and December). The new round of capital coincides with the news that Personal Capital crosses $5B of AUM this month (up from just $3B a year ago), and will reportedly be used to hire additional operations and more financial advisers in offices around the country (including Dallas, Atlanta, New York, L.A., and Chicago) as the company continues to scale up. And notably, while Personal Capital is often compared to other "robo-advisers", in reality it's still a human-based advisory firm simply using technology to communicate with clients (i.e., a "cyborg" adviser), and is also charging "human adviser" prices, with a fee schedule that starts at 0.89% for the first $1M. As a result, when measured by revenue (instead of AUM), Personal Capital has slightly more revenue than Wealthfront and Betterment combined (as $5B of AUM at 0.89% is more revenue than Wealthfront and Betterment's combined $17B of AUM at only 0.25% in fees), and with dramatically more affluent clientele (as 39% of Personal Capital's clientele are over $1M of AUM, also known as its "Private Client Group"). Which simply reinforces that, similar to Vanguard Personal Advisor Services and Schwab Intelligent Advisory, it's the human-based and tech-augmented platforms that are really generating the most actual revenue growth from consumers, while the pure robo-advisers continue to struggle with client acquisition costs and see growth slow. Although in truth, Personal Capital's greatest innovation is not its advice delivery model, but simply its unique client acquisition strategy of developing an industry-leading Personal Financial Management (PFM) app, giving it away to consumers for free, and then contacting every user that meets their minimums to solicit them for advisory services (which Personal Capital states is converting at a 6% rate!); what other advisery firm in history has the means to ensure that 100% of its high-volume purely inbound prospects are (pre-)qualified before ever talking to them!

PlanPlus Acquires FinaMetrica Risk Tolerance Software. Effective Aug. 1st, Canadian financial planning software maker PlanPlus has acquired risk tolerance software FinaMetrica, and will be merged into a single entity called PlanPlus Global. Notably, the acquisition is not expected to materially change the distribution and availability of FinaMetrica, and appears to have been driven by the need for a liquidity event for the founders, as FinaMetrica was established nearly 20 years ago, and co-founder Geoff Davey had already retired from his executive role with the company two years ago. In fact, PlanPlus was arguably particularly well suited for the acquisition, given that FinaMetrica has a substantial user base not only here in the U.S., but also with advisers in Australia (where the company originated), the U.K. and Canada, while PlanPlus similarly provides financial planning software in most of those countries (though it is not widely used here in the U.S.). In those countries, the FinaMetrica acquisition gives PlanPlus the opportunity to both integrate FinaMetrica more deeply into its financial planning software and recent "robo" tool MiPlan, and also a chance to offer FinaMetrica to its existing financial planning software users. The real question, though, is how the PlanPlus acquisition plays out in the U.S. While there is a risk that with PlanPlus having little presence in the U.S., it will focus its newly acquired FinaMetrica resources in other countries where it has more existing traction, the sheer size of the existing FinaMetrica adviser base here in the U.S. suggests it is more likely that PlanPlus uses the deal as an opportunity for growth by attempting to cross-sell PlanPlus to existing FinaMetrica users. Especially since PlanPlus CEO Shawn Brayman is a member of the U.S. Financial Planning Association's Board of Directors, suggesting that PlanPlus is aiming to grow with U.S. advisers. At a minimum, though, the deeper technology and development resources of PlanPlus should help FinaMetrica to continue upgrading its software capabilities and depth of integrations in the coming years.

Vestwell Wins XYPN FinTech Competition. Last week, the XY Planning Network hosted its second annual Advisor FinTech competition at its national conference, and out of the seven finalists, the winner was Vestwell, the new 401(k) and 403(b) "robo" technology platform for advisers. Notably, though, unlike other "robo" 401(k) solutions like Betterment for Business, the Vestwell solution was built from the start to be used by advisers. Co-founded last year by Aaron Schumm – who previously built and sold the tech-savvy TAMP FolioDynamix for nearly $200M – Vestwell is aiming to provide a similar turnkey solution in the 401(k) space, by overlaying on top of recordkeepers and investment managers to make it easier (for both advisers and companies and their employees) to handle plan design, onboard plans and plan participants, and Vestwell can even serve as a 3(21) or 3(38) fiduciary (or provide full 3(16) plan administrator services). The company is aiming to work primarily with RIAs serving the "small" employer retirement plan space (with plans less than $50M of AUM) … including RIAs that previously found it too onerous to support their clients' 401(k) plans, but may be willing to add in 401(k) services with Vestwell's 401(k) TAMP solution!

JemStep Gaining Momentum In Enterprise B2B Robo Marketplace? In the past two months, robo-adviser-for-advisers JemStep has announced two major enterprise deals – first up was the launch of its digital onboarding and account aggregation tools with Advisor Group (which collectively supports thousands of brokers through subsidiary broker-dealers Royal Alliance, FSC, SagePoint, and Woodbury Financial), and second was the rollout of JemStep Advisor Pro to Key Investment Services (the broker-dealer division and investment advisory division of KeyBank). The deals appear to be an extension of JemStep's early decision to integrate deeply with Pershing's API, both KIS and AdvisorGroup use Pershing's clearing services, thus making JemStep relatively easy to adopt and integrate. And notably, JemStep appears to be benefiting from its acquisition by Invesco last year, as in a world where it's not entirely clear which robo tools will survive, KIS President Marc Vosen explicitly noted that Invesco's backing – to "know they will be there tomorrow" – was a key factor in the decision to select JemStep. Ironically, though, it's notable that JemStep has recently had its own leadership changes, as co-founder and original CEO Kevin Cimring appears to have quietly stepped down from leadership (or left the company entirely?) in recent months, and prior JemStep president Simon Roy is now serving as both the company's President and CEO.

WealthAccess Rolls Out "Firm Insight" Business Intelligence Dashboards. WealthAccess is an independent Personal Financial Management (PFM) client portal solution for advisers to use with their clients, which takes account aggregation feeds to show clients a holistic view of their entire balance sheet and household cash flows. Of course, the reality is that if an adviser uses the WealthAccess portal for all their clients, there's value not only in showing clients their entire financial situation, but also for the adviser to gain insights into the rolled-up details of their entire clientele. Accordingly, WealthAccess has now rolled out the first version of its Business Intelligence dashboard, dubbed "Firm Insight," which can help advisers see the total depth of their clients' wealth, as well as identify new business opportunities. At the firm level, executives can also gain a better understanding of the wealth potential of one adviser's client base versus another's, whether to make decisions about resource support decisions, or to spot training opportunities for advisers to deepen their relationship with certain clients. In fact, the business potential of better oversight of advisers and their client opportunities (powered by account aggregation data feeds) is so significant, that it's likely more and more account aggregation and client PFM portal solutions will offer similar solutions in the coming years, as such dashboards become a key business management tool for larger multi-adviser enterprises.

Apex Clearing Announces New Partnership Deal With FolioDynamix. Continuing a multi-month series of major deals, in August Apex Clearing announced a new partnership deal with tech-savvy TAMP provider FolioDynamix. As with other recent Apex partnerships, including InvestCloud in July, Trizic in June, RobustWealth in May, and Vanare | Nest Egg (now adviserEngine) last year, the deal is one that will allow FolioDynamix's technology tools to be used on top of the ultra-low-cost Apex Clearing platform, as Apex continues to bet that in an increasingly commoditized custody and clearing business, its lowest-cost solution (rumored to have asset-based pricing as low as 6bps!) will win out once investment technology companies make them available as a platform. After all, if an adviser is already using various tools like AdvisorEngine, InvestCloud, Trizic, RobustWealth, or now FolioDynamix, and those solutions are already multi-custodial, it becomes little more than "the click of a button" for the adviser to switch to the lower cost Apex platform (with the caveat that clients still have to agree to the change, of course!). But it still remains to be seen whether advisers will actually be willing to make the switch when the time comes. However, the mere fact that Apex is increasingly available through a growing range of technology intermediaries means a new round of pricing competition is likely coming soon to Schwab, Fidelity, and TD Ameritrade, as advisers increasingly start to ask "why wouldn't we switch our clients to Apex, using our existing technology … unless you cut your custody and trading fees to match Apex's pricing…" Expect new RIA custody pricing wars in 2018!

Advicent Expands APIs As NaviPlan Catches Up On Integrations.Despite, or perhaps because of, its long-standing history as one of the "original" financial planning software solutions, NaviPlan was one of the last financial planning software solutions to migrate to the cloud, only finally winding down its desktop version at the end of 2013, and long rumored to struggle with a large separate of discrete enterprise deployments throughout the 2000s that made it difficult to innovate its core code base. In recent years, though, the software has been steadily rearchitected, with an adviser and client portal dubbed "Narrator," which companies can use as a sandbox to leverage NaviPlan (and other Advicent) APIs for customization and integrations. And after several years of building, Advicent now appears to be gaining some momentum to its integration strategies, with the announcement of a major deal to integrate with Envestnet to pass Envestnet client and account details to NaviPlan (which is significant, as Envestnet already deeply integrates with its own FinanceLogix software since acquiring it 2 years ago). In addition, Advicent also announced this month that it is further expanding its API capabilities in Narrator, for everything from wealth management to lead generation and digital data gathering, and is rolling out a new API developer portal to support further API integrations. Which still leaves NaviPlan and Advicent behind the depth of native integrations that FinanceLogix has with Envestnet, or that eMoney adviser has built over the years (and scaled up with Fidelity's ownership support), but with far more portal API capabilities than MoneyGuidePro, which insists on maintaining its planning-software-only focus (without developing a full PFM portal for its advisers and clients).

Tamarac Launches Salesforce App Exchange Integration Despite Native Dynamics CRM. This month, Tamarac announced that its portfolio reporting and rebalancing software has fully integrated with Salesforce, and will be available via the Salesforce App Exchange. The bi-directional integration will both populate key Tamarac portfolio data directly into Salesforce, and pull Salesforce client details into Tamarac (e.g., when client name and address information is updated in Salesforce, it will automatically update in Tamarac). Given that Salesforce is now the 3rd most popular adviser CRM according to the recent T3 2017 adviser Tech Survey, and a leader amongst the largest independent advisory firms (who tend to be Tamarac users), the decision of Tamarac to integrate is not entirely surprising. Notably, though, Tamarac itself has its own native CRM solution, built from the start on top of Microsoft Dynamics. Which means Tamarac's decision to integrate to Salesforce suggests that it is struggling to switch advisory firms to Dynamics – which isn't entirely surprising, as the growth of Salesforce (and middleware providers building on top of it in the Salesforce App Exchange) has left Dynamics in the dust when it comes to the Financial Services industry. On the plus side for Tamarac, a deep integration to Salesforce and a move away from its native Dynamics CRM solution should open up a wide range of new advisory firms. But it also raises questions of whether this may be the beginning of the end of Tamarac's own Dynamics CRM, especially if Tamarac-Salesforce users begin to outpace the growth and adoption of Tamarac's own CRM in the coming years?

TD Ameritrade Launches Facebook Chatbot As Client Service Moves To Third-Party Platforms. TD Ameritrade recently announced that it is launching a Facebook chatbot – a technology tool that will allow TDA clients to ask, via Facebook Messenger, about their account balances and trade status, and receive instant updates directly via the Messenger platform. On the one hand, the announcement is simply an acknowledgement that good client service is increasingly about going beyond "just" asking a client to use your website or app (or place a phone call to customer service), and instead is about working with clients where they are – which includes the world's largest social media platform, and perhaps soon voice-activated systems like Amazon's Alexa as well. On the other hand, though, the news represents the first step of what may become a fundamental shift in the expectations of where and how advisers must interact with their clients in the future. Of course, as is common with "cutting edge" technology, thus far the early reports of Facebook Messenger chatbots are lackluster – with delays of up to 15 minutes for responses, and "answers" that are often little more than reporting back basic information or responses from a simple list of Q&A answers. And companies like TDA are still working through the messy but crucial steps to authenticate who is a valid Facebook-based TDA user in the first place, to avoid breaching private client information. Nonetheless, the point remains that the basis for interacting with clients is increasingly shifting to digital mediums beyond just the adviser's office, client emails, and telephone calls … and that in the future, advisers (and financial services firms in general) must be prepared to interact with clients through a wider range of communication channels.

Banks Struggle To Monetize PFM Solutions, Even As Adviser Adoption Ramps Up! Over the past few years, there was a flurry of banks acquiring and integrating Personal Financial Management (PFM) software as a potential means to support product cross-selling and expanding wallet share. But now, after apparently lackluster results, a slew are being shut down, including Capital One's Level Money, Prosper Marketplace winding down its Prospect Daily app (the old BillGuard ID-monitoring solution), and SoFi eliminating its Zenbanx solution. Yet even as banks struggle to monetize these various PFM and mobile app solutions, adviser demand for PFM tools continues to grow, from Fidelity's acquisition and growth of eMoney Advisor, to Envestnet's new PFM tools since acquiring Yodlee, the growth of independent adviser PFM solutions like WealthAccess and Oranj, and the fact that virtually every leading financial planning software company now offers a PFM portal for clients (except MoneyGuidePro). A simple look at a tool like eMoney Advisor reveals the strong economics of account aggregation solutions for advisers – at a rate of $200/month (for "just" the client portal and account aggregation), eMoney Advisor generates $2,400/year per adviser, where most advisers will have at most 50 – 100 clients on the platform… which means PFM for advisers is generating a healthy average of $24 to $48/year per (client) user. And Personal Capital has built its entire client acquisition process on the base of "giving away" its PFM app for free, and then using it to identify qualified prospects, and contact them about doing business… bringing in $5B of AUM and a north-of-$500M valuation. Which raises the question – why do PFM providers keep designing solutions for banks and direct-to-consumer channels, when PFM and account aggregation used by financial advisers for wealth management monetizes at drastically better rates and is capable of making far more valuable companies?

The Rise Of Financial Profiling Tools For Advisers. Financial advisers have long used various forms of risk tolerance profiling tools with clients, as a means of addressing basic "Know Your Client" (KYC) requirements regarding their investment implications, though since the arrival of Riskalyze a few years ago, online risk assessment profiling tools as a means of engaging prospects (rather than just doing due diligence on an already-agreed-to-come-on-board new client) has gained rapid adoption. Yet as investment management becomes increasingly commoditized, and the pressure grows to do more comprehensive financial planning beyond just the portfolio, so too are "client profiling tools" being pressured to go beyond "just" risk tolerance assessments and into a more holistic view of the client's financial attitudes. Accordingly, a new category of "financial profiling tools" is beginning to emerge. Arguably, it started with solutions like Financial DNA years ago, which aimed to assess not just a client's tolerance for risk, but their broader financial attitudes. And companies like Money Quotient have long produced (paper) questionnaires that advisers can use to better profile their clients. But more recently, there was the Precise FP/Bob Veres joint venture "Financial Identities," and the recent XY Planning Network FinTech competition featured new financial profiling technology solutions as 2 of its 7 finalists, including ROL adviser (a series of online client profiling tools to support life planning for clients from life planning pioneer Mitch Anthony and Peak Advisor managing partner Steve Sanduski), and DataPoints (which offers psychometrically designed assessment tools to help evaluate a prospective client's wealth-building potential that originated from the Millionaire Next Door research). At a minimum, the evolution of such tools has the potential to shorten the data gathering and discovery process for comprehensive financial planners, as much of what is typically discussed in the first meeting instead shifts to pre-engagement online tools. But ultimately, the evolution of financial profiling tools like ROL Advisor and DataPoints can both help many financial advisers go deeper with clients (especially if they're not accustomed to or trained in having such conversations upfront), and help in systematizing what is otherwise a very one-client-at-a-time process for even the most comprehensive of financial planners.

New Product Watch: Whealthcare. Continuing the theme of new profiling and assessment tools for advisers to use with their clients that go beyond "just" risk tolerance, the new software to watch this month is the release of Whealthcare, which as the neologism implies, focuses on the intersection of wealth and healthcare. Created by physician-turned-financial-planner Dr. Carolyn McClanahan, Whealthcare provides advisers a series of three tools to use with their (aging and retired) clients to evaluate health-care-related issues: the first is a Financial Caretaking assessment, which aims to understand whether clients have the proper plans (and legal documents) in place for continuity of financial caretaking if they are incapacitated or impacted by cognitive impairment; the second is a Risk Profile, which is designed not to assess the client's risk tolerance, but their risk of cognitive impairment (and whether they might already be impaired by the early stages of dementia or Alzheimer's); and the third is a tool to help formulate a Long Term Care plan, where the focus is not how to pay for long-term care needs (e.g., with traditional or a hybrid LTC policy), but what the actual long-term care plan would be (i.e., in what facilities would the client stay, and what would it cost, based on their individual health, and tendencies to utilize doctors and the health care system)? At the least, Whealthcare may help with the growing focus of financial regulators on using financial advisers to identify potential situations of client cognitive impairment or senior fraud or exploitation (e.g., as both FINRA and states are working on proposals where advisers can intervene in such situations). But ultimately, as the pressure continues to grow on financial advisers to demonstrate their value proposition beyond just the portfolio alone, Whealthcare provides a framework of tools that advisers can use to take their relationship with retired clients to a much deeper level when it comes to health care, long-term care, and managing cognitive decline (as McClanahan does in her own advisory practice).

So what do you think? Will Vestwell really be able to make a dent in the challenging small-business employer retirement plan marketplace? Is Apex going to manage to apply competitive pricing pressure against Schwab, Fidelity, and TD Ameritrade? Are PFM software makers missing the mark by not building and marketing solutions to advisers? Will client financial profiling tools that go beyond just risk tolerance really gain traction with advisers? Please share your thoughts in the comments below!

Michael Kitces is a Partner and the Director of Wealth Management for Pinnacle advisery Group, co-founder of the XY Planning Network, and publisher of a continuing education blog for financial planners, Nerd's Eye View. You can follow him on Twitter at @MichaelKitces.


What do you think?

View comments

Recommended for you

Sponsored financial news

B-D Data Center

Use InvestmentNews' B-D Data Center to find exclusive information and intelligence about the independent broker-dealer industry.

Rank Broker-dealers by

Upcoming Event

May 02


Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in four cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video


What's the first thing advisers should do when they get home from a conference?

After attending a financial services conference, advisers can be overwhelmed by options, choices and tools. What's the first thing they should do when they get back to their office?

Latest news & opinion

Is Fidelity competing with retirement plan advisers?

As the Boston-based mutual fund giant expands the products and services it brings to the retirement market, some financial advisers say the firm is encroaching on their turf.

Gun violence hits investment strategies, sparks political debates with advisers

Screening out weapons companies has limited downside.

Whistleblower said to collect $30 million in JPMorgan case

The bank did not properly disclose that it was steering asset-management customers into investments that would be profitable for JPMorgan Chase.

Social Security underpaid 82% of dually entitled widows and widowers

Agency failed to tell survivors that they could switch to a higher retirement benefit later.

If Finra eases firm oversight of outside business activities, broker-dealers could lose revenue

Brokerage firms would no longer be able to charge reps for supervising nonaffiliated RIAs.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print