Fintech vendors can't afford to be one-trick ponies

FinMason expands its investment analytic service as tech firms look for ways to increase market share.

Mar 8, 2018 @ 2:00 pm

By Ryan W. Neal

FinMason is expanding its services beyond risk tolerance technology to include even more investment analytics tools, and it's not the only fintech firm recognizing advisers appreciate vendors that can offer them multiple capabilities.

The Boston-based company announced Thursday the launch of the FinMason Investment Analytics Consulting group, a team of subject-matter experts working with advisers to explain and deploy effective analytics. FinMason plans to double the analytics it offers to 1,400, including analysis on private securities and multi-asset portfolios.

Leading the group is Maral Boyadjian, an industry veteran who most recently served as a consultant and investment subject matter expert at Gerson Lehrman Group. Though the company pitched its risk tolerance tools at the 2017 T3 conference as a way to screen portfolios for potential compliance issues, Ms. Boyadjian said FinMason "has been and always will be" an investment analytics firm.

(More: A financial adviser's guide to risk management software)

"Visual risk tolerance assessment is just a cool thing you can do with analytics," Ms. Boyadjian said. "But at the end of the day, we don't want to be a product company. We want to be the "intel inside."

The firm is doubling-down on the consultative process to help firms implement the data and analytics they get from FinMason, said Kendrick Wakeman, the firm's CEO, in a statement. It will be Ms. Boyadjian's job to help advisers understand what analytics are and how they can be useful.

"[Analytics] have been used on the institutional side, but are quite new on the retail," she said.

Technology vendors across the landscape seem to increasingly realize they can't be one-trick ponies.

Riskalyze, one of the biggest names in the risk-assessment technology, now counts robo-advice, a model marketplace and a retirement solutions platform among its product offerings via partnerships and in-house development.

AdvisorEngine expanded into client relationship management in January with the acquisition of Junxure and Orion Advisor Services has added direct indexing, trade executions, and a model marketplace of its own to its portfolio accounting service.

(More: Fintech looks to the future of financial advice at T3)

This sort of progression is natural said Tim Welsh, the president of consultancy firm Nexus Strategy. Startups pick a label when they enter the market – whether it's trading, rebalancing, risk tolerance, etc. – to gain a foothold, and expand once they gain market share.

This improves the technology's functionality and value, allowing firms to charge more for the product and increase revenue. But there's always a risk of sacrificing the quality of the product or diluting the brand by trying to be too many things, Mr. Welsh said,

"Advisers tend to default to 'best-in-breed,'" when it comes to picking technology, he said. "If I'm overwhelmed with all the things that you do, I'm going to default and go back to something else."

Mr. Welsh, who advises several fintech companies but does not work with FinMason, recommends that startups focus on being the best in the industry at their core application and building a sizable user base before expanding services. This can take time, and companies should have a strategy and be patient.

"People jump into the space and immediately start rolling out other applications — none of which are best in breed," he said. "This diffuses the message, diffuses the quality and diffuses the adviser experience."

However, expansion is necessary to survive, Mr. Welsh said. If firms aren't constantly investing in building new products or expanding functionality, it's only a matter of time before a competitor does it for them.

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