After a year of financial planning technology deals, where does Advicent stand?

While 2019 was a banner year in many ways for financial planning technology, the flurry of activity only raised more questions surrounding Advicent’s NaviPlan. 

NaviPlan is one of the oldest financial planning technologies on the market and was arguably the most popular among advisers in 2011, when former owner Emerging Information Systems Inc. sold to Zywave, a technology company backed by private equity firm Vista Equity Partners. But most industry surveys show NaviPlan has ceded much of its market share over the last decade to competitors. 

According to InvestmentNews’ most recent technology survey, 35% of financial advisers use MoneyGuide, while 30% use eMoney. Just 4% reported using NaviPlan, trailing RightCapital, a solution provided by their broker-dealer or custodian, and “other.” 

Another technology survey from Technology Tools for Today found that 2.36% of advisers use NaviPlan, putting it behind MoneyTree (3.1%), RightCapital (4.87%), eMoney (22.93%) and MoneyGuide (25.69%). 

Those numbers should be taken with a grain of salt, as Advicent traditionally strikes contracts with large financial institutions to build custom versions of its financial planning software, said Michael Kitces, XY Planning Network co-founder and Pinnacle Advisory Group director of wealth management. Many advisers might use a customized version of NaviPlan without even realizing it. 

Even so, it’s hard to see the numbers and not think Advicent might be in some trouble, Mr. Kitces said. The company found success by building custom versions of its platform for institutions, but that strategy has made it difficult to modernize the platform to keep up with the competition. 

“Clearly, they are still struggling just to be able to iterate and keep pace,” Mr. Kitces said. 

Scott Smith, director of advice relationships at Cerulli Associates, said NaviPlan still maintains a reputation among some financial planners as a more “serious” tool, but eMoney and MoneyGuide are both making inroads in that area as well. MoneyGuide has an elite version of its software, and former eMoney founder Edmond Walters is partnering with MoneyGuide to create a more sophisticated tool for ultra high-net-worth investors. Meanwhile, eMoney is going after large institutions with its eMoney for Enterprise product. 

All of this is surely troubling for Vista Equity Partners, which many industry sources say has been trying to sell Advicent for several years.

The picture gets bleaker when you consider the price tag commanded by NaviPlan’s competitors. Fidelity Investments acquired eMoney in 2015 for a reported $250 million, and Envestnet bought MoneyGuide in May for $500 million. At the other end of the market, Advizr, a relatively tiny financial planning software startup, sold in July to Orion Advisor Services for a reported $50 million. 

With NaviPlan’s history, reputation and long-standing partnerships with some very large financial institutions, Vista likely wants a higher figure than Advizr commanded. But it’s unclear if anyone is willing to pay the price.

Rather than acquire a solution, Morningstar went ahead and built its own financial planning platform. Custodians and broker-dealers seem to be embracing an open architecture approach that lets advisers choose between a few vendors, including NaviPlan, rather than deal with supporting a proprietary product.

Vista Equity Partners did not respond to a request for comment, and Advicent CEO Angela Pecoraro said Vista continues to invest in the company to support its vision and strategy.

“We feel we are in a terrific position as a business to maintain our independence,” Ms. Pecoraro said.

She added that industry surveys don’t accurately capture NaviPlan’s full footprint. The company counts more than 70 large financial institutions as customers, including eight of the top 10 North American banks, four of the top five custodians, and seven of the eight top insurance companies. It has partnerships with firms including Morgan Stanley, US Bank, First Command, Janney Montgomery Scott and Ameriprise, Ms. Pecoraro said. 

The company also has sizable penetration in Canada, thanks to having a French version of its platform, and in Europe after acquiring financial planning startup Figlo in 2014. In total, Advicent has more than 3,000 customers and 140,000 end users, and it generates several million plans per year.

“There’s no better time to be in the financial planning industry than right now,” Ms. Pecoraro said.

Though Ms. Pecoraro says NaviPlan today is “the most precise and robust calculation engine in the financial planning industry,” she acknowledges that demand for a simplified, more accessible financial planning software allowed competitors to gain market share over the last decade. Ms. Pecoraro is confident a number of moves Advicent made in 2019 have it well-positioned to define what she calls the “third wave of financial planning.” 

Advicent refreshed NaviPlan with a new user experience, and in December it introduced a new Guided Retirement tool to help advisers deliver a quick yet accurate assessment of clients’ retirement readiness. Like other fintech vendors, NaviPlan also now has an API marketplace that lets financial institutions take just bits and pieces of the technology rather than the entire platform. 

“Our platform is going to cover the entire, end-to-end client journey and address the needs of clients across the wealth spectrum,” Ms. Pecoraro said. “We have the upmost sophistication and best user experience on the market. You’ll see that this year.” 

Advicent could have an opportunity to regain market share simply by virtue of being an independent technology, said Cerulli’s Mr. Smith. Rather than try to beat eMoney and MoneyGuide at being the most user-friendly financial planning software, perhaps it could double down on being the most in-depth, comprehensive, cash-flow based system.

Mr. Kitces agreed that financial planning software needs a new wave of innovation, but he remains skeptical that Advicent will be the one to deliver. NaviPlan isn’t likely to close up any time soon — its Ameriprise contact alone is probably large enough for it to survive as a business — but the company hasn’t proven an ability to innovate, he said.

“They are three epochs behind, trying to reinvent themselves, and I’m not sure there is a clear vision of what their new model is going to be,” Mr. Kitces said. “It is time for the next big thing, and I haven’t seen it yet.”

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