Every December, InvestmentNews looks back at the most important developments of the previous 12 months. From ETFs to ESG to TINA, we’ve got all the acronyms covered — and a whole lot more.
For the hundreds of technology startups launched during an era of unprecedented market returns and easily accessible venture capital, 2022 delivered their first experience of an extended economic slowdown. While most adviser-facing fintechs were spared the pain felt across the wider technology landscape, not everyone escaped the year unscathed.
Silicon Valley kingmaker Y Combinator urged tech companies to “plan for the worse,” and fintech funding in the third quarter dropped 64% year over year to its lowest level since 2020, according to CB Insights. Of the 146,000 employees laid off from technology companies this year, 20,700 came from fintechs, according to data tracked by Layoffs.fyi.
Data aggregator Plaid became the latest when it laid off 260 people — 20% of its workforce — Dec. 7, just one day after microinvesting startup Stash terminated 32 workers. Earlier this year, cryptocurrency-for-advisers startup Onramp Invest lost several high-profile employees, including CEO Tyrone Ross, and laid off numerous employees. Wealth management software company Tifin cut 10% of its workforce in June, and Robinhood slashed 23% of its employees in August.
Diminished tech valuations may have also played a role in UBS’ decision to terminate the deal to acquire Wealthfront, while falling markets reportedly ended Envestnet’s exploration of a private equity buyout.
Perhaps no provider of adviser fintech had as tumultuous a year as Envestnet. Apart from the sale speculation, the turnkey asset management provider relocated its headquarters to Berwyn, Pennsylvania, shuttered its former HQ in Chicago and offices in Seattle, and announced a corporate reorganization that included the departure of Envestnet president Stuart DePina.
In November, an activist hedge fund with a 7.2% stake in the company criticized the company’s stock performance. Just a few days later, Envestnet closed on $575 million of debt financing. Through it all, the company continued to expand, acquiring digital retirement plan marketplace 401kplans.com in June and billing fintech Redi2 Technologies in July.
No one had as bad a year as FTX, the crypto exchange that melted down in November. Its former CEO, Sam Bankman-Fried, faces both criminal charges from the Justice Department and civil charges from the Securities and Exchange Commission.
Crypto assets across the board struggled in 2022, shaking retail investor confidence even as financial institutions continue to move forward with plans to embrace cryptocurrency. As the industry awaits greater regulation of crypto in the wake of FTX, the CFP Board published guidelines for how its codes and standards apply to digital assets.
Things weren’t all bad for fintech this year. Companies providing advisers with digital access to alternative investments thrived. Client relationship management was also hot, with Orion Advisor Solutions acquiring Redtail CRM and Wealthbox CRM raising $31 million. Direct Indexing technologies also continued to be popular, with Ethic pulling in $50 million.
To read more articles in this series:
"Shares of alternative assets managers have lagged this year as investors grow wary of private-credit exposure."
The fintech platform is touting a new AI-free Planning Observations feature, which draws on IRS tax records to uncover opportunities for advisors.
The Omaha, Nebraska-based RIA's latest acquisition expands its Rocky Mountain footprint after two prior Colorado deals last year.
Operational drag between an advisor signing and accounts going live is emerging as a competitive liability for wealth management firms.
Bain says companies face a "winner's paradox" as AI transformation collides with complex integrations.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
