Why advisers are worried about eMoney's acquisition by Fidelity

Purchase of popular software company causes advisers to wonder whether integration with other custodians will suffer

Feb 2, 2015 @ 1:58 pm

By Liz Skinner

Financial advisers using eMoney Advisor were startled Monday to learn that the firm they relied on for software to create financial plans for clients would now be mostly owned by Fidelity Investments.

Fidelity, the nation's second largest mutual fund company and a brokerage for some advisers and others offering wealth management services, bought Conshohocken, Pa.-based eMoney for an undisclosed amount, the companies announced early Monday.

“Waking up to this was like a punch in the gut,” said Vincent Barbera, managing partner of Newbridge Wealth Management. “I liked that they were custodian-agnostic and not in bed with any one firm.”

He and other advisers who use eMoney in their businesses were most concerned that the software they and their clients enjoy will one day become unavailable to advisers who don't custody assets with Fidelity, or somehow will be a less robust version.

“A potential concern is that if eMoney has new offerings and upgrades, will those only be available for the first six or 12 months to advisers with Fidelity?” Mr. Barbera said. “That would give those advisers a competitive advantage.”

For its part, Fidelity said eMoney will remain independent and keep up its integration with other technology firms and relationships with other custodians. eMoney software is part of integrated technology solutions offered by Schwab Advisor Services, TD Ameritrade Institutional and Pershing (under The Bank of New York Mellon Corporation).

“Only one-quarter of eMoney’s adviser clients are shared with Fidelity,” said Erica Birke, Fidelity Institutional spokesperson. “We are deeply committed to that other three-quarters and making sure eMoney continues to serve them in the same way it did before the deal.”

The eMoney business will report to the enterprise services group at Fidelity, not the custodial arm, she said.

Also eMoney Advisor founder Edmond J. Walters will remain in charge of eMoney and there are no plans to change the software’s pricing, she said.

In a response to concerns voiced by advisers on Twitter, @eMoneyAdvisor posted: “Not to worry, eMoney will continue to operate independently as a standalone entity.”

The deal reflects a push by large firms that work with advisers to acquire and integrate adviser-technology offerings on their platforms. In addition to the financial planning benefits, eMoney Advisor incorporates a client portal, or personal financial management tool.

But Peter Huminski, founder of Thorium Wealth Management, said one of the reasons he chose to buy eMoney six months ago was because of the firm's “independent flair and how they did things differently.”

“I don't see how any independent adviser would be excited that this company we use is no longer independent and now part of one of the top few biggest players in the industry,” he said.

Thorium's clients “love” the eMoney solution, and Mr. Huminski is concerned that over time Fidelity may decide not to integrate with other custodians and platforms, an essential way advisers create efficient and client-centric firms today.

“The big fear is that all of a sudden Fidelity will say, 'We have the best tool in the business, why should we offer it up to anyone else to use?'” Mr. Huminski said.

(More: Top 25 technology products used by advisers)

Last month, eMoney released a new platform, emX, including features supporting goals-based financial planning. The company said that in all, it tracks more than $1.4 trillion in client assets.

Competitors include MoneyGuidePro, made by PIEtech Inc., and NaviPlan, by Advicent Solutions.

George Papadopoulos, owner of an eponymous investment advisory firm, had been thinking about buying eMoney, but is happy he has not done so yet. He has client assets with TD Ameritrade.

“This will be a definite advantage for advisers working with Fidelity, as I expect it to make eMoney available to its advisers for a significant discount or perhaps free,” he said.

He wondered if Schwab and TD Ameritrade would look to do something similar in the future.

For its part, TD Ameritrade Institutional said it plans to continue working with multiple software providers, including eMoney, MoneyGuidePro, NaviPlan and Finance Logix, according to spokesman Joe Giannone.

Not all advisers who use eMoney Advisor are concerned.

Ron Carson, founder of Carson Wealth Management Group and a member of eMoney's advisory board, said he has been assured that "the entrepreneurial spirit and flexibility" of eMoney will continue.

Kathleen Asack, a consultant with AmplifyRIA, said advisers should not be worried “as long as Fidelity allows eMoney to operate independently.”

“Any time that the big boys are competing and advancing technology, that's usually a good outcome for advisers and end clients,” she said. Also, since Fidelity is such a financial juggernaut, “you know it will remain well-funded,” she said.

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