On Technology

Envestnet MoneyGuide deal will have a massive impact on the advice industry

Transaction leaves two big players in the market for financial planning software, Envestnet MoneyGuide and Fidelity's eMoney

Mar 15, 2019 @ 3:03 pm

By Ryan W. Neal

Do you remember in 1998, when we got not one, but two movies about asteroids colliding with Earth?

Both "Armageddon" and "Deep Impact" featured computer-generated scenes of space rocks hitting the planet, causing varying degrees of destruction. "Deep Impact" was especially dramatic, with the comet causing a shockwave that could be felt around the planet (though the movie really only shows New York City).

Thursday's news that Envestnet is acquiring MoneyGuide reminded me of those movies. Both companies are so large and have such influence over the financial advice industry, especially among registered investment advisers, that the collision of two is going to be felt across the entire industry.

Envestnet counts 96,000 advisers across 3,500 firms as its customer base, including most of the largest banks, brokerages and RIAs. MoneyGuide says it's used by "tens of thousands of financial advisers" to create two million financial plans a year.

According to survey data from Technology Tools for Today producer Joel Bruckenstein, MoneyGuide controls 26% of the financial planning market. The other big player, Fidelity's eMoney, has a 23% share.

(More:Should CFP Board require technology training? Advisers seem to think so)

"The competitive landscape in the retail advisory tech space clearly just got much smaller, and more concentrated," said Rob Foregger, co-founder of fintech firm NextCapital. "The MoneyGuide Pro acquisition will certainly put pressure on the broader financial planning market, especially as Envestnet more tightly integrates MoneyGuide Pro."

The deal could make things even more difficult for smaller companies like Advicent, which has struggled to earn market share in recent years despite having once been one of the biggest names in financial planning. Mr. Bruckenstein put Advicent's share of the market at 2.36%. Advicent did not respond to a request for comment.

(More: Future of advice is wealth planning across the household)

Mr. Bruckenstein's data show a pretty big gap between the top two financial planning technologies and the rest of the market, although numbers may hide the number of white-label partnerships Advicent has with financial institutions.

But it's that race between the top two — MoneyGuide and eMoney — that will be particularly interesting. With connections across channels via Yodlee, Envestnet has access to far more data than eMoney's owner, Fidelity.

"The [Envestnet and MoneyGuide] deal wasn't for cross-selling or better integration — this was 100% a data play," tweeted Craig Iskowitz, CEO of consulting firm Ezra Group. "MGP is #1 in market share of financial advisers. [Envestnet] now has access to assets by custodian, by tech provider, positions and tons of customer demographics."

Part of eMoney's strategy recently has been to target the institutional firms, but Envestnet's data could make MoneyGuide a more attractive product. It helps that Envestnet already works with banks, broker-dealers and insurance companies.

Adding to the drama is the fact that eMoney's founder, Edmond Walters, is now developing an new, extremely sophisticated financial planning tool for ultra-wealthy investors in partnership with Envestnet MoneyGuide. There's also the fact that Fidelity and Envestnet have long been partners: For example, Fidelity's Managed Account Solutions platform is powered by Envestnet.

Fidelity's official statement on the matter: "We have a long-standing, successful relationship with Envestnet, and that will continue."

Even still, advisers looking for a full-service technology platform based around financial planning will now likely be choosing between Fidelity or Envestnet. Even if Envestnet doesn't have any interest getting into the custody and clearing business, there is more overlap than before.

"On the software side of things, there will be times when they compete against each other for business," Mr. Bruckenstein said.

Things could also become more difficult for the other custodians.

"Some people are very supportive of the open-architecture system and worry about somebody controlling too many of these third-party providers," Mr. Bruckenstein said. "If you're of that mindset, you're going to be concerned about this."

0
Comments

What do you think?

View comments

Upcoming event

Sep 10

Conference

Denver Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six 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

Most watched

Events

Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.

Events

Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.

Latest news & opinion

How to battle sequence-of-returns risk

Retiring during the longest-running bull market in history can be scary, as some begin to wonder when the good times will end.

Tony Robbins loses role with RIA amid charges of sexual misconduct

String of allegations costs the self-help guru his gig as chief of investor psychology at Creative Planning.

SEC sets June 5 date for vote on Regulation Best Interest

Commission adds new item to agenda: Interpretation of broker guidance that qualifies as advice

House passes SECURE retirement bill with massive bipartisan support

The measure allows small employers to band together to offer plans and raises the RMD age. Another provision eases use of annuities in 401(k)s, which critics say goes too far

10 IBDs with the most annuity revenue

Here are the independent broker-dealers that brought in the most annuity revenue last year.

X

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.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print