Michael Kitces #FinTech

Michael Kitces: The latest in financial adviser fintech — April 2019

This month's edition kicks off with the blockbuster deal of the decade in advisor technology: Envestnet acquiring MoneyGuidePro for half a billion dollars, or nearly 10X its forward revenues

Apr 18, 2019 @ 11:00 am

By Michael Kitces

Welcome to the April 2019 issue of the Latest News in Financial Advisor #FinTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors and wealth management!

This month's edition kicks off with the blockbuster deal of the decade in advisor technology: Envestnet acquiring MoneyGuidePro for a whopping half a billion dollars, or nearly 10X its forward revenues… though ultimately, the purchase may not merely be a testament to Envestnet's expectations for growing MoneyGuidePro's software revenue, but the potential to link its new Insurance Exchange to MGP as a means to facilitate the distribution of fee-based insurance and annuity products to independent advisors through the software as well.

From there, the latest highlights also include a number of interesting advisor technology announcements, including:

• Schwab adds a new "Premium" option to its Intelligent Portfolios robo-advisor, that will offer human CFP professionals providing personal financial planning… not for a traditional AUM fee, but a financial planning monthly subscription fee instead.

• AdvicePay announces half a dozen new partnerships with broker-dealers and signs 17,000 advisors under Enterprise contracts as fee-for-service financial planning models expand deeper into the RIA and hybrid broker-dealer communities as well.

• Hidden Levers signs a 7-figure deal with Focus Financial in a pivot from portfolio stress testing software into a business intelligence platform that can stress test the revenue and profits of an entire advisory firm (or an aggregated collection of them).

• Economic Laurence Kotlikoff rebuilds his popular-with-consumers financial planning software platform ESPlanner into a new web-based solution dubbed MaxiFi Planner and rolls out a financial advisor version for "just" $499/year.

Read the analysis about these announcements in this month's column and a discussion of more trends in advisor technology, including the winners of the recent TD Ameritrade Innovation Quest FinTech Competition, the opening of submission for the latest (4th Annual) XY Planning Network FinTech Competition, a recap of the recent ScratchWorks FinTech competition at the Barron's Independent Advisor Summit, and the arrival of Harbor Plan, a new player in the world of digital marketing automation for financial advisors with a unique tool specifically to help advisors send timely follow-up messages to prospects without allowing any to accidentally slip through the cracks while servicing their existing clients as well.

And be certain to read to the end, where we have provided an update to our popular new "Financial Advisor FinTech Solutions Map" as well!

I hope you're continuing to find this new column on financial advisor technology to be helpful! Please share your comments at the end and let me know what you think!

*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to TechNews@kitces.com!

Envestnet Acquires MoneyGuidePro For $500M But The Endgame May Be More Than Just Financial Planning Software. For more than a decade, industry software surveys have shown MoneyGuidePro as the leading financial planning software by advisor adoption, having overtaken the prior cash-flow-based (and more-time-intensive) alternatives in the 2000s with its goals-based approach. And with the ongoing commoditization of asset allocation services, more and more broker-dealers and RIAs have been shifting into offering financial planning services, driving further growth in financial planning software companies… and a growing hunger for large firms interested in strategically acquiring them. Accordingly, back in 2015, Envestnet acquired FinanceLogix for $32M, and Fidelity acquired MGP competitor eMoney Advisor for a then-eye-popping $250M. However, for other large firms interested in financial planning software, the quickly-apparent problem was that there just weren't many other platforms available for sale, and the market leader – MoneyGuidePro – was held by founder Bob Curtis, who expressed no interest in selling and exiting. And so beyond a few recent upstarts, like Advizr and RightCapital, the financial planning software marketplace has been relatively staid in recent years. Until this month, when Envestnet announced that it was acquiring MoneyGuidePro for a whopping $500M (including almost $300M in cash and just over $200M in Envestnet stock). And while the strategic potential for Envestnet to expand further into financial planning with MoneyGuidePro made sense, many in the industry immediately questioned the price, which technically was still slightly accretive to Envestnet's earnings (given their own forward P/E is close to 26X), but was still stunning at nearly 10X MoneyGuidePro's projected 2019 revenue of $50M, and 20X MoneyGuidePro's profits at an estimated 50% margin. Especially when MoneyGuidePro is "only" growing at mid-teens growth rates, due in part to the saturation already present in the now-mature marketplace for financial planning software. Except, of course, that Envestnet has the potential to monetize MoneyGuidePro for more than "just" their software revenues. Because as discussed last year on this blog, MoneyGuidePro has been working with Cetera on a straight-thru application processing of insurance and annuity products directly within MGP, an extension of a partnership between MGP and a company called Covr nearly 2.5 years ago. While just last month, Envestnet announced the initial rollout of 6 insurance/annuity carriers in its own newly launched Insurance Exchange. Which means the real opportunity for Envestnet may not simply be to acquire and further grow MoneyGuidePro software revenue, but to expand into the distribution of fee-based insurance and annuity products – for which Envestnet can earn a distribution fee – consistent with Envestnet's existing core business in the investment space (to similarly help distribute various SMA and other investment strategies, for which Envestnet is paid a distribution fee). Simply put, as technology platforms increasingly shift from merely a back-office efficient tool into a bona fide distribution channel, Envestnet just acquired the largest potential financial planning software distribution channel for its new Insurance Exchange. At the precise moment that insurance and annuity carriers are trying to figure out how to reinvent their distribution models in a fee-based world. Which in the long run, could give tremendous additional upside to Envestnet's acquisition beyond the MGP's software revenue alone. But it also raises the troubling question: will MoneyGuidePro be able to maintain its objectivity as an analytical tool for advisors to use with their clients, if Envestnet does decide to shift the MGP business model towards (potentially conflicted) product distribution?

Schwab's Intelligent Portfolios "Robo-Advisor" Launches Premium Human-Based Monthly-Subscription-Fee Financial Planning Service. Over the past decade, the financial services industry has grown increasingly fixated on how to reach the "next generation" of investors … the Gen X and especially Millennial consumers who may not have substantial assets today, but are poised to inherit nearly $30 trillion in assets from their baby boomer parents in the coming decades. The difficulty, though, is that those next-generation clients aren't actually profitable for most asset managers to serve today, because they don't yet have enough in assets to generate sufficient revenue for the firm under a traditional assets-under-management model. Which in turn has led to the industry's focus on so-called "robo-advisors," as a means to automate as much of the investment management process as possible, making it (hopefully) financially viable to serve those younger clients and their not-yet-sizable investment accounts. The alternative, of course, is simply to lead with financial planning for younger clients instead, charge for that financial planning, and simply include the investment solution as a low- or zero-cost "throw-in," as has become increasingly popular with various fee-for-service advisor business models, such as XY Planning Network's monthly retainer or monthly-subscription-fee approach. In this context, it is notable that Schwab recently announced that it was launching its own version of a monthly subscription fee model, as a "Premium" extension to its existing Schwab Intelligent Portfolios (SIP) "robo-advisor" solution. Notably, though, the new SIP Premium is not a robo solution, and instead gives consumers access to a CFP professional, who will provide an upfront plan and then ongoing planning advice, in what is actually just a reconfiguration of its existing Schwab Intelligent Advisory solution into a new non-AUM pricing model of $300 upfront and a $30/month subscription fee (in addition to requiring a $25,000 asset minimum in SIP, which itself generates additional revenue for Schwab through its proprietary ETFs and affiliated-bank cash sweep). From Schwab's perspective, the appeal is that a baseline monthly subscription fee for financial planning generates the requisite minimum revenue per client, without the need to set a much-higher minimum that would exclude the next generation clients they're trying to reach. Which Schwab can try to deliver efficiently by leveraging its existing MoneyGuidePro relationship (which was already at the core of Schwab Intelligent Advisory). The broader significance, though, is not simply that Schwab is shifting from its prior 28bps AUM-based fee for its Intelligent Advisory and into a monthly subscription fee model instead, but that with the sheer size and breadth of Schwab's reach, it will likely accelerate the mainstream adoption of the model with consumers themselves. While also pressuring other advisors who charge for financial planning to differentiate their own value, and show exactly what they're going to do to provide value on top of what Schwab will now provide for $30/month.

AdvicePay Signs 17,000 Advisors Under Enterprise Contract As Fee-For-Service Financial Planning Models Grow. One of the biggest challenges of the advisory industry's ongoing shift to the assets-under-management model, from the rise of the RIA to the broker-dealer transition to fee-based accounts, is that there may actually be too many financial advisors all pursuing the same relatively small number of households that have sufficient liquid assets available to invest, outside of a 401(k) plan, who are actually willing to hand over the assets and delegate to an advisor. After all, with what may only be about 7M households who have the liquid investable assets and a delegator mentality, across nearly 300,000 financial advisors, there would only be 21 clients per advisor available in the marketplace if "everyone" became an AUM advisor all at once! The squeeze, in turn, is leading to an emerging "crisis of differentiation," as advisors try to demonstrate why their value proposition is unique and more effective than any of the other advisors offering similar holistic wealth management services for clients with sizable portfolios. For which a growing number of advisors are simply trying to move away from the AUM model altogether, adopting alternative fee-for-service business models that can serve the wide open "blue ocean" of non-AUM clients, from charging hourly fees to annual retainers to monthly subscription fees. In essence, while over the past 20 years, the RIA community shifted into the AUM model to draw business away from broker-dealers still charging commissions, now that broker-dealers are themselves shifting to the fee-based model, the RIA community is moving again to adopt the next new business model. Because the upshot of these fee-for-service models is that they can serve clients that other RIA- and broker-dealer-based AUM advisors aren't even competing for. The bad news, however, is that until this point, RIAs had no means to bill their advisory fees for non-AUM clients, short of simply requesting a physical check. (Which is difficult to do for next-generation clients when many Millennials don't even have a checkbook anymore!) In this context, AdvicePay launched last year as a payment processing platform for financial planning fees, built to handle all of the nuances of SEC custody rules and other RIA-specific regulatory requirements that apply when financial advisors charge standalone planning fees. But as it turns out, the broker-dealer community is already quickly following the standalone RIAs into the world of fee-for-service advice. Thus, as after announcing the close of a funding round and the launch of AdvicePay Enterprise two months ago, this month AdvicePay announced more than half a dozen hybrid broker-dealer enterprises have signed on, adding a massive 17,000 advisors under enterprise contracts in the span of just a single month. Which suggests that, while the industry has been predominantly focused on the broker-dealer shift to fee-based accounts, the broker-dealer community is already extending more rapidly into full-service financial planning for standalone planning fees than anyone had actually realized?

Hidden Levers Lands Mega-Deal With Focus Financial In Pivot To Business Intelligence Software. It is a strange irony of the past 20 years that as the independent RIA movement has continued to grow, more and more industry benchmarking studies have been developed to help RIAs understand how they're doing relative to their competitors … yet remarkably few tools have been developed to actually apply that business intelligence within the advisory firm. In fact, for most advisory firms, gathering industry benchmarking data is itself still a very time-consuming and manual process, as even today's portfolio performance reporting and accounting solutions rarely capture and characterize the data in a relevant manner for what advisors need to submit to industry studies. And virtually no tools take the next step – actually helping advisory firms understand and evaluate the risks to their business on the basis of that business intelligence data. In this context, it's notable that portfolio stress testing tool Hidden Levers announced this month a deal to provide business intelligence software to mega-RIA Focus Financial, in what is reportedly a 7-figure software deal where the bootstrapped startup beat out the likes of BlackRock's Aladdin and Envestnet|Tamarac's data capabilities. The strategic opportunity for Hidden Levers is that, with a core of portfolio stress testing capabilities, their business intelligence software can not only provide reporting to an RIA of its current business metrics, but show how various market scenarios would impact the firm's client portfolios, and therefore the firm's revenues. In other words, Hidden Levers will be able to effectively answer the question that every RIA worries about but cannot quantify: when the next recession comes, and client portfolios inevitably decline, by how much will they likely decline, how much of a revenue impact would that have on the firm's AUM fees, and given how most firms' advisors are compensated on a percentage-of-revenue basis, how would that market decline, revenue decline, and advisor compensation decline, all play out together in terms of the advisory firm's profit margins? A question that is especially challenging for a firm like Focus Financial, which itself is an aggregation of dozens of underlying firms, each of which have their own investment models and allocations, making it virtually impossible – until Hidden Levers' new business intelligence tool – to actually understand their revenue and profit exposure to the next bear market (or other various "market stress" scenarios that Hidden Levers can model). Though arguably, the Hidden Levers solution isn't just relevant to aggregator firms like Focus, but any advisory firm that wants to really understand what its revenue and profit exposure is in the next bear market. Especially given the current bull market is now more than 10 years long in the tooth.

BlackRock Expands Its "Land Rights" For Investment Data With $1.3B eFront Acquisition. Back in May of 2017, the Economist wrote a piece making the point that, when it comes to technology platforms, it's not just about selling the technology itself; the data that underlies it is the new oil. When Henry Ford transformed our country and ignited the industrial revolution with his combustion engine, oil was the resource that powered the world. As we have shifted to the hyper-connected, knowledge worker economy, data powers the world. Financial services has invested heavily in data for decades but not in the same way that we are watching FAANG companies do it today. Billions of dollars have been spent to get market data a nanosecond faster. But now we are seeing the behemoths in the space start to invest in data as a means of personalization for investors. Accordingly, BlackRock's acquisition of eFront for $1.3 billion dollars is their latest move in what appears to be a series of investments and acquisitions that equate to acquiring "land rights"… for data. As just like in the old days, you couldn't drill for oil if you didn't own the explicit ability to do so on that piece of land, today, you cannot harvest rich insights from Big Data and use them as a means for deep personalization if you do not have explicit access to the data itself. BlackRock has slowly been acquiring that explicit access to data. Thus, in addition to BlackRock having $6 trillion dollars' worth of accounts in their own products that they are actively "fracking," and in addition to the new eFront acquisition for data on alternatives, BlackRock has also made strategic investments in iCapital (as Larry Fink has stated, alternatives are a huge strategic focus for BlackRock, in addition to technology, as currently, alts make up only $143B of their $6T in AUM), along with Envestnet (rich data from ~100,000 investment advisors and numerous home offices on the Envestnet platform), and Acorns (data from ~4 million accounts on the Acorns platform which consists of accounts that are not in the traditional BlackRock ecosystem, mostly held by millennials with account sizes too small for traditional wealth management firms but standing to inherit the largest wealth transfer in history). What a space to focus on creating a personalized experience! And the beautiful part about being a strategic investor for Blackrock is that, in the spirit of partnership, they get access to all of that data… without having to outright acquire those businesses (although they ultimately did fully acquire eFront). All of this feeds their Artificial Intelligence lab in Palo Alto, California, which has already been pumping out portfolio construction recommendations… and will soon be utilizing the growing treasure trove of data to assist in offering increasingly personalized services for their investors. (Michael's note: This FinTech entry was written by Kyle Van Pelt, who, in addition to tweeting prolifically in Advisor FinTech, is involved in Strategy for SS&C Advent.)

Plan-It Financial Literacy App Wins First Ever TD Ameritrade Innovation Quest Competition For New Advisor Technology. Just over 20 years ago, Clayton Christensen set forth the concept of "The Innovator's Dilemma" (in a book by the same name), highlighting how large, established firms, even when doing everything right, can still end out getting disrupted by newcomers. Because established businesses end out focused on their core products and solutions, where iterative improvements provide the most value on a sizable existing customer base, and can struggle to innovate new products and ideas that don't seem likely to move the needle (until a competitor has already taken the idea so far that it is too late for the incumbent to react). In recent years, this phenomenon has led companies that fear disruption to proactively sponsor various "Innovation Labs" and "Startup Competitions," in an attempt to bring forth and identify promising new technologies, and hopefully be able to acquire or otherwise participate in that innovation at an earlier stage. Accordingly, last year TD Ameritrade announced its own "Innovation Quest" startup FinTech competition, where three finalists would have the opportunity to showcase their software solutions at the company's annual TDA LINC national conference, winning $25,000 for being a finalist, and a chance for another $25,000 if dubbed the winner (on top of the opportunity to do a deal with TD Ameritrade itself). This year's finalists included Emotomy (a "robo-advisor-for-advisors" digital advice platform), RIA Genie (from independent advisory firm Dynamic Wealth Solutions, which takes Alexa voice-assisted commands to implement virtual assistant tasks for advisors), and Plan-It (from iMar Learning Solutions, a financial literacy app that parents can use with children to teach them money concepts). And the official winner: Plan-It, selected by a combination of industry judges and the RIA audience at TDA LINC itself, which was dubbed most promising for RIAs to be able to use with (or give to) their clients to support on financial literacy. Yet as positive as it is to see such innovative new solutions celebrated, it is striking nonetheless that out of 135 reported submissions to TD Ameritrade's contest for new technology to help advisors, the winning solution was not even one that directly impacts an advisor's day-to-day business needs. Suggesting that there is still ample room for more newcomers and innovation in advisor technology?

XY Planning Network Announces 4th Annual Advisor FinTech Competition. For large incumbent institutions, the challenge when it comes to innovation is spotting "the next big idea" when it's far enough along to be validated, but not mature and established that it actually disrupts the incumbent. From the startup's perspective, though, the challenge is far more practical: even if an innovative new solution has been built, it's still difficult to get the marketplace to pay enough attention to the business to attract the customers needed to gain traction. Accordingly, back in 2016, XY Planning Network launched its inaugural FinTech competition, with a specific focus of trying to help newcomer FinTech providers gain the exposure and visibility they need to get their solutions off the ground with early adopters. With a particular focus on FinTech solutions that help support the delivery of financial planning services to "next-generation" (i.e., Gen X and Gen Y) consumers, the XYPN FinTech competition past winners have included marketing technology Snappy Kraken, 401(k) technology provider Vestwell, and onboarding software from Mineral Interactive (shortly before Mineral itself was acquired by Carson Wealth). Applicants to the XYPN FinTech competition must either have launched in the past 12 months, still have less than $1M of revenue, or be an existing company bringing a new solution to market that is substantively different than its existing offering, and winners get both the visibility of the XYPN FinTech Competition itself, an article on Nerd's Eye View featuring the technology, promotion on the #XYPNRadio podcast, facilitated introductions to industry media in partnership with industry PR agency FiComm, and a promotional video and feature from FPPad's Bill Winterberg. Interested companies are able to apply through May 6 , with winners selected during the summer to present in-person at the XYPN LIVE national conference in St Louis on Tuesday, September 10th.

ScratchWorks FinTech Competition Highlights The Challenges Of Investing In Fast-Growth FinTech. From a traditional perspective of acquiring businesses, financial advisory firms are a "risky" proposition, being almost entirely a goodwill-based cashflow business and lacking any kind of physical collateral that can be foreclosed upon in the event that the business goes south. Yet the relative stability of advisory firm revenues, with an annually recurring revenue base (of AUM fees) and top firms commanding 97% to 98% revenue retention rates, has made banks increasingly willing to finance advisory firm acquisitions, and has supported rising valuations for advisory firms that can run as high as 8X to 10X free cash flow (as much as 2X to 3X revenue depending on the firm's profit margins). In recent years, these acquisitions have led to the rise of some "mega-RIAs," that have $5B+ of assets under management, and leaders who are looking to expand further and reinvest some of their available profits. Which last year, led to the launch of "ScratchWorks," a Shark-tank-style FinTech competition where companies can pitch the "sharks" – the leaders of several multibillion-dollar RIAs – on their innovative solutions, and seek investments of capital (that the RIA owners make directly with their own dollars) to help fuel the growth of their FinTech businesses. At this year's ScratchWorks competition, held in conjunction with the Barron's Top Independent Advisor Summit, the presenting finalists included SolidusLink (which provides investors the opportunity to directly purchase fractional interests in actual physical gold bars), 280Capital Markets (which build a "BondNav" solution that helps advisors purchase individual bonds with greater transparency), and AdvicePay (a payment processing solution for fee-for-service financial advisors to charge and collect their financial planning fees via bank account or credit card). And while the ScratchWorks investors ultimately decided to pass on SolidusLink (questioning how often clients would really want to invest directly into gold bars instead of simply buying a Gold ETF), there was interest in both 280Cap's BondNav and AdvicePay… until it came time to set terms. As 280Cap reported current revenues of $4M and projected growth to $12M in the coming year, and accordingly asked for a $54M valuation (just over 4X future revenues with 300%+ growth), while AdvicePay reported an anticipated $1M of revenue in the current year and $3M to $5M in the coming year, and requested a $20M valuation (similarly around 4X future revenues projecting 300%+ growth). And in the end, neither company was able to come to terms with the ScratchWorks investors, who insisted on lower valuations based on each company's trailing (pre-growth) 12-month revenues. Which highlights that while advisory firms can boast relatively stable (albeit unsecured) cash flows to substantiate their value, they are also relatively "slow growth" businesses, where 5% to 10% organic growth rates (potentially 15%+ total growth rates including market appreciation) is still viewed as a fast-growing firm. While FinTech firms are often capable of far faster (and more easily scalable) growth of 100%+/year, along with higher profit margins (at least in the long run), boosting their potential valuations far above traditional advisory firms (as evidenced by Envestnet's acquisition of MoneyGuidePro for 10X its forward revenues!). Ultimately, the benefit of a competition like ScratchWorks in bringing more visibility for advisor FinTech is to celebrated either way. But at the same time, it also raises the question: while advisory firm owners are likely best positioned to understand the opportunities in the advisor FinTech marketplace, is there too much of a gap between typical advisory firm valuations and the aspirational hopes of fast-growth FinTech firms to find mutually agreeable deals?

Kotlikoff's ESPlanner Financial Planning Software Overhauled Into New MaxiFi Pro Planner For Financial Advisors. When it comes to the research and theory of financial planning, there are two schools of thought. The first is from the "traditional" financial services industry, built around Modern Portfolio Theory, the virtues of saving early and often to let the power of compounding work for you, and the idea that markets may be volatile in the short run but will average out (with favorable returns) in the long run. The second comes from the world of economics, and a body of research and theory dubbed "Lifecycle Finance," that views individuals as trying to smooth out their consumption over their lifetime (going through periods of "saving" and "dissaving" or spending), with a focus on trying to secure the stability of (and minimize the risk of) those cash flows over time (e.g., via pensions, annuitization, and other guaranteed income floors). When it comes to the tools that financial advisors use, such as financial planning software, most are built around the traditional industry framework, while relatively few are built by lifecycle finance economists. Except ESPlanner, a financial planning software platform built by economist Laurence Kotlikoff primarily for consumers to use directly, helping them optimize their financial decisions to smooth out their consumption (i.e., spending) throughout their lives and evaluate trade-offs like the impact of switching jobs, managing retirement accounts, and when to take Social Security. However, ESPlanner was originally developed as a desktop solution, and in recent years Kotlikoff has been developing MaxiFi Planner, a new web-based version of ESPlanner that has even more capabilities (e.g., Monte Carlo analyses and more sophisticated modeling tools like the impact of moving to another state), all framed around the impact of the household's decisions on their long-term annual standard of living. And now, Kotlikoff has debuted a MaxiFi Planner Pro version of the software, specifically built for financial advisors, providing the same core analytics as ESPlanner and MaxiFi, but with the ability to manage multiple clients, and customize reports with the advisory firm's own logo and contact information, and an entry price of "just" $499/year (less than half the "typical" financial planning software fee of $1,200/year). Though ultimately, the real distinction for financial advisors is not MaxiFi's cost-effective price point, but its potential to frame the entire financial planning conversation differently – around the long-term impact of a client's decisions on their long-term sustainable standard of living, instead of "just" their assets.

Citibank Launches Citi Wealth Advisor And SigFig Launches Atlas As Banks Look To Financial Planning To Expand Wallet Share. While financial planning firms have been focused on using advisor technology to become more efficient in their financial planning process, and asset management and brokerage firms have looked to financial technology to automate their investment process to more profitably serve an ever-wider range of investors with smaller investment accounts (who can accumulate more assets with them over time), banks have also been increasingly shifting into the adoption of financial planning and advice tools… as a means to increase "wallet share" and the key banking metric of "products/household" (across checking, savings, mortgage, and other banking solutions). Accordingly, Citibank announced this month a new Citi Wealth Advisor solution, which it has dubbed a "digital financial planning product" to its Citigold members (customers on Citi's wealth management platform with at least $200,000 in assets). And SigFig announced the launch of its new Atlas platform, which it is billing as a "financial advice and software-guided sales platform" that will more directly take in information on the customer's financial situation and needs, and then provide recommendations of which of the bank's various products or services would be the best fit. The upside of this shift is that banks have historically struggled the most to deliver financial advice to their customers, despite being at the center of the household's cash flows, because banks are notoriously segmented internally into distinct product verticals, without a unifying advisor that can span them all. The downside, though, is that even as the current regulatory movement is increasingly pushing to separate product sales from advice, banks still appear to be focusing on the rollout of advice solutions primarily as a means to cross-sell more bank products (rather than to actually get paid for and generate revenue from the advice itself). And of course, it's not even clear if consumers will fully adopt the technology, once they realize that it's primary purpose is just to sell them more of the bank's products. Nonetheless, the emerging ubiquity of some kind of financial planning tools from a wide range of sources – from robo-advisors, to self-directed websites, and now banks and other financial institutions – will increasingly put pressure on financial planners themselves to justify what, exactly, their value-add is, beyond the output from software that consumers can increasingly access from anywhere.

Apple May Launch A Credit Card To Threaten Banks… But Not A Threat To Advisor FinTech. The rise of the robo-advisor was supposed to be the moment of disruptive innovation for financial advisor industry, but, in practice, is turning out to be the technology that financial advisors may use to power the back office of their businesses in the future (not the competitor that disrupts them). Nonetheless, the advisor industry has retained a palpable level of fear that, someday, a recognized and trusted technology firm with massive reach, like Facebook, Google, Amazon, or Apple, might someday launch their own version of a "robo-advisor" as a serious competitive threat. Thus far, the major tech firms have shown little desire to engage in financial services, with Google testing the waters with their Google Compare initiative (primarily for auto insurance) but ultimately shutting it down, and Amazon launching its own credit card but seemingly focused more on using it as an incentive to simply make more purchases via Amazon (and to gather more data for Amazon on its customers' spending habits). Most recently, it was revealed that Apple is working with Goldman Sachs and Mastercard to launch its own credit card, and raising the question of whether the company may expand more fully into banking and threaten the recent trend of other FinTech startups moving into banking (e.g., Wealthfront launching a solution for short-term cash, Robinhood launching its own checking and savings feature, etc.). Yet the reality is that even if mega tech firms move further into financial services products, it doesn't necessarily signal a move into the financial advice business in particular… if only because financial advice simply isn't nearly as scalable as the traditional business lines of major tech companies. After all, Apple in particular is legendary for achieving a stunning average revenue per employee of $2M – a testament to its productivity and pricing power in the marketplace – while even the best advisory firms struggle to achieve a revenue/employee as high as $500,000 (and most are closer to $300,000 of revenue/employee). Which means even a best-practices financial advisory firm isn't even remotely close to the productivity and scalability of a company like Apple – making financial advice a particularly unappealing business line for Apple to consider. Or stated more simply – while mega-tech firms might try to test the waters with highly commoditized and scalable financial products like credit cards or savings accounts, it's still not any indicator they're even considering a move into far-less-scalable (at least by tech firm standards) businesses like financial advice (or the FinTech firms that support us).

New Product Watch:Harbor Plan Digitally Automates The Sales Follow-Up Process. While most financial advisors are not "swamped" by a high volume of prospect inquiries, the balance of needing to service a base of existing clients, on top of trying to nurture relationships with potential new clients, means many advisory firms are not always timely in their sales communications with prospects. And while there are a number of marketing automation platforms like MailChimp or ActiveCampaign that can help to take prospects through a funnel of marketing emails, once it's time to actually begin the "one-to-one" sales process, it's still a largely manual effort (in which not all advisors are diligent in their follow-up). And it's this problem that new startup Harbor Plan is aiming to solve, by creating what is effectively a "sales automation" tool that helps to automate the process of following up with prospects. Key features include automatically sending automatic follow-up emails to prospects who initially reached out but haven't responded since, sending follow-ups to attendees who registered for a recent or upcoming seminar, or even an "Intelligent Conversations" feature that automatically sends an email with a link to scheduling software for a prospect who indicates they're ready to move forward to an in-person meeting. In addition, Harbor is also developing a series of marketing funnel engagement tools as well, in the form of various "Financial Health" and "Investor Personality" quizzes that prospects can take, and then receive automated emails from Harbor to follow up further until they're ready to meet. But for many advisors, the appeal for Harbor won't necessarily be executing an entire digital marketing funnel, but simply helping to make sure that prospects who have reached out don't accidentally slip through the cracks by failing to send timely follow-up nudges until they're ready to do business.

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In the meantime, we've updated the latest version of our Financial Advisor FinTech Solutions Map with several new companies, including highlights of the "Category Newcomers" in each area to highlight new FinTech innovation!

So what do you think? Did Envestnet pay too much at $500M for "only" $50M of revenues from MoneyGuidePro? Are financial advisors really the right investors for Advisor FinTech startup companies? Has Hidden Levers found a real gap in the marketplace for advisor business intelligence software? Will Apple (or Google, or Amazon) ever really try to launch a 'robo-advisor' or similar competitor for financial advisors? Please share your thoughts the comments below!

Michael Kitces is a Partner and the Director of Wealth Management for Pinnacle Advisory Group, co-founder of the XY Planning Network and AdvicePay, and publisher of a continuing education blog for financial planners, Nerd's Eye View. You can follow him on Twitter at @MichaelKitces.

Kyle Van Pelt, who contributed to the commentary on BlackRock's acquisition of eFront, is part of the Strategy team at SS&C Advent. You can connect with him via LinkedIn, or follow him on Twitter at @KyleVanPelt.

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Finra makes its list to target hundreds of rogue individuals

The regulator sees patterns in the behavior and disclosures of high-risk brokers.

LTC insurer offering co-pays to blunt soaring premium increases

John Hancock policyholders would get a discount on their premium in return for agreeing to pay a bigger portion of their claims in the future.

Goldman Sachs acquires United Capital

After a payday of $75 million or more, CEO Joe Duran plans to join Goldman in a senior position.

Private equity loves IBDs, but will that last?

Three big acquisitions in less than a year signals renewed life in the formerly beleaguered industry.

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