Fintechs provide software to financial planning programs to grow future business

Having next-gen advisers advocating the tech to established firms could help providers gain market share

Aug 29, 2019 @ 4:00 pm

By Ryan W. Neal

Financial technology vendors are using college financial planning programs to help increase adoption of their tools throughout the advice industry.

RightCapital, an up-and-coming financial planning software, now has professors at 20 different universities using the technology to teach the next generation of financial advisers. With free access to the technology, students learn how to read the dashboards and balance sheets, prepare a tax return and even build an entire financial plan as their capstone project.

RightCapital CEO Shuang Chen said partnering with universities is helping make graduates more hirable by established firms and advancing the financial planning profession.

It doesn't hurt that the partnerships also are leading to new business for technology vendors, as many advisory firms turn towards young, tech-savvy advisers to evaluate technology options and help teach senior staff how to use it. Recent graduates can become "champions" for a product they are familiar with, like RightCapital, advocating the firm adopt it.

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For example, when Garrett Huerter, a recent graduate from Kansas State University's personal financial planning program, joined Peace of Mind Financial Planning, he recommended the firm's leadership look at RightCapital.

"Three months later the entire firm adopted the software," Mr. Huerter said in a statement.

This is a huge benefit for a relative newcomer like RightCapital, Mr. Chen said. The financial planning fintech field is crowded and competitive, and having next-gen advisers advocating the tech to established firms could help RightCapital gain market share from some of the big names in financial planning.

"We think it's a win-win-win for everybody," Mr. Chen said. "It's a good practice from a fintech firm perspective … we have to push hard in the first six months for people to take a look at us."

But RightCapital isn't the only financial planning firm offering free fintech to students.Celeste Revelli, director of eMoney's financial planning group, said 60 schools are in its university program, which provides hands-on education with the planning tool and the option to earn an official eMoney certification with additional training. To date, more than 300 students have earned the certification, Ms. Revelli said.

About 86 different universities and more than 4,000 students each year use Envestnet MoneyGuide, according to its chief growth officer Kevin Hughes.

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Knowing the ins and outs of a MoneyGuide is a "huge resume builder" for students entering the job market, Mr. Hughes said. While he couldn't site a specific example of a university partnership translating into business for MoneyGuide, he recalled sharing a cab in 2010 with someone who used MoneyGuide through the financial planning program at Texas Tech and brought it over to the firm that hired him.

That person is now running the financial planning department at a midwestern bank, and the entire team is using MoneyGuide, Mr. Hughes said.

He called the college partnerships "mutually beneficial to the extreme."

There is overlap of the programs receiving free access to the tools, but ultimately it comes down to how professors want to structure their classes. Some professors pick one program to use, others give students a sampling so they are prepared to use whatever software is available at the firm that hires them. Other programs let students choose which tools they would like to use.

Despite eMoney and MoneyGuide being the dominant players in the financial planning tech space, Mr. Chen said he is getting increasing interest from professors who prefer using RightCapital in the classroom.

Derek Lawson, an assistant professor at Kansas State University and an adviser with Priority Financial Partners, said he uses RightCapital to teach tax planning, retirement planning and wealth management on a single platform.

"I found that students were more engaged in class when I introduced them to the software, asking questions and forming lively discussions on planning related topics," Mr. Lawson said in a statement.

Financial planning fintechs aren't the only ones working with universities. Riskalyze co-founder and CIO Mike McDaniel said a dozen universities are teaching future advisers to use the risk analytics technology. Most notable is Penn State University, which has a donor advised fund managed by students in the university's financial planning program.

"They are learning with real money and leveraging [Riskalyze] technology," Mr. McDaniel said. "It's extremely important for an individual going into the world of advice to have intimate knowledge of the tools that can be used in the real world."

[More: Are schools adequately preparing next-gen advisers?]

He has also heard from established advisory firms that are hiring recent graduates to revitalize the firm's technology and bring their businesses into the modern era. Putting Riskalyze into university programs not only boosts a graduate's value, it helps make Riskalyze part of those revitalization plans.

Beyond the benefits to fintech vendors, Mr. Chen said free technology in university programs ultimately helps the slow-moving financial services industry pick up pace with tech adoption.

"Everything is entrenched and integrated, and it's hard for anyone to make a change," Mr. Chen said. Not only does he hope students bring RightCapital to existing firms, he hopes they will bring it along if they eventually launch their own firms.

"These students are the next generation," he added. "They are the driving forces who will actually increase technology adoption, not in the next 12 months, but definitely in the middle-term and longer term."

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