Do any advisers out there still think digital advice is just a fad?
The global robo-advice market is expected to reach $41.83 billion by 2030, a compounded annual growth rate of 29.7%, according to a new study from Grand View Research.
Smartphones and the increased application of chatbots are expected to increase the adoption of robo-advice, and “pure robo advice” — fully digital platforms without human advisers — is expected to grow the fastest, countering the narrative offered by many in the advice industry. Grand View also expects banks to be the fastest-growing sector, driven by the increasing digitization of the banking industry.
I recently dove into the growing ecosystem at SoFi, which is doing an impressive job at integrating a wide array of financial services into a single digital offering. It’s the goal many firms are striving towards, but few, if any, have as compelling an offer as the San Francisco-based fintech.
Robo-advice isn’t going anywhere and there's an appeal to the idea of an algorithm managing investments without the personal biases or conflicts of interest that people can often bring. The real value of advisers is providing what computers cannot, and this is where firms should be investing in the future.
For your Labor Day weekend reading, here are some of other fintech updates from the week.
Fintech and asset management outsourcing firm InvestCloud announced a significant upgrade to NaviPlan, the financial planning software it acquired in 2021. The new features further integrate NaviPlan into InvestCloud’s digital warehouse, aggregate client financial data into a single location and extend the software’s capabilities across complex planning scenarios.
NaviPlan was one of the earliest players in the digital financial planning game, but lost ground to emerging players like eMoney and MoneyGuide. InvestCloud has been aggressively expanding its digital offering for advisers, but hasn’t said much about how NaviPlan fits into the plan. It should be reassuring for NaviPlan users to see the company putting resources behind the software.
Goldman Sachs has closed the deal to acquire automated retirement planning software NextCapital, which it first announced in March. The product will be included in Goldman Sachs Asset Management’s multi-asset solution business, expanding the firm’s presence in the defined-contribution retirement market.
The purchase is a yet another notable milestone for the investment bank’s progress into the broader wealth management arena. Along with consumer-facing products like Marcus and its partnership with Apple Wallet, NextCapital gives Goldman a digital tool to connect with mass affluent investors. The traditional advice industry should be watching its progress closely.
White-label digital advice company Marstone has a new product to help financial services institutions offer financial planning to investors. Marstone Maps offers financial tips and simulated life scenarios, aggregation of workplace benefits and held-away accounts, and a timeline of goals to show investors how they're progressing.
Marstone has worked with large firms such as Interactive Brokers, HSBC Bank USA and most recently, American Century Investment. Firms across the industry are looking to expand their ability to offer financial wellness tools to investors, so a product like Maps helps Marstone be even more valuable to its institutional clients.
Digital custodian Apex Clearing Corp. has a new deal to provide direct broker connectivity to financial advisers using compliance fintech ComplySci. The data feed sends brokerage account data files to the compliance system to track, detect and report on employee trading.
Apex is best known for working with robo-advisers — for example, it’s the custody and clearing platform behind SoFi — but the company has been working to expand its presence among traditional RIAs. Smaller custodians like Apex see an opportunity to win business in the wake of the Schwab-TD merger, and integrations like this boost its offering.
Dallas-based data analytics startup VRGL announced a $15 million Series A fundraising round led by venture capital firms MissionOG and Fintop Capital. The company hopes to accelerate adoption among registered investment advisers.
Dynasty Financial Partners also participated in the fundraising, and a spokesperson told CityWire the firms plans to integrate the technology with Dynasty’s referral program. That’s a pretty impressive endorsement for a startup, as Dynasty has around 300 advisers on its Dynasty Connect platform.
Fintech company Equisoft has a new module built to help wealth management firms comply with regulatory requirements to conduct due diligence on investment products. Fund Compare automatically compares metrics like historical performance, volatility, product risk, fees and asset allocation without requiring the adviser to manually enter data about the investments.
The idea of a digital tool for comparing investment products isn’t new, but the automation behind Equisoft’s Fund Compare does help it stand out from the rest. The company started in Canada and has been working to expand in the U.S. since it acquired Grendel CRM in 2019. We’ll see if this new product is enough for it make a splash in the broker-dealer market.
"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.
