Honoring innovation
Investmentnews recognizes firms' inventive concepts and tools for advisers.
For the first time, InvestmentNews is highlighting and honoring firms that have developed innovative approaches to the opportunities and challenges facing the financial advice profession.
These 19 Innovation Award finalists, including six winners, have helped to improve how advisers take care of their clients, run their businesses and enhance client outcomes.
The firm finalists were chosen by a panel of InvestmentNews reporters, editors and other staff out of several hundred nominations submitted online earlier this year. The winners in each of the six categories were selected by the InvestmentNews Innovation Summit advisory board, which consisted of individuals recognized as InvestmentNews Icons & Innovators in 2016 and 2017.
The six winning firms were announced at the 2019 Icons & Innovators awards dinner April 17 in New York.
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More than five years ago, Envestnet introduced its Quantitative Portfolios in a systematically constructed separate account format. Clients continue to own the underlying securities and can therefore tax-manage and customize their portfolios. QPs also deliver factor-enhanced strategies, such as value, momentum or quality, which attempt to deliver excess returns through tilts. In 2018, three new QPs added exposure to small caps, international and emerging markets. Before, such strategies would only have been available through mutual funds or smart-beta ETFs. Plus, each of the series of QPs is suitable for a low investment minimum.
Envestnet recently added tax overlay services to the QPs, letting investors control unrealized gains. Since the client owns the individual positions of the tax lots in the QP, loss-harvesting programs can be tailored to their unique circumstances, with losses harvested at any point throughout the year. Moreover, Envestnet’s overlay services program can manage the portfolio while adhering to a client’s specified capital gains budget.
Its QPs also can screen out certain securities to align with specific client values. Envestnet’s allocation to best-in-class companies provides impactful exposure while managing environmental, social and governance risk.
Finally, Envestnet has met the challenge of balancing a combination of parameters through an iterative formulation involving hundreds of tests. Multiple dimensions include investment minimums, the number of positions, tracking error, sector neutrality, frequency of rebalancing and turnover.
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Retiree Inc. pioneered the first robo for retirement income with IncomeStrategy.com, which was launched in 2018 for consumers. Its other main platform, IncomeSolver.com, is designed for financial advisers. Both these platforms focus on withdrawal strategies during the decumulation stage.
The Retiree solution coordinates the impact of withdrawal sequences, collating ingredients from Social Security, Medicare, dynamic Roth conversions and tax minimization.
The software platform follows research published in the Financial Analyst Journal and the Journal of Financial Planning. Empirical evidence indicates that smart withdrawal sequences can add approximately seven extra years to a retiree’s financial solvency and make the average person’s money last longer. Much of the rest of the industry, including major financial planning apps, still relies on generalized modeling and conventional rules of thumb.
The software can help retirement advisers move beyond product solutions to embrace comprehensive strategies that can generate increased income for clients. It can account for complex details and the interdependency of key elements such as details of the tax code. For example, Roth conversions can affect Medicare premiums and Social Security taxes. Retiree’s software can help advisers extend retirement resources for clients and showcase their own alpha.
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Whealthcare Planning has created two cloud-based resources to aid financial planners with issues related to aging, cognitive impairment, financial abuse and decision-making. For advisers, the Whealthcare Academy is offered on a paid subscription basis. It comprises over 100 educational videos, white papers and research authored by internationally acclaimed experts in financial planning, psychiatry and geriatrics.
It is complemented by the Whealthcare Education Center, which houses free, similar content for the general public. Subjects range from health-care costs, family agreements and technological support to patient empowerment and loneliness.
Cases of senior fraud and abuse have doubled over the past five years and financial advisers are on the front lines in protecting older adults and their families from suboptimal financial decisions and elder manipulation. Agencies at both the state and local levels are actively regulating advisers to encourage them to be more vigilant about diminished capacity and exploitation.
Consider that a Harvard study has concluded that financial decision-making capacity peaks at age 53 and often declines rapidly thereafter. Whealthcare Planning has identified four age-related areas of transition: finances, daily living, health care and driving. Ignoring any or all of these issues can blow a hole in the best-intended financial plans. Advisers report that despite an instinctive reluctance to discuss these sensitive topics, clients are grateful for an opening to explore them.
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EMoney Advisor’s end-to-end client portal offers advisers a fully integrated mobile solution, providing a unified experience across all devices and making it easy for clients to access accounts on the go. Originally launched in 2001, eMoney Advisor aggregates more than 12 million accounts and $2 trillion in assets for over 3.1 million investors, all in real time.
The product provides a host of critical functions, from interactive charts and detailed summaries of accounts to an unlimited digital-document storage vault. Clients can create budgets, track spending and set alerts for key financial events. Moreover, the full-spectrum portal assembles a collection of tools to enhance collaboration between clients and their advisers.
For instance, virtual conferencing and screen sharing allows clients to meet with advisers from any location, and client tasking helps them to keep on top of goals. Additionally, automatic onboarding lets clients add their financial information to the portal in their own time. They can populate the system by providing answers to a set of dynamic questions that adjust based on prior responses.
These solutions together have boosted client satisfaction and improved retention for advisers. Specifically, advisers using eMoney Advisor with clients cite significantly increased assets under management, an ability to deliver more holistic advice, the capture of newly discovered assets, improved time efficiencies and higher recurring revenue.
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RBC BLACK is the first custodian-driven adviser platform that fully integrates five independent financial tools — account aggregation, CRM, risk analysis, goal-based financial planning and trading/rebalancing — into one suite. RBC Correspondent and Advisor Services’ RBC BLACK, which provides small advisers with economies of scale usually only enjoyed by giant wirehouses, costs firms 80% less than the price of purchasing its five technologies separately.
While many other platforms integrate technologies, and many custodians offer “open architecture,” RBC BLACK represents a distinctive approach. Others let users toggle among technology providers, but RBC actually displays all tools on one primary dashboard.
Advisers save time otherwise wasted on troubleshooting aggregation, or double-keeping information. This close collaboration with the five fintech partners has generated new solutions around identity verification, security, data flows, data presentation, data syncing and compliance reporting.
The RBC BLACK platform provides multiple benefits, allowing advisers to aggregate and advise on held-away assets, collaborate with clients to build a financial plan, anchor client expectations on a shared understanding of risk, and engage clients with targeted and relevant content. It can demonstrate to clients a clear rationale for why particular investments are being made.
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Advisers use Pershing’s Business Metrics Tool to track key performance indicators, such as productivity, profitability and client ratios. This interactive tool helps them reduce risk, measure capacity and results, and gauge trends. The hands-on benchmarking is particularly valuable for viewing the status quo relative to future plans, or comparing the firm against the industry. Users can compare themselves to similar firms by revenue size, business model or practice structure.
Pershing’s benchmarking, unlike those of its competitors, is not derived only from its own clients but from the entire span of RIAs, broker-dealers and hybrids.
Pershing clients can input and manipulate their own information with real-time access. From strategic direction to succession planning, clients sharpen their understanding of their position in the space, and clarify their evolving needs.
A rapid succession of mergers is driving the industry toward an RIA model. The Business Metrics Tool can play a key role in educating advisers and clients who are involved in that process, such as wirehouse partners that are creating their own RIA from several locations. It enables them to analyze appropriate economics and initiatives to drive profitable growth.
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