The latest in financial adviser fintech — March 2020

The latest in financial adviser fintech — March 2020

Welcome to the March 2020 issue of the Latest News in Financial Advisor #FinTech – where we look…

Welcome to the March 2020 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 results of the latest T3 Advisor
Software Survey, which continues to show that a subset of dominant players hold
the largest market share in each key category… but that at the same time,
upstarts in virtually every major advisor software category from Advyzon to
RightCapital to Wealthbox to YCharts are gaining market share, and that some of
the biggest shifts in advisor interest are coming from the “miscellaneous”
listing of new advisor software categories that are still being created!

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

  • FP Alpha
    and Intelligent Decision Tools are both launching new “Expert System”
    artificial intelligence tools that help analyze client documents and data
    to provide not just financial planning projections but real financial
    planning observations and recommendations
  • Indyfin
    launches a new third-party lead generation service with its own bundled
    call center (to save advisors the time of qualifying prospects), while FMG
    Suite and TwentyOverTen launch their own website-integrated digital
    marketing tools
  • Fidelity
    spins off Akoya to build the next generation of account aggregation
    solutions that rely on (more stable) APIs than (constantly-breaking)
    screen-scraping by logging in with client credentials
  • RightCapital
    launches RightPay to facilitate fee-for-service financial planning payments
    as the trend of “Financial Planning as a Service” (FPaaS) continues to
    gain traction

Read the analysis about these announcements in this month’s column, and a
discussion of more trends in advisor technology, including the shift towards
“re-bundling” of the advisor tech stack into various platform combinations, the
rising trend of ‘second-act’ FinTech entrepreneurs coming back to launch new
companies to disrupt the ones they originally built and sold, the emergence of
Regulation Best Interest compliance and training tools as the June 30th
effective date looms, and the latest list of the Best (Advisor) FinTech
companies to work for!

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 column on financial advisor technology
to be helpful! Please share your comments at the end and let me know what you

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

Releases Annual AdvisorTech Software Survey Of Adoption And User Ratings
The domain of financial advisors is extremely fractured, with Cerulli
estimating nearly 300,000 financial advisors industry-wide, and even the
largest mega-players (e.g., LPL for independents, wirehouses Morgan Stanley and
Merrill Lynch, RIA custodians like Schwab) struggling to gain more than 5%
market share at a time. From the advisor technology perspective, when even
mega-enterprises have no more than single-digit market share and the majority
of advisors are ‘independent’ (either as RIAs, or under flexible independent
broker relationships with an independent broker-dealer), it becomes especially
difficult to understand industry trends in advisor software adoption, when the
base of users is so scattered and technology platforms may be popular or even
dominant in one channel but virtually non-existent in others (which means even
slight variations in sampling methodology can result in drastically distorted
perceptions of market share). Nonetheless, the most popular industry survey in
the marketplace today to understand advisor tech trends is the
T3 Advisor Software Survey
, historically produced by industry tech guru
Joel Bruckenstein (and now conducted jointly with industry commentator Bob Veres’ Inside Information
as well), which captures key data points on both what advisors are using
(market share), what they enjoy using (i.e., User Ratings), and what
advisors are looking to potentially adopt next. Notable data in the latest 2020
survey results includes: Morningstar
and Envestnet remain
the dominant players in the ‘All-In-One’ category (through their broker-dealer
distribution reach), though independent Advyzon and Commonwealth’s Advisor360 are making
positive strides; Redtail remains dominant in the advisor CRM channel,
followed by Wealthbox,
Salesforce, and Junxure; MoneyGuidePro and eMoney remain the big
players in financial planning software, but RightCapital is taking
a clear claim on 3rd; Morningstar Office and Albridge remain the top
players in portfolio performance reporting, but Orion is closing the
gap, Tamarac (with
its PortfolioCenter acquisition) is even larger, and Black Diamond
maintains a strong user base (with one of the highest User Ratings); Riskalyze still dominates
the risk tolerance category, and despite the hubbub of competitors, no recent
upstart challenger to Riskalyze has gained even 1% market share (to Riskalyze’s
30%+); Morningstar’s Advisor Workstation maintains a hold on investment
research, but competitors Fi360,
YCharts, and Kwanti are all gaining ground
(along with AdvisoryWorld since its LPL acquisition); Calendly is the most popular
amongst calendaring
apps for advisors
; and the most popular amongst the ‘miscellaneous’
category that advisors are considering include CopyTalk and Mobile Assistant for
client note taking, AdvicePay
for financial planning fee processing, and Everplans and Whealthcare for elder care and estate planning for clients,
and MaxMyInterest
for client cash management; and the “most valuable technology” for advisors was
ranked as CRM 1st, financial planning software 2nd, and
portfolio management tools a distant third (raising questions of whether
the latter, as traditionally the most expensive software of the advisor tech
stack, may soon face advisor pricing pressure

Artificial Intelligence Rules-Based Expert Systems Are Coming: FP Alpha
And IDT Launch At T3
. As a knowledge-based profession, there has
been a growing buzz in recent years about whether someday the exponential
growth of “artificial intelligence” would replace the human intelligence of
financial advisors in working with clients. Thus far, though, advisor software
solutions touting their “AI” features have been non-starters, with the actual
scope of “AI” often limited to little more than basic algorithms that do little
in practice to impact the advisor marketplace. However, at the recent T3
Advisor Technology conference, a new generation of Artificial Intelligence
tools are emerging: rules-based
Expert Systems
, which aren’t fully “artificial intelligence” – in that they
don’t actually learn from the data presented, and instead simply apply
a complex series of if-then statements and decision rules to navigate the
information – but do hold the promise of converting what has long been a series
of mental flowcharts and checklists that advisors implement in their heads
based on their CFP knowledge into technology-driven recommendations. After all,
the reality is that most of the technical knowledge of financial planning
really does amount to little more than understanding which analysis and
recommendations are appropriate given various information and data gathered
from and presented by the client… which in the end, is especially conducive to being commemorated
in checklists and flowcharts
(which in turn can be programmed into
technology). Accordingly, the recent T3 conference witnessed the launch of both
FP Alpha, and also Intelligent Decision Tools, both of which
are rules-based
expert systems that gather various types of client data and use it to generate
prospective financial planning observations and recommendations
. In the
case of IDT, the primary channel for gathering data is whatever clients input
to the software itself; with FP Alpha, the tools are built to actually scan key
client documents in PDF format (e.g., a homeowner’s insurance policy) to
identify key information and identify planning opportunities (akin to what Holistiplan debuted at the XYPN FinTech
last summer with respect to scanning tax returns to identify
planning opportunities). Notably, though, the new FP Alpha and IDT (and
Holistiplan) tools are not necessarily meant to be a replacement to traditional
financial planning software (still needed to do the calculation projections),
nor a replacement to financial advisors themselves (as both companies emphasize
they see their role to augment financial advisors, not replace them). After
all, even if an Expert System can fully identify all of the technical planning
opportunities, the reality is that financial planning is about more than just
telling clients what to do, it’s also about giving
them advice that they’ll actually implement that “sticks”
… which, because
our brains are wired to interact with and communicate with other human beings
when deciding to change our behaviors, largely remains the domain of
human-to-human financial advice. Nonetheless, with Expert Systems beginning to
emerge, the shift of financial advisors from doing the analytics and crafting
recommendations, to helping
clients better discover what goals they really want to pursue
and implement
the behavior changes to achieve them
, may begin to accelerate if the
technology really can both improve the quality and consistency of advice (as
Expert Systems have the potential to not only ensure better recommendations and
that key information isn’t missed, but will also likely be compelling to
departments that are especially concerned about the business
risks of inconsistent advice!).

Diamond Founder Reed Colley Continues Trend Of AdvisorTech Founders Returning
For Second-Act Disruption
. It was 1997 that Clayton Christensen
first published “The
Innovator’s Dilemma
”, documenting the phenomenon of why large
established firms with dominant market share and reach can still be “surprise”
disrupted by new innovation. The problem, in essence, is that an innovation
that makes a company successful in the first place often makes the business so
large that it cannot justify deep ongoing investments into new ideas (in
part because even if it “worked”, the early stage offering is often so small
and niche that it can’t move the needle of sales/growth at a large
firm). Yet by failing to do so, an emerging niche player can gain momentum,
move upmarket, and by the time it reaches an ‘established’ product or offering
it’s growing so fast that the incumbent doesn’t have time to react… and is
thereby disrupted. In the context of the AdvisorTech world in particular, the
challenge of the Innovator’s Dilemma appears to be playing out in a newly
emerging pattern: founders that innovate and create AdvisorTech companies, sell
them, and then re-appear as second-stage entrepreneurs to build the new
innovation they ‘couldn’t’ build in (and that may even disrupt) their original
company, from Oleg
Tishkevich selling FinanceLogix to Envestnet and launching
, to Edmund
Walters selling eMoney Advisor to Fidelity and launching Apprise
. And now,
at the 2020 T3 Advisor Technology conference, the pattern is playing out again,
with the announcement that Reed
Colley – founder of Black Diamond, which was sold to Advent for $73M in 2012 –
is “back” launching a new company dubbed “Summit Wealth Systems”
, hiring
some ex-Black Diamond and ex-Advent leaders, to build a new performance
reporting tool. Of course, “performance
reporting” is already a crowded segment of the AdvisorTech landscape
, but
Colley emphasizes that the focus is not simply to build a new performance
reporting competitor but to recognize that the ‘next generation’ of performance
reporting is shifting away from how to do reporting better and into an
entirely new format and approach of how to answer the client question “Am I
going to be okay?” (A domain where most advisors still rely on external tools
to relate investment results back to financial planning goals, or even just
show the client’s path in an Excel spreadsheet.) Ultimately, whatever Summit
Wealth Systems’ new offering will be, Colley indicated that it won’t likely be
released until the 3rd quarter of 2020. But in a world where so much
AdvisorTech creation and disruption has come from advisors themselves (building
“homegrown” solutions to solve their own problems and then selling the solution
to other advisors), the success of AdvisorTech in the 2010s – including a
number of high-profile sales – appears to be driving an exciting new kind of
AdvisorTech innovation in the 2020s: successful AdvisorTech entrepreneurs
coming back with second acts with more resources, experience, and perspective
than ever before.

Re-Bundling Trend Accelerates As Carson Group Rolls Out “Free” Tech Stack
In the early days of financial advisor technology (the 1980s and 1990s), the
“best” technology was found in wirehouses and other mega-firms that had the
financial resources to invest into developing those tools, while independent
advisors languished with a cottage industry of mostly homegrown tools. The rise
of the internet and the emergence of APIs, however, turned this equation upside
, suddenly making it possible for various combinations of independent
technology to be woven together, so accelerating the growth of independent
advisors and their technology that today major ‘independent’ technology
solutions like eMoney Advisor have more advisor users than all wirehouses
combined! Yet the challenge of the explosion of the independent AdvisorTech
ecosystem is that it forces advisors to choose the various combinations of tech
necessary to make their own firm-specific tech stack… a challenge that many
advisors, being focused on the financial services industry and their clients
(and not being ‘techies’), are ill-equipped to handle. As a result, the nearly overwhelming plethora of
AdvisorTech choices
is leading to a new trend of “re-bundling”, where
various advisor platforms try to group together the components of a
valid advisor tech stack and offer a single consolidated solution, including
both custodians (e.g., Fidelity
), broker-dealers (e.g., RBC Black),
independent technology companies (e.g., Envestnet
or Orion)… and now
platforms that aggregate independent advisors together, such as Dynasty Financial, XY
Planning Network
, and most recently, the Carson
. As while a subset of the most independent-minded advisors will
likely always want “total” control of their technology – and continue to select
their own tools one by one – the pressure and challenge of weaving together an
ever-growing number of independent tools to properly integrate and pass
relevant data and actions back and forth means that more and more advisors are
willing to select a curated combination solution that will just “work” (based
on the vetting and negotiation of their platform). Ultimately, though, the
caveat is that not
everyone can be a true advisor “platform”
, and it remains to be
seen which players will emerge as dominant when the bundled platforms of
custodians and broker-dealers clash with the bundled platforms of technology
companies which in turn are increasingly clashing with the bundled platforms of
advisor aggregator platforms. Nonetheless, the key point remains: while the
emergence of the internet and APIs has made it possible for an innumerable
range of independent AdvisorTech solutions to blossom, in the end most advisors
just want all their technology to “work” together… which means if the solution
of the future isn’t a holy grail all-in-one, the opportunity remains for
various advisor platforms to create their own all-in-one equivalents
by patching the solutions together themselves into a bundled offering!

Launches Online Lead Generation Solution With Bundled Prospect Screening Call
. The good news of the ongoing shift of financial advisors
towards providing increasingly holistic financial advice is that consumers
receive broader and more integrated recommendations, and advisors have the
opportunity to demonstrate a broader and more compelling value proposition to
justify their fees. The bad news is that when ‘all’ financial advisors
providing individualized and personalized comprehensive financial planning
advice based on their credentials and years of experience… consumers can’t figure
out which advisor to choose, and growth
rates begin to slow as the average advisor increasingly struggles to
differentiate from all the rest offering the same solution
. This “crisis
of differentiation
”, in turn, has led in recent years to a proliferation of
new “lead generation” services for financial advisors, bundling together the
capabilities of the internet (and online/digital marketing) with the desire and
of financial advisors to pay quite generously for new clients
. The caveat,
however, is that most financial advisors don’t have well-developed sales systems
to handle a significantly larger volume of prospective client leads… to the
extent that a
recent Kitces Research study showed that financial advisors are more satisfied
with their lead generation services based on the quality of the leads
(i.e., whether the prospect was qualified and really interested in doing
business with the advisor) than the actual cost efficiency of the solution

(i.e., whether the revenue generated is a good return on investment for
spending on the lead generation solution). In this context, it is notable that a
new lead generation solution – Indyfin – launched at the recent T3 Advisor
Technology conference
and, unlike other advisor lead generation competitors
that simply try to serve up online prospects to advisory firms, will engage its
own call center to pre-screen, vet, and qualify the lead before handing
it off to the advisor (and then providing relevant prospect information to the
advisory firm to help close the client), while only charging (and a
revenue-sharing basis as a solicitor) for the prospects who actually close and
turn into clients of the advisory firm. Of course, the caveat to all such
advisor lead generation systems is that, in the end, they’re only as good as
their ability to actually generate prospective leads in the first
place – regardless of their screening and vetting process – and it remains to
be seen whether Indyfin will be able to
generate the necessary top-of-funnel flow of leads to put through their system
and serve up a subset of the highest-quality prospects to advisory firms in the
first place. Nonetheless, with a
recent Kitces Research study showing that advisory firms have an average Client
Acquisition Cost of $3,119
– much of which is based on the available time
of the advisor and is therefore constrained by the advisor’s time – there is
arguably still a substantial opportunity for whatever platform can
first crack the advisor lead generation formula… for which Indyfin may be
uniquely positioned by focusing on lead quality over just volume or lead
generation ROI alone (which fits best into the psyche of how financial advisors
actually like to buy and pay for leads!).

Launches LeadPilot
Suite Launches Curator
Integrated Content Marketing
Platforms To Capitalize On Advisor Tech (Integration) Fatigue
. For
anyone in the business of “selling” – especially when they sell a complex
product, or themselves and the complex value of their advice – one of the most
important sales tools in the toolbelt are ones that help collect data from and
‘nurture’ prospects through the sales process (until they actually become
clients). In the world of software sales itself, solutions like SalesLoft have filled the void, but in the
realm of financial advisors there are remarkably few options beyond the
relatively basic capabilities of advisor CRM itself (which is mostly focused on
recording and capturing what advisors are already doing in the sales process,
not to actually facilitate sales engagement itself). In turn, this gap
for content marketing and digital engagement tools has led in recent years to
the emergence of players like SnappyKraken
as standalone third-party solutions. But given that advisor content marketing
will generally happen on a financial advisor’s own website, it’s
perhaps not surprising that advisor
website maker FMG Suite launched Curator
, and
similarly, TwentyOverTen has launched its own embedded content marketing
platform, dubbed LeadPilot
. The emerging trend is interesting for two reasons.
First, like SalesLoft (and unlike standalone CRM sales trackers), these new
products will give advisors substantially more context on their prospects and
make those first in-person interactions (when prospects move from the digital
to ‘analogy’ realm) more value-packed. Rather than the same series of the same
generic questions for each prospect, now advisors can tailor questions in their
approach talks to what the prospect has already identified as the reasons they
engaged. (Fingers crossed that this eventually starts to pre-fill financial
planning software, too! Imagine the next-level client experience when a
prospect comes in for the first time and the advisor already has their goals
and profile built?!) The second reason these new content marketing platforms
are interesting is the vertical integration with TwentyOverTen and FMG Suite’s
core businesses. Already some of the more widely adopted website providers for
advisory firms, it is a huge advantage that LeadPilot and Curator are
architected to live inside TwentyOverTen and FMG Suite websites and inform the
compliance dashboards (though notably, advisors don’t need to be a
TwentyOverTen website customer to use LeadPilot), potentially reducing the
recent phenomenon of advisor “tech fatigue”. Advisor fatigue with their
technology solutions is often attributed to advisors having too many software
options to choose from
, but in reality, it is a challenge of insufficient integrations
to facilitate interactions between their client-related software tools.
After all, a recent
marketing technology study showed that the average non-financial services
enterprise uses 91 pieces of marketing software in their tech stack
and 43 pieces of sales/CRM related software
! And every business has to
purchase their non-industry-unique software as well (e.g., financial software
for accounting, bookkeeping, and bill paying, productivity software like
Microsoft Office or Google Apps, cybersecurity for firewall and intrusion
detection, etc.). But the lack of consistent integrations across the key
components facilitating the advisor-client (or advisor-prospect) relationship,
in particular, can quickly produce advisor tech fatigue in the struggles of
getting systems to “talk to each other” better. Thus, until the integration
gets tighter in our industry, advisors will likely continue to be hungry for
more bundled or vertically integrated software that reduces 3rd party
integration headaches… as FMG Suite is now offering with Curator, and TwentyOverTen is offering with LeadPilot.
Though ultimately, the real question, in the long run, is not the efficiency
and integrations of advisor digital marketing platforms… but simply whether
they can scale their website traffic enough to generate the necessary
‘top-of-funnel’ prospects to make those marketing systems work in the first

Launches LiveTrack As Retirement Planning Tools Shift From Upfront Planning To
Ongoing Relationship Support
. For most of its history going back to the origins in 1969,
“financial planning” was a form of consultative
needs-based selling
where “The Plan” demonstrated a gap or need of the
client… which the financial advisor could then “solve” with a product to sell,
whether an insufficient amount of life insurance coverage (buy this insurance
policy to eliminate the coverage gap!) or a retirement savings shortfall (add
more money to this advisor-managed retirement account to get back on track for
retirement!). Which means in practice, financial
planning software has largely functioned as a (product-centric) point-of-sale
, where data is gathered during the initial prospect or client process,
analyzed, used to craft a recommendation, which is then implemented… and at
that point, the financial planning software falls by the wayside until the
client’s situation changes and a new analysis must be run (generally to
identify a new sales opportunity). Yet with the ongoing shift to the assets
under management model over the past 20 years – and more generally, the
transition from a transactional-sales to an ongoing-relationship business model
– the advice process for advisory firms themselves is less and less about the
upfront “sale”, and instead far more about the ongoing advice and
relationship experience with the client; after all, industry benchmarking
studies routinely show that top advisory firms have 97%+ retention rates, which
means the average client will be around for 30(!) years… even as financial
planning software remains primarily focused on the first 3-6 months of the
client relationship, and not the 29.5 years to follow! However, this
perspective is beginning to shift, as various advisor-led software solutions
are beginning to emerge that are focused more and more on not just
what happens in the initial advice process with clients, but also how to track,
monitor, and add value to the relationship on an ongoing basis
as well. In this context, it is notable that at the recent T3 Advisor
Technology conference, Timelineapp –
which makes retirement planning tools to facilitate advisors implementing
retirement portfolio-based sustainable withdrawal strategies
– announced a new “LiveTrack” feature build to show not
just whether the client can afford to retire (or not), but whether their ongoing
spending in retirement is within the parameters of their original spending
(given subsequent changes in value due to withdrawals and market
performance, which can
be pulled in from external portfolio performance reporting systems like Black
Diamond via integration
) and help clients understand in real-time when
spending adjustments may need to occur to stay on track (and if the client does
veer off track, notify the advisor to intervene). The good news of such ongoing
real-time monitoring tools for clients is that they provide a way for the
ongoing to demonstrate ongoing value outside of the portfolio management
itself. The caveat, however, is that when the rest of the financial
planning process still occurs within financial planning software, it remains to
be seen whether third-party solutions like Timelineapp will be adopted
separately and in parallel by advisors (where traditional financial planning
software handles the upfront planning process and Timeline the ongoing),
whether the two will become more integrated on an ongoing basis… or whether
traditional financial planning software will finally begin to shift more
effectively from being an upfront sales tool to an ongoing advice platform

Launches RightPay As Demand For Fee-For-Service Payment Platforms Grow
While the 1980s and 1990s were the heyday of the commission-based model of
financial advisors selling mutual funds and insurance policies, and the 2000s
and 2010s were the assets under management model of managing comprehensive
portfolios, the 2020s are marking the shift into the “Financial Planning As A
Service” approach where advisors charge ongoing non-commission non-AUM fees for
ongoing financial planning advice or a
calendar of ongoing planning services
(e.g., in the form of monthly
subscription fees
or quarterly or annual retainer fees). The benefit
of the Financial Planning As A Service (FPaaS) approach is that it expands the
marketplace for financial advice itself
, as advisors no longer must
constrain themselves to clients who have investable assets that are liquid and
available to manage (and clients willing to delegate), and instead can serve
any type of client who simply has the financial wherewithal (from assets or
from income) to pay for financial advice. The caveat, however, is that the commission-based
model had a natural payment mechanism for the advisor (paid directly by the
product company to its sales agent), as did the assets-under-management model
(collected directly from the accounts that the advisor manages)… while the
early stages of the FPaaS model has had to rely on collecting physical paper
checks from clients (which is time- and labor-intensive, and very difficult to
scale, especially in ongoing recurring revenue models that would collect checks
on a regular monthly or quarterly basis). In turn, the difficulties in getting paid
for FPaaS under various fee-for-service models has spawned the creation of
third-party payment processing solutions like AdvicePay,
built to fit into existing financial advisor technology and workflows and check
the necessary boxes for financial advisor regulation when collecting financial
planning fees via credit card or bank account ACH. To the extent that financial
planning fees are collected for doing a financial plan, though, it is
arguably more natural for clients to facilitate their financial planning
payments from directly within their financial planning software… and
accordingly, this month, financial
planning software company RightCapital announced the launch of its own
“RightPay” solution
to allow advisors to bill client credit cards (but not
currently bank accounts) for financial planning fees from directly within
RightCapital. On the other hand, the caveat to having financial planning fee
billing built directly within planning software is that few advisory firms
operate an exclusively FPaaS model, and most are still at least working with
some assets-under-management clients as well… which makes payment solutions
more natural to integrate with AUM fee billing platforms than financial
planning software. And in the context of large advisor enterprises – where it’s
not uncommon to advisors to use different financial planning software solutions
under one umbrella – collecting fee-for-service payments within one financial
planning software isn’t feasible for the advisors who use other tools. Which
raises the question of whether RightCapital offering RightPay will be able to
induce enterprises to switch all of their advisors to centralize
with RightCapital in order to gain the fee-billing efficiencies… or if instead,
firms will choose to centralize their billing instead and allow their advisors
to remain flexible in which planning software they use to generate the
financial plans for which they’re charging their fees?

Spins Off Akoya To Facilitate API-Based Account Aggregation Connections (That
Won’t Constantly Break!?)
. In theory, account aggregation should
be one of the greatest efficiency improvements available to financial advisors,
facilitating a continuous flow of data that collects financial planning data,
keeps it updated on an ongoing basis, and even helps advisors spot financial
planning opportunities with clients in real-time. In practice, though, the
efficiencies of account aggregation have been erratic at best, driven in large
part by the inconsistency of the solutions themselves, with links to external
accounts that routinely “break” and have to be re-connected (and cannot by
reconnected by advisors themselves, instead often requiring clients to manually
log in to update their credentials), and data that is ported inconsistently due
to what is still a heavy reliance on ‘screen-scraping’ data directly from a
website login rather than porting the data more directly (in a richer and more
standardized format). And the situation hasn’t been helped by the fact that
many external companies have used and leveraged account aggregation to
facilitate transactions against the data providers themselves – for
instance, platforms
that use account aggregation from banks to automate transferring money away from
those banks into higher-yielding alternatives
, or others that leverage
account aggregation data to help consumers find better deals on credit cards
than what they currently hold. Yet with the
recent acquisition of account aggregation facilitator Plaid by mega-incumbent
Visa for $5.3B
, account aggregation has suddenly be shifted from an
‘outsider’ platform threatening banks and credit card providers, to an industry
participant that is a major credit card provider and key partner of
banks… which on the one hand means account aggregation is here to stay,
and on the other suggests that Visa may soon use its size and clout to ‘force’
the industry to play more nicely in the account aggregation sandbox. In this
context, it is perhaps not surprising that Fidelity
announced its own account aggregation ‘deal’ this month, spinning off Akoya
which will provide a secure API framework to facilitate account aggregation
that is jointly owned by Fidelity and the Clearing House Payments Company
and its 11 major member banks. In other words, Akoya
is building towards a non-screen-scraping API-based alternative that
should create more accurate data flows that remain more consistently connected
(for all users of Akoya, which ostensibly will include Fidelity’s own eMoney
Advisor). And because it will be owned by a conglomerate of banks and
other incumbents, is ostensibly more likely to actually be adopted and
implemented (whereas in past years, banks
have often resisted more API-based solution that would be more stable and
secure but may have also accelerated their own asset disintermediation
Ultimately, it remains to be seen which players, in particular, will prove
dominant, and how Plaid and Akoya will position themselves against Envestnet’s
Yodlee and other solutions… but the trend is clear towards industry incumbents
that have historically held account aggregation at arms length instead bringing
them into the fold, which from the advisor perspective should facilitate more
accurate and stable data connections and the potential for more
ways to leverage account aggregation beyond just flowing the data itself and
into real-time financial planning actions and recommendations for clients

Launch Regulation Best Interest Training And Support Modules

As June 30th Implementation Date Looms
. While critics have
lamented that Regulation Best Interest failed to implement a full fiduciary
duty to the recommendations provided by the registered representatives of
broker-dealers, “Reg
BI” has increased the standard that applies to brokers above what
previously applied
under the existing suitability standard. Which means,
from a practical perspective, that broker-dealers will need to be even more
mindful and vigilant in their oversight of their brokers to ensure that advice
meets the new ‘Best Interest’ standard. As when a similar rule change occurred
in 2016 under the Department of Labor’s fiduciary rule, one of the most
straightforward ways for large broker-dealer institutions, in particular, to
ensure compliance with new standards is to implement technology that itself can
standardize and make their broker recommendations more consistent, easier to
review (through technology channels), and leverage technology itself to help
identify potentially problematic recommendations and/or to provide training to
their brokers on how to deliver more effective (and compliant) advice.
Accordingly, with the Regulation Best Interest implementation date of June 30th
looming large, advisor technology firms are beginning to roll out their own
solutions to help support Reg BI compliance, including a
new series of Reg BI training modules from Fi360 (produced in collaboration
with ERISA fiduciary guru Fred Reish)
, and Riskalyze
is incorporating more Reg BI oversight capabilities into its tools as well

a trend that is likely to continue in the coming months as more broker-dealers
focused on new Reg BI compliance requirements and technology companies aim to
fill the void. In fact, with a
lawsuit pending from XY Planning Network that could vacate Reg BI
– just as
the Department of Labor’s fiduciary rule was also vacated by an industry
challenge – advisor tech firms are likely limiting how much they invest into
Reg BI solutions (for fear of seeing their new offerings scrapped if the rule
is vacated), and broker-dealers themselves will likely wait until the ‘last
minute’ to fully implement their Reg BI compliance regimes (again just in case
the rule itself is vacated). Which means if the courts rule in favor of the SEC
this time around and Reg BI really does go through, there will likely be a mad
scramble of AdvisorTech compliance solutions being rolled out and implemented
in May and June?

Financial Planning Magazine Releases (Third) Annual “Best FinTechs To Work For”
. While the emerging shortage of next-generation advisor
talent is creating an increasing focus on how to create high-quality appealing
work environments to attract and retain that talent, when it comes to the
technology industry, it already is – and has long been – a hyper-competitive
environment for the best tech talent. The challenge is perhaps especially acute
in the world of Advisor FinTech, where even “big” companies won’t likely ever
reach the size and scale (and stock-option-compensation potential) of FinTech
high-fliers like Stripe, SoFi, Plaid, and Gusto. Accordingly, Advisor FinTech
companies have to compete with talent on the strength of their missions, the
quality of their firms, and the appeal of the work environment itself. For
several years now, Financial
Planning magazine (via its parent company Arizent) has run a “Best FinTechs To
Work For” list
, which isn’t specific to the domain of Advisor FinTech, but
does include a heavy component of AdvisorTech companies in particular. Popular
AdvisorTech winners this year included investment research platform YCharts (#1), AdvisorTech consulting firm ActiFi (#2), digital marketing firm Snappy Kraken (#7), advisor CRM Redtail (#11), bond
trading platform 280CapMarkets
(#13), and portfolio performance reporter and all-in-one Advyzon (#34). Popular ‘perks’ included
flexible work schedules, a $100/month allowance for local co-working spaces
(for firms with remote employees), sabbatical and service awards, and generous
employee health insurance and related benefits. Though ultimately, most of the
leading firms appear to emphasize their culture and mission, more so than any
particular financial or related perks!

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? Are AdvisorTech entrepreneurs who sold their first companies and come back for ‘second acts’ the best way to push forward industry innovation? Do you think financial planning Expert Systems will gain adoption from advisors (or will they be viewed as a threat instead)? Is it better for advisor technology to remain unbundled, or become more bundled again? And is there really a gap for software solutions to help track and monitor client progress in the relationship after the initial financial plan?

Disclosure: Michael Kitces is a co-founder of AdvicePay and a member of the Advisory Board for Timeline, both of which were mentioned in this article.

Kyle Van Pelt, who contributed to the commentary on FMG Suite & Twenty Over Ten, is part of the Strategy team at SS&C Advent. You can connect with him via LinkedIn, or follow him on Twitter at @KyleVanPelt.

Michael Kitces is the Head of Planning Strategy at Buckingham Strategic Partners, co-founder of the XY Planning Network, AdvicePay, and fpPathfinder, and publisher of the continuing education blog for financial planners, Nerd’s Eye View. You can follow him on Twitter at @MichaelKitces.

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