digital advice platforms

Mission: Impossible – Choosing the Right Digital Advice Vendor

“Your mission, should you choose to accept it, is to review and analyze the leading vendors in the digital advice space and select the best one for your firm.”

“This message will self-destruct in five seconds.”

Sometimes it seems that the only way to fully grasp the rapid advances in advisor technology is to be part of a secret government organization like Tom Cruise’s Ethan Hunt character from Mission:Impossible. But since none of us have watches that shoot laser beams or HALO skydiving suits, we just have to struggle to keep pace using more mundane methods.

One ways you could have increased your knowledge of the leading vendors in the digital advice space was to have attended a discussion I moderated at the recent In|Vest NYC 2018 conference.  An all-star panel provided a vendor-agnostic point of view that was as refreshing as it was informative. (See Digital Digest from the InVest 2018 Conference)

Doug Fritz, president of consulting firm F2 Strategy, gave an overview of a few of the leading vendors in the digital advice space.  He believes that the real challenge for wealth management providers is converting their people, process, and pricing from the old way of doing business into the digital sphere.

Many firms allocate time and energy to improving their technology, but very few actually focus on improving their internal processes for vendor selection and partnering, Fritz noted.

Fritz divided up the vendors into three buckets: Legacy Solutions, Current Leaders and Market Challengers.

Legacy Solutions

When thinking about the industry over the last 10-15 years, there are legacy firms that put a stake in the ground by offering some of the first wealth management digital experiences, Fritz observed. Vendors such as Scivantage have been around for a long time and have a compelling solution.

They’re established as some of the largest wealth management vendors in the country, but in the last five years, there have been new entrants that are very cool, attractive, fast, with great design, Fritz noted. These include Jemstep, Trizic, AdvisorEngine, and InvestCloud. (See Comparing The Best Digital Advice “Robo-Advisor” Platforms For RIAs)

According to Fritz, there isn’t any better or worse when it comes to evaluating which vendor is right for a particular wealth management firm.  You need to determine if the vendor can be more than just a provider of services and software but also be a central hub for all of your other technology to connect into as well as deliver an intuitive digital advice solution, he insisted.

digital advice platforms

Current Leaders

One way to think about how to separate these vendors is whether they are able to rebalance portfolios, handle CRM, act as a data repository, provide artificial intelligence services. Do they provide a deeper levels of functionality? 

If what you want is an elegant marketing plugged-in solution that will help drive business and create a great experience, Jemstep would be an outstanding choice, Fritz claimed. Especially so if you don’t need integrated portfolio rebalancing or CRM. (See 3 Thoughts on Why Invesco Acquiring Jemstep Was A Smart Move)

Trizic and AdvisorEngine are also very compelling and they are beginning to do more. Fritz believes that AdvisorEngine’s acquisition of Junxure earlier this year was a great example of an up and coming vendor expanding their capabilities beyond just a digital solution. They’re looking to become a competitor to Envestnet by building out their own end-to-end platform. (See Is AdvisorEngine Building a Tamarac Killer?)

Fritz feels that Trizic’s partnership with financial services giant FIS will be seen as a stroke of genius on the part of new CEO Drew Sievers. They’re making a major push to become the default provider of digital advice technology in the trust accounting market.

Sievers had a strong relationship with FIS before he became CEO since they purchased his previous company, mFoundry, a provider of mobile banking and payment solutions.  He believes that Ttrizic can not only dominate digital advice for FIS clients, but can be consumed across all bank channels including mobile, ATM, branch, and IVR.

Investcloud has spent a lot of time and money building out a comprehensive suite, but they are still perceived as offering only a client portal, Fritz observed. He recommended that firms do more than just scratch the surface since there’s a lot more they are capable of doing, he noted. Investcloud is now starting to compete with more mature technology platforms.

Market Challengers

Who are the market challengers in digital advice platforms?

According to Fritz, these are firms such as Morningstar with their Morningstar Office product, FactSet and their digital client experience solutions and Envestnet, which is a market leader for overall wealth management platform, but is playing catch up in digital.  

When you think about market challengers, it is normal to envision new cool tools that you’ve never heard of before.  But what Fritz sees are incumbents filling these slots.  

The advantages to this are that most wealth management firms already have established relationships with these vendors, so they can more readily access their digital tools. Fritz pointed out that people in their organizations already have experience with them, contracts have already been signed, and data channels have already been established, for example. They do not have inertia to overcome.

Another vendor that has been around for a while, but is making a play in digital is MyVest, Fritz added. Acquired by their largest client, TIAA, in 2016, MyVest was primarily focused on the managed account space before expanding into digital advice. (See Is MyVest the Right Portfolio Rebalancing Software for You?)

Fritz believes that they offer a compelling digital experience that any wealth management firm would be proud to provide to their clients. TIAA built their digital platform on MyVest as did Personal Capital, although former Paypal and Intuit CEO Bill Harris has an ownership stake in both firms.

Before jumping into bed with one of these digital platforms, you need to have a plan, Fritz stressed.  You need to know who you are as a firm, what makes you unique and different and what you want your client experience to be when they open their phone. If you don’t know what you want the advisor and client experience to look like, then any of these vendors will just lead you down the path towards mediocrity, Fritz warned. You have no chance at building an awesome client experience without a plan. 

One vendor that I would have added to this list would be SigFig, which has been making a big push into the retail bank space with their digital advice offering.  SigFig recently raised $50 million after securing a $40 million funding round in 2016.

In SigFig’s direct-to-consumer robo model, the average account size is around $60,000, but this grows to over $100,000 after six months on the platform, according to a company source.  

Another company that should be included in this conversation is Riskalyze and their AutoPilot product.  (See What Exactly is Riskalyze Building?)

Mergers & Acquisitions

What about acquisitions? Some of these firms have been acquired by larger companies. Does that help or hurt their business case, and should firms be happy or sad that they are no longer independent?

When thinking about the results of an acquisition, Fritz recommends looking at whether the target company is more stable post-acquisition. Take Jemstep’s acquisition by Invesco, which is a stable company with $4.6 billion in advice platforms

This instantly remove any fears you might have that the target company’s funding might dry up or that there’ll be market volatility and that clients will leave once they get acquired. One big question Fritz posed is how much the parent company will invest in the new unit and are they planning to use that unit (especially the digital experience) merely as a channel for their proprietary funds?

I think when some of the robo-advisor firms got acquired, most of us (Fritz included) thought FutureAdvisor was just going to become a delivery channel for BlackRock ETFs and LearnVest would become a Northwestern Mutual annuities provider. But that didn’t happen, and these firms didn’t do that, he noted.

You have to look at all those cases individually, but in some cases, the acquiring firms allowed their acquisitions to operate independently. Fritz believes that some of those acquisitions were about helping to bring innovation to the larger firms.

“You can’t catch innovation like you catch a cold,” Fritz warned. In his opinion, the MyVest acquisition has been great for both sides. It has helped them as well areas within TIAA that are really going to benefit from tighter integration and more focus on their advice platforms

A lot of banks that have deployed a digital advice solution haven’t been crazy about it, reported Gavin Spitzner, president of Wealth Consulting Partners.  It’s been kind of a rent-a-robo and there hasn’t been a lot of brand tie-in, he noted. So something like a Scivantage, where you can really take the toolset and build something very unique to you that’s not a robo. That’s where the opportunity is, he claimed.

None of these firms are really robo solutions, Fritz insisted. He doesn’t know any firm that wants a robo-advisor solution right now. What they want is a digital wealth management experience that could have a robo channel and have been for the last year and a half.

Whatever digital solution you buy should be implemented across the entire firm and for all sized accounts. Why should your smallest accounts get the best digital experience?  If someone is paying you $100,000-$200,000 a year in fees, then they should have a client experience that matches what they’re paying, Fritz emphasized.

To say that you can just pivot from a B2C robo-advisor to a full digital platform is a gross oversimplification, warned Will Trout, Head of Wealth Management at Celent. There’s a lot of work that needs to be done on the back-end in terms of deploying and implementing these type of digital advice solutions.. Financial institutions have to think about how their digital device platform integrates into the rest of the organization including other lines of business.

To your point about trust or even insurance, and we’ve seen some examples of digital advice platforms that incorporate insurance in the U.S. and Canada. So there’s still a long way to go,

If we were having this conversation five years ago, we’d be talking about direct to consumer models, Trout pointed out.  But the dialogue has shifted almost completely to where the platforms speak to some of the fundamental needs of banks and other firms in our industry, he stated. 

I recently wrote a very long blog post comparing five digital device platforms. I started of by saying that this is going to be the last time I write this, because there’s no more digital advice channel. There’s no vendor that only provides a self-directed onboarding solution. They’ve all morphed into full-featured, wealth management platforms, end-to-end products.

Fritz peered into his crystal ball and predicted that firms like Future Advisor, SigFig, and Betterment will soon build more complex wealth management capabilities, such as UMA. This would help these challenger firms take business from the legacy firms. He expects to see some of the more modern, nimble, cloud-based, aggressive, great experience digital robo firms move upmarket within the next 12 months.

Build vs Buy Decisions

There are firms that have built their own systems versus acquired or partnering. Do you have a preference one way or the other?

Whether a firm builds buys from vendor or builds their own code from scratch does not matter as long as they did their homework, got the best price and have the resources to support their decision, Fritz noted.  Tight integrations with the rest of the infrastructure was also important, he noted.

One negative aspect of building a proprietary system is that you’re locked into your code and could run into  severe limitations on growth and innovation if the architecture was not done properly, Fritz explained. 

One thing that is missing from Fritz’s vendor slide are the corresponding systems of record, Spitzner pointed out. On the broker side, there is Fidelity, Pershing, and TDA Ameritrade. On the trust side would be firms like SEI and FIS. Spitzner thinks these vendors are at an inflection point in deciding how much they should build out their own platforms as opposed to just partnering with other providers.

Can these digital advice platforms move upmarket and provide more bespoke, high net worth services, and offer separately managed accounts? Trout was not so sure of this. It could come from either the digital provider side, such as Jemstep or another robo-type platform, or it could come from an incumbent such as MyVest or even Vestmark, if decide to go that route. There are plenty of routes to reach the end point, and just because you’re a legacy provider doesn’t mean you can’t dive into this digital lane very quickly, he emphasized.



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at