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“The solution often turns out more beautiful than the puzzle.”
— Richard Dawkins, British ethologist, evolutionary biologist, and author
This month, we cover six stories in wealth management technology related news. Four of them are acquisitions. This is not a new trend as we see a constant boom and bust cycle in almost every industry. A recurring theme of bundling together solutions with common themes or that compliment each other and trying to make the whole worth more than the sum of the parts. And shortly afterwards, the Great Unbundling Migration, as startups crowd into a space offering point solutions to target niches left open by the giant conglomerates who have corporate strategy indigestion from consuming so many competitors.
We have a wide range of wealthtech categories including roboadvisors, TAMPs, financial planning software, private cloud providers and onboarding/workflow systems. Something for everyone. Which ones make sense and which ones could eventually fall apart? You’ll have to read or listen to this episode to find out.
Companies Mentioned:
- Apex Clearing [02:25]
- Apprise Labs [11:24]
- AssetMark [16:43]
- BlackRock [02:19]
- Bluff Point Associates [05:47]
- eMoney Advisor [11:40]
- Envestnet [11:23]
- FreeWill [01:32]
- FutureAdvisor [04:42]
- Itegria [08:58]
- LegalZoom [03:14]
- Lincoln Financial [18:59]
- Marstone [01:30]
- NaviPlan [12:43]
- OS33 [09:00]
- RetireUp [21:22]
- Right Capital [21:22]
- RightSize Solutions [09:00]
- Salesforce [26:13]
- SEI [28:12]
- SigFig [04:38]
- Skience [23:52]
- True North Networks [05:43]
- Voyant [16:45]
Topics Mentioned:
- Marstone Integrates FreeWill’s Estate Planning Solutions into its Comprehensive Digital Wealth Management Platform
- Compliance Fintech True North Acquired By PE Firm Bluff Point Associates
- Envestnet Acquires Apprise Labs’ Estate Planning Tech
- AssetMark to Acquire Voyant
- Skience Launches New Data Aggregation Capability
- SEI Buys What’s Left of Oranj
Podcast Transcript:
Craig: Come on in sit back and enjoy episode 93 of the WealthTech Today podcast. I’m your host Craig Iskowitz, founder and CEO of Ezra Group, a consulting firm. And if you work for an enterprise wealth management firm, asset manager, RIA aggregator, or any of the many technology vendors in our space, then Ezra Group can help you make better technology and business decisions. Please check us out at EzraGroupllc.com.
This podcast features interviews, news, and analysis on the trends and best practices, all around wealth management technology. A few housekeeping tasks before I continue be sure to subscribe to this show wherever you listen to podcasts so you don’t miss any future episodes, and please go to our website EzraGroupllc.com and you can register to catch the recording of our most recent webinar called the journey towards data-driven wealth management. If you have any involvement at all in the data infrastructure or data asset strategy at your firm, or if you use any data at your firm, you’ll want to attend this webinar, at least the recording of this webinar, which you can find at our website EzraGroupllc.com.
Marstone Integrates FreeWill’s Estate Planning Solutions into its Comprehensive Digital Wealth Management Platform
All right, first story in our April News Roundup, Marstone partners with FreeWill. Marstone, a digital advice, wealth management technology provider partners with a startup providing will and estate planning, which is called FreeWill. Now if you’re regular listeners to our podcast here, WealthTech Today, you have heard of Marstone’s CEO, Margaret Hartigan, the co-founder and CEO. She’s been on a program before you can do a quick search and you’ll find the previous interview with her if you want some more information. Marstone has been doing well in the space offering digital advice solutions. They’ve made some big announcements over the years. They have partnered with and sold a deal to HSBC for their new digital wealth, their digital advice offering, they have partnered with BlackRock to offer their model portfolios on their platform. Last year they partnered with Apex to launch digital wealth solutions as Apex looks to take a bigger chunk of RIA business, and you can listen to my podcast interview with Tricia Rothschild, the president of Apex Clearing. But what does this deal mean?
So FreeWill, honestly, I consider myself an expert in advisor technology, I’d never heard of FreeWill before. Apparently it’s a startup, as I mentioned in the will and estate planning space. And this is something we’re seeing more of, although this is a much smaller scale. So FreeWill uses into a simple interface to guide clients through answering basic questions, and then helps them build documents that can be printed and signed in front of a notary or witness and becomes a valid legal document. Seems to me like some of the sort of a LegalZoom that advisors can offer their clients. Now they’re a startup, FreeWill they’re small. They have a network of lawyers across several states, I think 11, that’s still a very small, but it reminds me of what Envestnet’s doing with their trust exchange, where they’re looking to offer advisors sort of automated process and network for reaching out to qualified lawyers, accountants, and other professionals around estate planning and trust requirements.
So it seems like FreeWill is doing something similar and Marstone has partnered with them to integrate with their platform to enable self-directed investors who are coming on to these platforms to also access legal and and will and estate planning documents. We’re seeing a lot more of these integrations with financial planning tools into wealth platforms, and I’m a big proponent of that. I’ve always asked why we have separate tools and separate databases for CRM, financial planning, portfolio management, and such when it just creates more friction more issues moving data back and forth, why not have one data source for all that to share. So this could be a step in that direction, but it’s definitely good for Marstone to start partnering with some of these firms to offer more functionality, look for ways to differentiate themselves because they have competitors still, firms like SigFig who have deals with Wells Fargo and UBS, firms like FutureAdvisor owned by BlackRock who was their partner.
FutureAdvisor has BBVA and US bank and others. So they’re still competitors out there that are looking to help broker dealers, banks asset managers, and other firms offer digital advice solutions. So Marstone needs to stay on top of things, but I’m confident that Margaret Hartigan can do that. She’s had a nose for staying one step ahead of the game and keeping her firm unique and differentiated also around the ideas of financial wellness and making things easier for consumers, investors who maybe don’t have enough assets for the full advisor experience, but still want to be somewhat connected to advisors or to other financial institutions. So they’ve got some good things going and I’m looking forward to seeing what else Marstone can come up with to build out their ecosystem for digital financial advice.
Managed Service Provider TrueNorth Networks Acquired By PE Firm Bluff Point Associates
Story number two, True North Networks acquired by PE firm Bluff Point Associates. True North Networks is a managed service provider. In case you don’t know what they are, they provide network support, cloud integration, virtualized, desktop environments. They are a soup to nuts hardware network software provider in one package. And we’ve done some research on these types of offerings, these services, there’s over, I think over 20,000 MSPs in the US but not all of them are in the financial services area and only a small percentage really focus on advisory firms. Although, if you are looking for this type of service, you really want to go with a firm that knows investment advisory knows RIAs, and there aren’t that many of them. True North Networks was one of the leaders in the space, and we had done some research in the area and True North gets great reviews, all their clients who are like them. They’ve been stealing business from some of the other firms. So I think this is a great move by PE firm Bluff Point Associates. We are not sure how much they paid, but I would hope they paid a fair amount and helped Steve Ryder and his firm and move on and help build out their infrastructure and their offerings, because it is very capital intensive. What they’re basically doing is offering a private internet. So when you connect your RIA to True North, you don’t talk to the main internet. You’re running on a parallel version of the internet and they build out pipes to all of your vendors. They’ll build out a pipe to Riskalyze and build a pipe to your custodian, a pipe to your portfolio management software. You’re not really going over the public internet, you’re going through encrypted pipes that run alongside the internet.
It’s much more secure. It’s much harder for hackers or anyone else to get into your network, to interact with you or interact with your employees. They also control or can control, if you’re going to all out, they can control your email all aspects of your network. They would even offer to manage your local hardware, everyone’s laptops or desktops, computers. They would manage that, they’ll drop ship you a new one if it breaks, that way everything’s controlled by them. They’re all exactly the same. So they’ve got the same software setup. It’s very secure and very standardized. The downside is it’s hard to change. It’s hard to improve if you have new ideas, you just can’t load new software on your computer, or your laptop, and neither can your advisors or other parts of your business.
And that’s both a blessing and a curse. It’s a curse because, Hey, if I want to try something, I can’t necessarily without getting my MSP to approve it and get it onto the network. It’s a blessing because people can’t just load stuff they want onto your network. So it really reduces the amount of malware and viruses and other things that can sneak into your network through someone’s software or USB drive. They’ve become very popular, a lot of firms are using MSPs. The top firms when we looked at things two years ago, I believe we did our scan of MSPs were in alphabetical order. Itegria, OS33, RightSize Solutions and True North Networks. That’s just in alphabetical order, not in market share order, but those are the big four big firms. And now PE firm Bluff Point Associates owns True North and they also own RightSize, so they own two of the four that we reviewed. RightSize was purchased by one of Bluff Point’s portfolio companies called Swizznet, great name. I would imagine they’re going to combine True North and RightSize somehow. It only makes sense since this is such a capital intensive business, having to have all this infrastructure, cloud networks and other hardware and such. Being able to combine these two would help reduce their costs. And these vendors, even though they’re offering private cloud networks, they are reselling other cloud providers. They don’t really build the cloud networks themselves. They resell Microsoft Azure, Amazon Web Services, Google Cloud, and other providers. Being able to combine those two would also save some money, save some support issues across RightSize and True North if they could combine them.
Besides offering application maintenance, they also do monitoring upgrades patching. All of your servers and all your software or your computers all have the latest operating system patches, which is one of the biggest risks that firms face. Most hacking is done through unpatched software. So outsourcing to an MSP can eliminate that, and it’s not cheap, but if you’re getting peace of mind, by going with an MSP like True North.
I would expect PE firm Bluff Point to announce some sort of merger between RightSize and True North. It’s going to help them expand their market share, which I believe they already have some decent market share. And firms should look into these these companies, even if you want to look at OS33 or Itegria, if you’re an RIA and you believe you need better cybersecurity security, or you want to upgrade what you’ve got, call these guys and see what they have to say. We recommend True North networks, I like Steve Ryder and his team. But check out the other ones as well, and we’re expecting some big things from True North and RightSize as they get combined by Bluff Point.
Envestnet Acquires Apprise Labs’ Estate Planning Tech
Story number three, is Envestnet acquires Apprise Labs estate planning technology, no one saw this coming. I think this is something that was certainly not a surprise to anyone considering the partnership between Apprise Labs founded by Edmund Walters who sold his previous firm eMoney Advisor to Fidelity in 2015. And it seems to make a lot of sense, plugging this into MoneyGuidePro. Apprise Labs software for high net worth estate planning which is a major gap in the MoneyGuidePro platform. Although in all seriousness, the reviews we’ve done of financial planning software, money guide pro always seemed to be targeting mass affluent, and that was really their, their core constituency is advisors who had mass affluent clients, and they were happy in that space and dominating in fact. They were the number one software tool for advisors using financial planning software. I think eMoney is now running neck and neck, but for a time MoneyGuide was the clear favorite.
They’ve never had cashflow planning and they never needed it because they were goals-based. That’s just where their constituency lay. And when it came to estate planning, we reviewed our last review of a financial planning software and MoneyGuidePro was a distant third behind NaviPlan and eMoney, which were kind of running neck and neck when it came to estate planning functionality. Estate planning functionality can be very complicated, as anyone knows who’s done estate planning, especially around trusts and inheritance and building an insurance into a trust and different, complicated financial situations. So it just wasn’t something that MoneyGuidePro was concerned with.
So when we heard about Apprise Labs and they announced this back in 2019, I’m looking at my notes. Yep, at the T3 Conference in 2019 is when they announced the joint venture between Envestnet and Apprise Labs. And that was an interesting announcement. I was also at the Envestnet conference that year, where were Edmund was on stage and gave us some demos and some screenshots and talked more about the product. It seemed really interesting what they’ve come out with is really high end. I was talking to Michael Kitces earlier today, and he mentioned that when he saw a demo of it, it looked more like a MoneyGuidePro replacement for clients with more than $20 million, rather than a MoneyGuidePro ad-on, and I would tend to agree with him. So that leaves another gap, because there’s still the higher net worth, or the emerging higher net worth families who are in the $1-$5 million range. And it doesn’t seem as though Apprise Labs is really targeting, or really going to be useful for that cohort of clients. So not sure what they’re gonna do with that. Maybe they’re going to build out some more of the tool. Maybe they’re going to leverage the cashflow engine in Apprise Labs and sort of down to scale it for the $1-$5 million AUM. We don’t know, we shall see what happens, but it’s definitely a need.
I was reading about them merging the different engines, not sure how that’s going to happen. It was a goals-based planning engine is very, very different than a cashflow based planning engine. And the needs of those different cohorts are very different that when you’ve got enough cash, when you’re in the $1-$5 million range or up, we’re not that worried about whether you can retire or not in general, in terms of the minimum. Whereas if you’re below a million, you may not be able to retire, you may not be able to meet your expenses, just the basic living expenses. So that’s where those the what if scenarios around MoneyGuide, the strength of their play zone and the dials, the gauges that show you whether you’re in the green or the red are really very helpful for advisors with families the clients that are less affluent, the mass affluent clients that are concerned about that.
I think it seems like it’s a good deal. It seems like it’s something that is really gonna benefit MoneyGuidePro if they do it right and they build it out right. Right now, it’s being called Wealth Studios by Envestnet. So that’s the new name of Apprise Lab software. And we’ll wait to see how that comes out, how well tightly it’s integrated with MoneyGuidePro, the different levels of the pricing levels, the tiers, how they’re going to tier it, whether you’ll have to buy earlier versus the MoneyGuidePro or their lower levels of MoneyGuidePro in order to get the Apprise Labs where you can just buy Apprise Labs, not sure. I’d like to get into the demo as soon as it comes out and then see how it compares to what I imagine is a lot more robust functionality from eMoney and NaviPlan. But again, you don’t really need to have every single feature to compete in the market. You just need the 80/20 rule. What’s the the 20% of the functionality that 80% of the market needs. So hopefully they can come out with that and put out a good product, and we will see how this plays out.
AssetMark to Acquire Voyant
Craig: Here we go with story number four, AssetMark acquires financial planning software Voyant for $145 million. This was not a shock to me specifically, but that’s only because on story number four, AssetMark acquires financial planning software Voyant for $145 million. This was big news when it came out, AssetMark does not acquire a lot of software companies. In fact, I think this is their first acquisition of a software company. They have bought a lot of other investment firms, RIAs and other TAMPs and such. They’ve built a lot of their own software. I know I put something on my blog I believe about two years ago when they came out with a new dashboard software about portfolio construction software that I thought was really great very innovative for advisors to build portfolios that are putting assets onto the AssetMark platform.
And this is going to be I would imagine be merged into that program, and this makes a lot of sense. AssetMark seems to be concentrating on onboarding process, the planning process. Financial planning can be tightly linked to portfolio construction. A lot of tools will do that. Even most of the financial planning software that’s out there has integration with models. So when you’re doing your planning, do you need to add risk tolerance? You can pick a model, so the models have to get into the system somehow. So connecting those two makes a lot of sense for firms and also makes sense for AssetMark to do what they can to help advisors understand their clients better onto their platform, and being able to have those tools for them will help create some loyalty for their advisors, so whether they’re moving to other platforms, moving to other software while they’re working with AssetMark, they can stay inside the AssetMark platform.
Now Voyant was not on my radar. We do a lot of reviews of financial planning software at Ezra Group, my company, and we never really heard of Voyant until about last November is when they popped up on my radar. Voyant is very big in the UK. That’s one of their primary markets UK, Canada, Ireland. They do have a small presence in the US only one client that I know of Lincoln Financial. We never really ran into Voyant until last November, when my phone started ringing from PE firms, asking for my advice on the financial planning software market. And for some reason, all these firms also wanted me to talk about Voyant. So that’s a tip-off that something’s going on. So I knew something was happening with Voyant, just didn’t know what it was or who was going to be buying them. So when AssetMark came out, I said aha! That’s who was who was looking to buy, it was AssetMark. So we were surprised by that.
So the demos I saw at Voyant, it looks good. It’s decent. they they’re, they pride themselves on the simplicity of their application, the ease of use, which is definitely a benefit for some advisors, although in the US I know if you look at some of the articles and research done by my friend, Michael Kitces on his blog, Kitces.com, what we find in the US at least is that many financial planning focus advisors don’t want simplistic tools. They want more complicated tools because it allows them to provide more complete and more complex financial planning. So the simplicity angle doesn’t play with a lot of advisors in the US but every advisor is different. I’m sure with 17,000 SCC registered RIAs, I’m sure there are some that would be interested in a simple, easier to use application.
I was going through my notes from the demos I got at Voyant, and I only saw the UK version so I didn’t see what they’ve done for Lincoln Financial, which I would imagine has US accounts like IRAs, where the UK version only has ISA’s individual savings accounts, which is the UK retirement plan. They’ve got both cashflow based and goals-based, they’ve got expense tracking. They have insurance, some insurance planning, but of course in the UK, they call it insurance protection. So it’s not called insurance. I’m not sure how much they’ve done in the US with insurance. They have basic estate planning in the UK, again, need to be updated for US estate rules, estate planning, wills, trust, and estate rules. They support taxes and some tax planning again, would need to be US-based. There’s plenty of illustrations, what if scenarios, retirement planning. So it looks good for a lot of needs, but there’s a whole lot of work they’re going to have to do to catch up to MoneyGuidePro, eMoney, NaviPlan, RetireUp, Right Capital, if they plan on competing in that space, which I don’t think they’re going to. I really see AssetMark building it in for advisors who just want some light planning and want it to maybe throw some goals in, do a little bit of cashflow, just as part of the portfolio construction or onboarding process. It reminds me a lot of what United Capital did when they built their MoneyMind tools.
They’re very onboarding focused, planning focused and collaborative focused between the advisor and the client. And I know Voyant has some decent client collaboration, features and functionality. You can invite clients onto the platform and have them interact with the tools. So they might be looking to do that. And something that AssetMark CEO, Natalie Wilson said in an article I read, that they see an opportunity to grow AssetMark in the international markets where Voyant is already popular. That’s sort of a reverse plan or reverse merger that they’re looking to capitalize on the advisors that Voyant has rather than the other way around, rather than bringing Voyant software to AssetMark advisors. They want to do AssetMark intellectual property, AssetMark models, or AssetMark strategies out to Voyant advisors. Very interesting, which means they’d have to build in some hooks from the TAMP functionality into the financial planning functionality of Voyant.
Could be sort of a reverse of how Envestnet is building out insurance functionality and other tools into MoneyGuidePro. So the MoneyGuideProcomes a front end to actually buy products, buy insurance product, maybe even buy models or other other investments. So it sounds like if Natalie Wilson’s plans come to fruition that AssetMark would build in some hooks into Voyant, where they could buy a strategy, a money manager strategy, or buy a model, or for higher net worth advisors by UMA, from AssetMark and plug it into the plan. Show how that asset links into their retirement, supports their retirement covers the closest some gaps. That could be a really interesting solution for advisors in the UK, Canada, and Ireland. And if successful could help boost AssetMark’s growth rate with, as they look to power past a $100 billion dollars in TAMP assets.
Skience Launches New Data Aggregation Capability
Story number five, Skience announces a data aggregation capability. Now, from what I’ve read, this is not your standard data aggregation capability, where they’re bringing in client data client held away assets or other accounts, bank accounts, credit card accounts, and things like that. This is more of a data lake or data. What they’re calling a data consolidation replication module. This is something I’ve been talking about for a while, so I’m interested to see if they can pull this off and if it actually works. What they’re saying this does, is it transfers client data from multiple vendor applications into a centralized repository. This is, I think if you heard in the earlier article, I was talking about why we have separate silos for different types of data, CRM, financial planning, portfolio management, etc, etc. Why? Because we’ve always done it that way. We’ve always had separate applications each with its own database, and then you have to integrate them using tools and APIs and such that rarely work the way they promised. And you have a big mess.
If you had this data consolidation or application module, as Skience has announced that would pull the data or replicate it from your CRM, your financial planning software, portfolio management software, maybe even separate, maybe you have a separate compliance system, a separate performance reporting tool billing. Although billing usually pulls data from the custodian or the portfolio management software. So scratch that. But all those other applications, you’d own all the data you would control it. And if they could build this out to support all the major applications in each category, and there are a lot of categories, if you’ve seen Michael Kitces’ advisor tech map, which you can find on Kitces.com and I help them out with that, please go check it out, you’ll see we’ve gotten a lot of applications in the space and a lot of categories and a lot of applications in each category. So being able to support even the majority of the 80/20 rule is a lot of work for Skience, but kudos to them for trying to build this or for building it and trying to support it. It could be very powerful if it works, it’s had a huge lift.
Skience has come a long way since I first heard about them I think for four years ago where they were just really digital onboarding at the time sitting on top of Salesforce, but they’ve leveraged that to get into a lot of enterprises as most enterprise firms and especially wealth management are using Salesforce. So having Skience on top of Salesforce gives them a built-in CRM. They don’t need to build one, don’t need to integrate with one they’re built on top of it. So they’re right there. It gives them a bit of an advantage.
I know last year they came out with the ability to open multiple product types. So you could open insurance annuities, different types of accounts, up to 10 different accounts that claim with account opening process, which can save a lot of time when you’ve got an advisor with a client with multiple accounts, or maybe kids accounts, family accounts, rollovers, and things that can open all at the same time, very convenient. They announced the integration with Envestnet that should help them out as well since Envestnet also integrates well with Salesforce and they’re strong in the enterprise space. And I’ve heard that Skience is even looking to build out more functionality and tools in the wealth management area. They currently have the things I mentioned, plus advisor transitions, trade surveillance, reg BI. So a lot of tools around the core RIA functionality of portfolio construction, portfolio execution, rebalancing trading.
So they don’t have that yet, but I’ve heard that’s something that they’re looking into. So that’ll be interesting if they were to come out and become a full end to end platform on top of Salesforce as an overlay to offer RIAs and broker dealers the end-to-end experience of wealth management or if they’re going to stay around the edges of the tools that they built. So it remains to be seen if they can keep building out and which way they’re going to be going with this.
SEI Buys What’s Left of Oranj
And to wrap things up, we’ve got a late addition to the News Roundup, this news just came out this morning. It hit my email at 10:50 AM this morning, SEI is buying Oranj, or at least they’re buying the tech platform of Oranj or what’s left of it after it closed at the end of last year. Not a lot to talk about here, I guess they’re just buying the assets. I think I did some tweets or I was quoted in some news articles when Oranj announced they were closing last year, six weeks before December 31st, not giving their clients a lot of time. Hopefully there’s something they can make out of this. There was some decent tech, I mean, I liked the demos I saw of the Oranj tools, the RIA platform. SEI doesn’t really have any direct to advisor tools, down to the small RIAs. So if this is something they feel that they can offer to to a different segment of the market where SEI what their wealth platform is more for larger firms, but they are a very big TAMP, so they do have some serious RIA clients just know RIA based platform.
It does say that they’re bringing on David Lyon, the, founder and CEO and some staff. So I guess they kept some people on, I know a bunch of had left at the end of the year, so that’s good. We don’t want to see people losing their jobs if we can. But it’ll be interesting to see what comes out of this if they keep the platform, they just pull a specific tech from it, or are they just going to use the model marketplace which was getting a little bit of traction, though. From what I heard, there were some problems with bringing on new advisors on to the model marketplace, they were lacking in some tax transition tools, which is key if you’re going to be selling models, you want to be able to move advisors off of the models they’re on and onto your models. If you don’t have tax transition planning software the clients of the advisors are gonna take a big hit when they’re liquidating assets. So that was one gap in the platform. And plus they just couldn’t get enough people to pay for it. They were offering a freemium version and they didn’t have a lot of clients on the free version of Oranj tech platform, but we’re having trouble converting them to paying customers. So I imagine SEI bought this for a song considering it’s been closed for three months, but they did a deep dive, looked at the tech, saw there’s some value there, something they can build out or maybe take pieces of it into their own offering for RIAs, and maybe David can bring some of his vision that he had for a new way for RIAs to manage the client’s assets, which I liked some of the vision he had, and sprinkle that magic through what SEI is doing. We will see.
