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Come on in and sit back relax, you’re listening to Episode 181 of the WealthTech Today podcast. I’m your host, Craig Iskowitz, founder of Ezra Group Consulting and this is our March news roundup where we cover a curated selection of the most interesting news stories in wealth tech. This is our March news roundup. There’s so much to cover, a lot of news this month. Firms were really holding back December, January, February and just let it loose end of February and March, there’s just so much to talk about a plus conferences. Orion’s Ascent conference was the end of February. The big T3 Conference last week in Tampa, the Shift conference last weekend. So much going on so many press releases and announcements was tougher our crack team of news analysts to filter through everything but we managed to narrow it down to 10 stories, plus of course our monthly AdvisorTech map updates and some big changes to the Ezra Group WealthTech Integration Scores.
Before we get into the interview, if you are listening now you’re an executive at a broker dealer, an asset manager or an enterprise RIA you should run not walk to a website, EzraGroupllc.com and fill out the Contact Us form on the homepage to meet with us about your technology platform issues. Our experienced team can assist with evaluations of your current tech platform, optimize your technology run RFPs for you to select new vendors implement that software across your firm, perform operational improvements and more. You can take advantage of our free initial consultation offer by going to EzraGroupllc.com. Now, let’s kick this thing off.
Companies Mentioned
- Accenture
- Addepar
- AdvisorEngine
- AdvisorTouch
- Advyzon
- Altruist
- Apex
- benjamin
- Black Diamond
- BlackRock
- BNY Pershing
- CAIS
- Cetera
- Charles Schwab
- Commonwealth
- Conga
- Docupace
- Dynasty Financial
- El Camino Financial
- Elements
- Envestnet
- EvestTech
- Equisoft
- Fidelity
- Flyover Capital
- ForwardLane
- FP Alpha
- FutureAdvisor
- iCapital
- Halo Investing
- Hubly
- LUMA
- LPL Financial
- Mariner Wealth
- MoneyGuide
- Morningstar
- Nest Wealth
- OpenAI
- Opto Investments
- Orion Advisor Tech
- Practifi
- PreciseFP
- Riskalyze
- Ritholtz Wealth
- Salesforce
- Sequoia Financial
- Simon Markets
- Skience
- SS&C Salentica
- TradePMR
- Wealthbox
Topics Covered
- T3 Conference
- Orion Ascent Conference
- Morgan Stanley partners with OpenAI on internal chatbot
- Elements raises $5 million in a seed extension round
- BlackRock sells FutureAdvisor’s direct to consumer business to Ritholtz Wealth
- Commonwealth transforming into a large national RIA with a BD platform
- Opto Investments emerges from stealth with $145 million in Series A funding
- Custody newbie Altruist claims number three spot with SSG acquisition
- AdvsorTech Map Updates
- Ezra Group WealthTech Integration Score Updates
1. T3 Conference
The first story up in this week is the first story in our month’s news is the T3 Conference. This is one of my favorite conferences of the year. I never miss it at least I haven’t missed it the past 10 years. And I believe next year is the 20th anniversary of the T3 Conference. So that’ll be a big one. This one was still very big, over 900 attendees, about half advisors and other firms and half vendors, which makes for a great mix of people and conversations. So much to go through. I’m working on a very in depth summary of the conference, which is going to be a blog post, you will be able to find on Kitces.com hopefully next week. There’s a couple of other good summaries, one by Davis Janowski over at WealthManagement.com, one by Ryan Neal over at InvestmentNews so please check those out. You can check out their summaries. Also a Tim Welsh did his own summary on RIABiz. Encourage you to check those out.
So a quick review I’ll just do a review day one. Which I thought had a lot of great content MoneyGuide did a presentation, gave us some sneak peeks into new technology, new features and functionality such as the single page plan, which I liked, and something called PlanPulse which gives an overview of your entire firm’s financial planning and what’s been done, any clients who are falling behind, clients who are missing a plan. Excellent enterprise feature.
Onto Morningstar, they did a presentation talking about direct indexing, and also including some details on ByAllAccounts and how they are merging some of the different platforms they have and cross linking them with data. I think it’s a great opportunity for them. They’ve got so much software and so much data and Morningstar that has been disparate in different separate silos. I’m glad to see that they’re merging things together making it easier for clients to access different parts of the business.
Of course, Orion Advisor Tech had their session talking a bit about AI, which was a big theme of the conference seemed like almost every panel, every session was talking about chat GPT other areas, Orion did that as well. Talking a bit about what AI can do for advisors and what it can’t do in areas that advisors still have the advantage over AI. So you can check that out.
There were a lot of large RIAs and broker dealers at the conference and they were on panels and presenting and I always like to hear from these firms to hear about their tech stack and I want to hear what are you working with and what’s working for you, what’s not, how are you implementing things. Sequoia Financial, a large RIA and we’ve they have around $15 billion of AUM they were on a couple of panels, sharing some other information. They’re a big Salesforce user as an example talking about how they’re integrated into their environment. Some of the apps they build some of the different tools that they’re plugging into Salesforce, always interesting to hear that.
A company called Nest Wealth, big Canadian FinTech firm. They process about 80% of the wealth management account openings in Canada, which is a really big market share for them. They’ve been moving into the US with a $50 million funding round from Canada’s National Bank. They generated a little bit of controversy and provide some great statistics and information about what’s going on in the industry. So you can check that out.
Of course, how can I forget talking about the T3 Tech survey? Always excited to hear that every year to see what’s going on who’s changed market share, where it’s moving up, what’s moving down. Some of the big takeaways from the T3 Tech survey, we’re not seeing enough cybersecurity, we really need to see more. Some firms are lagging some categories of firms are lagging behind in cybersecurity. We’d like to see more of that.
Some gainers in terms of categories of software, tax planning up 11% by advisors in general, trading rebalancing up 7%, Social Security analysis up 6%, those are interesting numbers. You can check that out there’ll be soon the the T3 Tech survey will be available as a PDF you can download. It’s not quite available yet, but soon it will be it’ll be a lot more tidbits and information about that you can check out.
Riskalyze is a great sponsor of T3 and Aaron Klein, CEO was on stage talking about their their new growth platform how they’re expanding their capabilities, moving away from Hey, we’re just risk and we are a growth platform that includes risk proposal in which they built out analytics, where they’re compete with Morningstar light planning, engagement, compliance and other insights. They’re trying to bring this all together and really own all the capabilities between the CRM and the asset platform. That’s where they see their growth platform fitting in as well as deep integrations. Always a good thing to see from Riskalyze.
Fidelity was on stage as well sharing a lot of details from their advisor survey. Some of the interesting stuff that came out of that survey was 40% of investors want their advisor to provide more advice beyond just investments. We’ve been saying this for a while, especially with the rise of robo advisors, advisors have to move up the value chain to stay ahead of automation, not just robo advisors, but all automation, whether it’s AI driven, or any other tools and technology that can provide some of the basic commoditized functions that is in any business.
A couple other minor notes from this 33% of investors want advisors to help them make healthcare decisions. That’s big news. Especially for the specialized planning vendors offering health care advice. Take that you can check them out on the Kitces-Ezra Group map. There was a lot of talk about estate planning. Estate planning was an area that has been expanding increase in market share increasing utilization by advisors according to the T3 survey and there’s a bunch of estate planning vendors including FP Alpha, announcing a couple of new features functionality. One is they’re breaking out their estate planning into a separate product. So it’ll be a standalone application separate from their core functionality. And they’re also offering a property and casualty snapshot to help advisors analyze homeowners policies and auto policies. Very interesting stuff.
There was also a Schwab panel where they were talking about capabilities and their upcoming integration and merger with TD Ameritrade and basically trying to calm everyone down say hey, we’ve got this under control. They’ve been doing a lot of testing of their platform, and they believe that their their new capability new platform for advisors, what’s going to combine TD Ameritrade and Schwab is going to go great. Of course, there are lots of other smaller custodians who are coming in say, hey, maybe it won’t go so great and come work for us, which is great. We always want more competition, wherever we can get it.
That’s really the quick overview of T3, there’s so much more to talk about it right just I would go on and on. Oh, one more thing before I finish it. There was a great panel, great Fireside Chat with Brian Hamburger and Shirl Penney from Dynasty Financial, where Shirl basically gave an MBA class on running an RIA, mergers and acquisition, terms of deals, deal making, deal advice. Super interesting. You really shouldn’t miss it. I’ll just give you a quick one quick tweet and check my Twitter feed @CraigIskowitz. I tweeted about a lot of these panels and sessions. He talked about four metrics that Dynasty evaluates ongoing. One how to plan but be flexible to respond to events. Two, team building a team which is the hardest part of any organization, especially an RIA. Three, capital get enough to fulfill your vision for your business and four, timing, being in the right place at the right time is crucial for being successful in any business. He mentioned how Dynasty moved from their headquarters from New York to Florida six months before COVID and good news that they did that really helped them out.
So that’s I’m going to wrap my T3 review with that again, go to Twitter, you can check out my full all my tweets about T3 and next week, go to Kitces.com. I’ll be posting that link when the the my summary gets published.
2. Orion Ascent Conference
Next up is three stories from Orion. These all came out of their Ascent Conference, they’re really cranking out the new features functionalities, partnerships. Orion is always at the cutting edge here. The first story from Orion portfolio solutions selects Docupace for workflow automation. A recent study from Accenture shows that 93% of executives expect to have optimized front to back office processes across internal and external partners by 2025, which is a 50% increase from where their operations stand today. Not surprising, who wouldn’t want optimized front to back office processes. Docupace is a good choice. One of the biggest workflow engine tools in our space, especially in the broker dealer and soon to be RIA segments.
Their workflow engine can automate compliance and business process rules by providing standardized and data synchronization engine intelligent routing alerts notifications, configurable digital operations and pre built workflows. Of course Orion portfolio solutions is Orion’s TAMP, which is a combination of their acquisitions of FTJ, FTJ Fundchoice and Brinker Capital, doing really well, grabbing market share, and offering more of a comprehensive solution where they can combine both their tech platform and the TAMP which more and more firms are looking for to combine all those that we had one vendor to deal with, one contract to sign and we’d like to say one throat to choke. You can find out more about this technology that you can go to Docupace.com or OrionPortfolioSolutions.com. So I’m rushing through these because there’s so much Orion news to talk about.
The second one is Orion launches breakthrough compliance technology with a new client oversight tool that’s fully integrated into their wealthtech stack. Well, again, we love integration. We love a full wealthtech stack if you can get it, we always say if all things are equal, it’s better to have a full stack from one vendor than 10 different applications you’re trying to integrate unless you’ve got a good team, you’ve got the money to burn the build out and IT team that can support all the integrations, it’s often better to have one vendor providing it. Orion can do this.
Their new compliance tool, they’ve always had some decent compliance technology, and now they’ve got they’ve had a pre trade compliance plugged into their Eclipse trading rebalancing engine. They’re offering share class alerts, powered by Orion Risk Intelligence. Ownership alerts for when you hit more than 5% of the public company shares. Large trade alerts which is 13H initiated through Orion’s compliance tool alerts flags when transaction volume equals or exceeds the rule established thresholds within a daily or monthly timeframe.
What’s funny is that now Orion can do this basically in real time or very quickly. In some cases, I know we built similar tools like this 25 years ago, except we were pulling flat files from the custodian and feeding it into a Microsoft Access database to run these reports. Now you’ve got them integrated into your overall platform much more convenient, much easier for compliance to run in other parts of the business to see across your platform, a lot more visibility. So we really like these kind of tools. Because when we sure they really integrate, and they really provide a seamless experience not just standalone apps are sort of a cobbled together, we want to see real integration, the same UI across all these applications, so that the compliance team and operations team don’t have to keep bouncing around between different applications. So that’s the second Orion news.
Third Orion news, Orion reveals ChatGPT integration. Everyone’s doing ChatGPT. It’s the the flavor of the month. But there are a lot a lot of great capabilities you can access with this technology. So what is Orion doing a new integration between ChatGPT and Redtail Speak, their compliant texting platform offer to the Redtail CRM lets the AI analyze conversations and suggest responses to advisors. So the advisors can then edit the responses and then shoot them out to clients. This is a really a good use of the ChatGPT functionality because a lot of the text it prepares is a little bit stilted. You can tell a human didn’t write it. So you really want someone to read through what the AI is providing and humanize it a bit, customize it for a particular client. So there’s a lot of potential here.
They can also feed in at some point in the future, data points about the clients from the CRM as an example maybe even social media. So it can fit in say, it saw it was your son’s birthday, or noticed your daughter just graduated from college, it can build that into the communications for advisors because you advisors have a lot of clients and sometimes they can’t remember everything about every client. So if the AI can pull out and create an interesting comment or an interesting update for a client, that’s going to be a benefit to advisors. As Eric Clarke said at the Ascent Conference, a lot of advisors are naturally speaking about portfolio analytics and other parts of the business, but then some maybe a little stilted, maybe they don’t have those, those natural speaking capabilities. So building the narrative and identifying speaking points and bullet points is something the AI can help people to do. They’ve been beta testing, ChatGPT and their API’s for a few months now, they’re looking to make it available in the next few months, said Brian McLaughlin, former CEO of Redtail, who is now the President of Orion Advisor Tech. Again, you can check out anything you want about Orion at OrionAdvisorTech.com.
3. Morgan Stanley partners with OpenAI on internal chatbot
That was a lot of Orion news. Similar to our last story from Orion, this next story, Morgan Stanley partners with OpenAI on internal chat bot for its advisors. OpenAI is a technology company that built ChatGPT partially funded by Elon Musk, and Morgan Stanley is partnering with open AI to build their own internal facing chat bot, Morgan Stanley GPT if you want to call it that, and it’s going to help financial advisors and their teams answer questions so you can post questions to the chat bot, and answers will be generated exclusively from Morgan Stanley’s proprietary content library, including investment strategies market research, commentary and analysts insights. How do they do that? Well, any AI in any of these GPT functions can be trained. So how you train the AI is how will respond. ChatGPT happens to have been trained with billions of pieces of information from across the internet, whether it’s Wikipedia or other publicly available sources. So you can just take the GPT system and train it on your own and it won’t have any of the other things that only have what you want to talk about.
Morgan Stanley’s doing that which is going to save advisors from having to comb through probably hundreds or even thousands of PDF files on internal websites trying to find answers to specific questions. They can just ask the AI what they want, and receive an English response with links to the source documents. It’s like having the most knowledgeable person in your firm at your fingertips at all times who knows where everything is. This is really where these GPT and other AI based tools are going to provide value. Soon you won’t really even know it’s AI, you’ll just be used to go into the chat function saying hey, how do I roll over an account? How do I close an account? How do I put a structured note into a client’s account? How do I approve that? What’s the compliance issues? It’ll just respond with you.
I had seen something similar to this a couple of years ago. This is pre-COVID I think in 2019 at the Pershing conference, they were working with a company to build an AI chat bot that would do the same thing but just for their environment. So if you want to know hey, I want to client lost their debit card, what do I do? You type that into the chat bot and it brings up the right form, prefilled, to fill that out to send in to get them a new debit card. That’s really where you’re going to see a lot of value from these API’s. And really customize for specific vendors or for specific wealth management firms. We’re expecting to see a lot more news like this in the near future.
4. Elements raises $5 million in a seed extension round
Elements raises $5 million in a seed extension round as demand for advice engagement grows. Elements founder and CEO Reese Harper told Citywire that they got some new capital from Flyover Capital that would fund operations for roughly two years, as the revenues are rising pretty quickly and not burning as much capital anymore.
Always good to hear from a startup some of the backers of Elements include kickstart fund Saas Venture Capital, Grant Ventures and ForwardVC. Now this group along with a few angel investors that didn’t increase the stakes invested a total of $4 million back in 2021 seed rounds. This is an extended seed round not sure why it’s not a Series A but anyway, the the cash funding helped them recruit people like Carl Richards as their Chief Brand Officer. That was a great move by them love Carl and his work.
So CEO Harper said that while Elements that started out doing business with small RIAs with one to five employees, they’re now going to start selling into mid market RIAs with as many as 100 employees. That’s always good news, that’s what we see with our clients, you got to start small and work your way up and having a couple million dollars in the bank always helps you don’t have to worry. One of the funders of Flyover Capital, one of the general partners is Marty Bicknell, founder and CEO of Mariner Wealth. Not bad to have him in your corner and also some proof of concepts running at Mariner to see how Elements can help them.
We liked the Elements platform, the application, they were in the light financial planning category on the Kitces-Ezra Group map, but we move them into advice engagement, since they were in themselves moving away from being a light planning tool and to be able to offer more growth and if you look at what people are saying about them, what their customers are saying about them. All of the testimonials talked about I got a new client because of Elements, I grew my business because of Elements. So that’s talking more advice, engagement and less about specific planning. We like the Elemental format, with different the table of Elements, different colors, it looks sharp, great mobile app, desktop app.
I think a lot of firms are trying to copy what Elements has done and we’re seeing more firms coming into the advice engagement category, which didn’t exist last year or early last year. We just created it Michael and I because we didn’t really know what to put a couple of things. And now it’s crowded, there’s 12 applications now in advice engagement. And we’ll talk a little bit about some apps, some firms, some applications that moved into this category at the end when I talk about the advisor tech map, but if you want to learn more about elements, you can go to their website, GetElements.com.
5. BlackRock sells FutureAdvisor’s direct to consumer business to Ritholtz Wealth
Next up, I’ve been sitting on this news for a month waiting to talk about this. BlackRock sells FutureAdvisor’s direct to consumer business to Ritholtz Wealth. We were kind of shocked by this. But we were shocked when BlackRock announced they were acquiring robo advisor, FutureAdvisor in 2015 for $250 million, which seemed like an insane amount of money for that platform, but they did it and they’ve been running it quietly for the past seven, eight years. I don’t really think it’s gotten tremendous amount of traction. Although they said on the the direct to consumer side which they they stopped selling. They have 1.8 billion in assets which is what Ritholtz is buying. So not buying the technology, there’s buying the assets, which makes a lot of sense of BlackRock is getting out of that. They’re just keeping FutureAdvisor for B2B. They don’t want to be into the B2C business. I get it although Blackrock is a huge B2C firm. So what why they wouldn’t want to do more of that I don’t know, but I guess they’re really focusing on the roots direct to advisors and direct to institutions.
So it was interesting to hear that and why they’re doing that and how Ritholtz is now looking at more of a capabilities to serve as smaller advisors with their platform. They have their own robo platform as well. So that’s great. Maybe they’re gonna move all those assets over to there. We do not know. But there has been a lot of movement. What we’ve seen on FutureAdvisor I know US Bank partnered with them. I know LPL at some point, had partnered with FutureAdvisor I think a long time ago. It’s gotta be six or seven years ago, so I haven’t heard anything about it. And that’s really what happens with a lot of these, you hear an announcement a lot of fanfare with a press release, and then it just goes away. You don’t hear from it anymore, which means it didn’t quite work out. So I’m not surprised by that but it’s good to interesting to hear this kind of movement. And we haven’t really heard a lot about robos and these kind of digital advice platforms. It’s kind of falling by the wayside as digital advice has become ubiquitous. Every vendor has the capability of offering these self directed platforms, software capabilities to wealth management firms. It’s more of it’s just not a unique feature anymore like it was back in 2015. Now everyone’s got it so no one is unique there. So that’s the wrap on BlackRock selling future advisors to direct to consumer business to Ritholtz.
6. Commonwealth transforming into a large national RIA with a BD platform
Moving right along, next story Commonwealth transforming into a large national RIA with a BD platform is from FA magazine. Last year Commonwealth added $11 billion in AUM to reach a total of 243 billion. I know we talked to the Commonwealth a lot last year. We just talked to all the broker dealers we work with a lot of them, we keep in touch with them. And they were telling us last year I mean, I didn’t know this was going to happen. But they were telling us last year, how much they see themselves as just a really large RIA considering that 80% of their assets were already on the corporate RIA versus the broker dealer side. I found that to be interesting when they told me and now it makes perfect sense that they’re now just becoming a national RIA.
We’re seeing more large RIAs launching their own white label advisor platforms, usually built on top of one of the big vendors like Envestnet, Orion or Black Diamond or others. And then white labeling it maybe mixing your TAMP capabilities to offer more of a full service feature. And it’s easier to do that now. There’s it’s easier to connect the software, it’s easier to white, label it and deploy it and build some unique capabilities because they’re all really competing for the same group of advisors. So whatever they can do to give themselves a leg up and give themselves something unique selling points. They’re going to try and do whether it’s firms like to buy their advisor group or Mercer advisors or other nationwide or national RIAs are doing something similar. So it’s not unusual to see them doing that, of course, Commonwealth built their own tech platform from scratch, starting about 16 or 17 years ago, which they call advisor 360 and eventually spun off into a separate tech company, also called advisor 360. And there everything’s 360 Commonwealth I believe they’re their client platform client facing is called Client360 and they have an Office360. That’s just their their terminology. They’ve got a lot of capabilities. I believe they have a network of 2000 essays, which is relatively small. Cetera’s got probably four times that headcount. LPL has got 10 times the headcount. But, you know, the actual number of advisors isn’t as important as the assets they’re managing the services they’re providing to their clients. So interesting news, like to see if any other broker dealers similar IBDs are going to be converting to national RIAs as well.
7. Opto Investments emerges from stealth with $145 million in Series A funding
For more news, this is in the alt space Opto Investments emerges from stealth with $145 million in Series A funding. Are you kidding me $145 million in Series A funding. That’s surprising. That’s a lot to unlock access to private markets for investment advisors and their clients. The story was on Fin.Capital if you want to look it up. So despite the growing role of alternative empowering the innovation economy, the vast majority of savings worldwide have little to no access to alternative assets. And the average wealth advisor has 0-4% of their portfolio in private investments, often due to a lack of resources and efficient access.
The Opto platform is launching to help RIAs level up their practices with access to exclusive private market investments. I spoke to Joe Lonsdale who is one of the founders of Opto and probably the biggest name on the team, but he’s got a very good team of people from other parts of the business. They believe that they have unique capabilities, competing with firms, hugely capitalized firms. I think iCapital has a $4 billion valuation just took down $400 million in funding last year. CAIS, also an alternative investment platform. You have Halo, Luma, Simon Markets a lot of firms are building out alternative investment marketplaces. Doesn’t a month go by Michael Kitces and I get pitched by another alternative marketplace it seems at least one a month comes to us asking to be on the advisortech map we have to know because the advisortech map right now is just for software. It’s not for marketplaces.
But Joe Lonsdale, if you haven’t heard of him, he was also founder of Addepar, very successful tech player in the high net worth ultra high net worth family office and now already a space and they see up to as having unique, unique capabilities to deliver alternative investments, private funds, basically, private funds have custom capital credit or PE funds that they can deliver to advisors. They’ll do the curation of those funds and the managers and deliver it to advisors for relatively low cost low management fee plus a carry with a hurdle. So I think it seems like it’s a good deal.
They also announced Opto, at the same time, announced a deal with Riskalyze. They will be plugging their alternative marketplace into the Riskalyze ecosystem and offering Riskalyze clients the ability to access these customized private investment funds. Now, one question I had was, you know, they want to offer private investments because they’re not correlated, which is great. But also they believe they can provide higher returns. But you know, firms that are getting higher returns are doing it because of the only ones in these investments. If everyone gets access to them, won’t that drag the returns down across the board? Maybe depends on how successful these firms are. But there’s certainly over always more opportunity for these type of capabilities. As more advisors look to differentiate as advisors maybe moving a little bit up the food chain into higher asset clients or maybe their existing clients are getting older and earning more and building up more assets and want some exposure at least a couple percentage points to private markets. This these types of tools like Opto like there was a competitor’s seemed like a great way to do that. So you can find out more information at OptoInvest.com.
8. Custody newbie Altruist claims number three spot with SSG acquisition
We’re in the homestretch we’re on story number 10, Custody newbie Altruist claims number three spot with SSG acquisition. This is from InvestmentNews and my friend Jeff Benjamin, less than two weeks after debuting their RIA custody business on top of its FinTech platform, Altruist has announced the acquisition of Shareholder Services Group, a brokerage and custodial platform in a deal that significantly boosts Altruist’s status in the competitive custody business.
Altruists CEO and founder Jason Wenk said this deal puts them in the number three spot in the industry by Fidelity and Schwab in terms of number of RIAs being served by their custody platform, leap frogging over Pershing. They’re adding 1600 RIAs that currently use the SSG platform, pushing their totals over 3000.
SSG’s custody business is technically defined as an introducing broker dealer because it sits on top of the Pershing custody business, which means Altruist can now offer RIAs access to two different custody platforms. That’s unusual, most custodians don’t do that. They do what Schwab is doing, they’re buying TDA and then merging them, shutting down the TDA platform. So whether Altruist does this, we do not know. As the deal brings the two custody portals under one roof, at least one competitor wonders whether the acquisition represents another pain point for RIAs, but on a much smaller scale. So we don’t know if that’s true or not. This is a comment from Rob Baldwin, looking to get some business but again, Rob Baldwin and TradePMR they’re introducing broker dealer they resell custody from first clearing, if I’m not mistaken, good, not a bad business model. But it’s kind of the same thing. A lot of these these custodians what we call the second tier custodians behind the big four now big three firms like SSG, Altruist and a couple others that used to exist maybe don’t exist anymore.
You have to give Jason Wenk a lot of credit, considering how fast he moved this business from just founding in 2018. So now being the number three custodian they started out, reselling, as they we started out also as an interesting broker dealer, reselling custody from Drive Wealth. They had some technology problems. If I can share that, and then they moved over to Apex, which is a much more capable platform. But apparently they outgrew that. And just late last year, they had built their own self clearing technology out at Altruist and really became a true custodian offering custody now boom, they buy vessels SSG.
Moving really fast, have to commend Jason for building this business so quickly, bringing RIAs onto the platform so quickly, and it’s not easy to do, right advisors don’t want to change custodians. They don’t want to repaper accounts. So getting them to do that requires a great sales team, and a very strong value prop. Here’s Jason Wenk, “our team has around 350 people, including more than 200 engineers and SSG’s tech team is 30 people with no engineers”. So that not a lot of overlap. But now they are both competing with Pershing and a partner with Pershing since they are reselling their their custody. So how it’s gonna work we don’t know. But everyone nowadays in our business is either a partner or a competitor or both at the same time. So Pershing is used to dealing dealing with this. I know we’ve worked with Pershing for a long time and talk to them about working with their clients and how we all need to work together. They may be competing against some of the other vendors, but we’re all on the same page when it comes to helping our clients to grow. So big news their custody newbie altruist claims number three spot with SSG acquisition.
9. AdvisorTech Map Updates
Now we’re up to my favorite part of the news. We’re talking about the AdvisorTech map. Michael Kitces and I work on this map together every month we review vendors coming on vendors who want to be on the map vendors want to change their category. We’re changing categories as new products come into the space. Some applications are being acquired, some going out of business and which we’re changing the map. A lot going on. Let me do a quick review of what we got here. El Camino Financial is new to the map in the planning light category. EvestTech, we moved into client portal. We moved ForwardLane to advice engagement. Oh, by the way, you can check these links give you the URLs ElCaminoFinancial.com. Evestech is just Evestech.com. And they’ve got what they call the virtual communication hub for financial professionals. The all in one client messaging scheduling reporting meeting file sharing communication solution you’ve been looking for interesting stuff. Take a look at them and now they’re in client portal.
ForwardLane which you can find it ForwardLane.com also a very interesting product which we’ve moved into advice engagement. They focus on personalized insights and next best actions. They’re AI based, they review a lot of different applications across your business from CRM to financial planning to portfolio management, pulling out data from across those applications, combining it and giving advisors interesting insights with a calling signals to let them No Hey, there’s something you need to do. You need to call this client about this particular action. We’ve combined we’ve pulled data from from multiple places. It could be that hey, this client had a conversation we noticed in the CRM about an annuity, but we haven’t seen any annuity being being being bought for them. You may not want to do that great kind of stuff. This is really how AI can help advisors because there’s so much going on advisors are swamped with information, updates, analysis news, all different applications, whether it’s their marketing tools, a CRM tools account opening, portfolio management, rebalancing, trading, building, reporting, and plus all the other things are financial planning and other capabilities, taxes, managing your staff, the custodian problems. So having tools like forward lane that can automate personalized scale across your business I think is super helpful.
In the CRM category, there was some back and forth a bit moving some vendors between CRM overlay and CRM. And we did move a couple of vendors back and forth, but we put them back in the CRM overlay they really because they’re based on Salesforce, and they’ve done some interesting things I have to admit when it whether it’s firms like Skience or Practifi, or SS&C Salentica. These are firms that are based on Salesforce and they have done a lot of cool stuff. It’s really not your standard Salesforce platform. They’ve customized it tremendously. So you still there’s still a Salesforce license embedded into the platform. So technically, it’s a CRM overlay. It’s not a standalone CRM, like a Redtail or Wealthbox, or Advyzon or something or Equisoft or AdvisorEngine. It’s built on top of Salesforce, even though it’s super customized, and a lot of capabilities built into it. We looking under the hood and I spent a lot of time talking to these firms to really see what they’ve got going on. Unless you create a third category of Salesforce customizations, which we don’t want to do. We’ve put them back into CRM overlays, but just so you know, we’ve heard some complaints that it’s confusing the clients because they think they can just buy Salesforce like it’s another app exchange app. Practifi, SS&C, Skience, these are not Salesforce AppExchange apps, you can’t just download them onto your Salesforce FSC platform and run them. If you have Salesforce now, you’ve got to do a conversion to another version of Salesforce. And if you don’t have Salesforce now you can’t just buy Salesforce and then add them. You have to buy their specific customized version, very similar to how TD used to sell their own customized version of Salesforce nd now Schwab is selling their own version of Salesforce. It’s a little bit different. It requires a conversion not to get too technical down the rabbit hole there but we didn’t move them back to CRM overlay.
We created a new category we changed the name sorry, we changed the name of what used to be business support systems. It’s now called workflow support. And there are five vendors in that category. We’ve got Conga, Docupace, benjamin, Hubly and AdvisorTouch. So I mentioned Docupace earlier. Great workflow engine. They’ve got a lot of tools now besides their workflow engine document management, they can do multiple account openings. Very strong account opening tool can open multiple accounts at the same time multiple types of accounts. It can open annuities and insurance accounts all at the same time. They’ve got their new RIA product suite, they bought PreciseFP they’re really doing some great stuff over at Docupace. You can check them out.
benjamin is an interesting product created by Matt Reiner with workflow tools and capabilities. Hubly another interesting workflow product. Again, these don’t have the breadth and depth of a dark face. But sometimes an RIA doesn’t need that, there’s always tools for everyone. Different capabilities, different strengths and weaknesses. You need to check them out. You can check them all out in the workflow support. There you go. Alright, so I’ve gone through all of the advisor tech map changes for this month.
If are a vendor, and you are looking to be added to the FinTech map, you can go to the FinTech map on Kitces.com and you can just click on the link and send an email it’s technews@kitces.com, or feel free to email me or Michael directly if you have any questions about the map.
10. Ezra Group WealthTech Integration Score
Okay, the last thing in the news integration scores. This is where we talk about the Ezra Group WealthTech Integration Score which is a new research tool we launched last year. We are constantly looking to make it more valuable, more capable, more transparent and more accurate. So we had the first version released last August with a first round of scores for about 300 I think it’s precisely 298 vendors products we evaluated out of the 400 on the map. We’re constantly adding more every month when new vendors come on to the Kitces-Ezra Group AdviceTech map. We have about a one month lag for us to get time to evaluate them, look at their integration capabilities, validate them and put their scores into our database. So you’ll see them on our website EzraGroupllc.com which you can see for free and just check out the scores of any vendor or any category of vendors. But over the months we’ve had this we’ve noticed it’s working a little bit, kind of not the way we wanted to we wanted to we want to reward the vendors who are doing deeper integrations. That’s really the goal. One of the goals of the integration score was not only to provide transparency, not only to give wealth managers tech vendors and other interested parties, a way to compare application products across different categories maybe based on their ability to integrate, but it’s also to encourage vendors to build deeper integrations.
Something we’ve heard a lot from advisors are usually the $1 billion and up RIAs, RIA aggregators, TAMPs, broker dealers, lots of complaints over the years about vendors who say we’re integrated. We got dozens of integrations, and they’re really all just single sign ons which are okay we like them, but they’re really not integrations. Integrations are where I can move data back and forth between applications in some way or another or their API’s where I can write code and pull data from your app. I can send you messages, you can run stuff as a vendor and send me back results that we want to encourage because that’s going to deliver more seamless capabilities to advisors. How do we do that? We have to make the score reflective of those capabilities.
So looking at the scores the way they came out, the first round, version 1.0 of the scores it was sort of diluting the scores on the on the depth criteria, which is 50% of the score. If you had a vendor and we rank every score, every application every integration between vendors, we rate of a 1-5. 1 being SSO, 5 being super deep application integration like a widget, you just plug it right in and it works. Rather than having to write new code or go into the application and find a special menu and put in your criteria. You’re putting your login in manually have to do it. So we rate them one to five. We just did a raw average, if you had 10 integrations and let’s just make a crazy example. If you had 10 integrations half were 1 and half were 5, your average score would be a 3 and that’s not really fair because the time it takes to build an SSO, which is a 1 is so much less than the time and effort it takes to build a 5, a really deep integration, a built in widget or something that’s so easy to plug in. We wanted to skew the scoring a little bit more to overcompensate. For the 5 so that the 1s didn’t dilute because it would create a negative incentive for a vendor if they build a couple of 5s and they wouldn’t want to build anything else if it wasn’t a 5, because in fact it would lower their score too much.
We haven’t seen anyone doing that. But we didn’t want to encourage it. So in the depth category criteria, we rejiggered the algorithm to overweight, the 4s and 5s and deprioritize the 1s and 2s, assuming you’ve got both. If you only have 1s and 2s, you won’t see a change. If you got some 4s and 5s your score on the depth criteria should go up a bit, sometimes significantly. So we felt that was useful and beneficial and and more accurate in our in our mind and more incentivizing firms to spend the time and effort to build out the 4s and 5s in the deeper, more robust integrations.
We also added more questions around API support. 25% of the score is breadth, how many integrations you have, 50% is depth which is mentioned. The last 25% we call usability, which is a bunch of questions we asked about API’s. We only asked like three or four questions about API’s. Now we’ve got about a dozen. Talking about do you have a sandbox for developers? Do you have sample code? Is it all documented? What’s your authentication software methodology? So we really want to know more about how robust their support is for the API’s because we did find some vendors who said they have API’s, but there’s no documentation, no developer sandbox, no sample code. So it’s really hard to use them, which makes them almost useless. So we need this kind of documentation. We need this developer support, if we are going to be able to use these API’s. So we built it into the scores.
If you are a vendor, delivering software to RIAs, TAMPs, broker dealers, or other wealth management firms, please go to our website and fill out the vendor application survey. If you can’t find it, just fill out the contact us form and say you want to get a vendor survey. We’ll send you the link. You can fill it out online, and I guarantee you we haven’t found a vendor yet that filled out the survey and the scores didn’t go up. Every vendors go up because usually we don’t have all the information and we’re lacking. So filling up the survey gives us a lot of information that we may not have had before, and most likely your score will go up after doing that. So please do that at EzraGroupllc.com.
All right, you’ve made it to the end of another episode of WealthTech Today podcast. Thanks for listening. Please go to our website. As I keep saying as your group llc.com go to the homepage, the bottom of the homepage and fill out the form about signing up for the newsletter please. You will love it once a month you receive an email chock full of wealth management, goodness news, analysis, updates links, you will not be disappointed. Thanks again for listening and talk to you all again next time.
