Ep. 232: March WealthTech News

Come on in. Sit back and relax. You’re listening to episode 232 of the WealthTech Today podcast. I’m your host, Craig Iskowitz, founder of Ezra Group Consulting. This podcast is all about the news, information, updates, and technology around wealth management. This is our March news roundup, where I read the news give you my take on what’s happening in wealth management technology. This episode I have a special guest later on a couple of these clips is David Rossien, who’s got 30 plus years of experience is one of our senior consultants been around the industry for quite some time. He’s going to help me we’re going to bounce around some ideas and talk about some of the news.

Topics Covered

  1. Orion Ascent 2024
  2. Plenty launches app targeting couples blending finances
  3. Innovayte and ETC Brokerage combine to create new custodian
  4. Apex acquires portfolio rebalancer AdvisorArch
  5. Advisortech Map and WealthTech Integration Score updates

Episode Transcript

1. Orion Ascent 2024

First up is the Orion Ascent conference just came back from San Diego. Sunny and warm San Diego for the Orion Ascent ’24 conference. It was the biggest I thought the best Orion conference yet. I’ve been to quite a few of them. Again, it’s a bigger conference partly because it’s an Orion/Redtail conference. So you’ve got those two firms which merged all their clients now coming into this one conference so great to have everyone to see everyone they’re really a huge conference space at the at the hotel there in San Diego and the the exhibitor space was was jam packed away more exhibitors than I’ve ever seen before and Orion conference. Certainly a lot to choose from a lot to learn a lot of people talk to all three that are a great place to be last week.

Before we start, let me give a shout out to emcee for the for the experience the emcee of the conference, Rick Williamson, Director of Brand Experience at Orion. He’s formerly known as Ricky Redtail, and now known as aka Richard Orion, and he did a fantastic job as the conference host. He was on stage a lot, moving the programs along also interviewing Orion executives, which is not an easy job to do. Like Brian McLaughlin, and Natalie Wolfsen. So again, shout out to my friend Rick, he did a great job.

One of the main focuses that I found in the conference, one of the underlying themes was behavioral finance. This is something that Orion has really latched on to, and I think it’s great. It’s good to have something like that, especially when we all give lip service to holistic financial planning holistic wealth management.

Bringing in behavioral finance really supports holistic wealth management. And the way Orion is positioning it as sort of the glue that’s holding together and integrating and moving through all the different applications is great to see and I think a great move on their part. Number one, it’s the right thing to do. Number two, it’s a differentiation from some of their competitors. Now their suite of services and products, all working with behavioral finance was apparent during the conference. Through the different breakout sessions that I went to, everyone is mentioning everyone’s talking about it. Of course, it’s being driven by their Chief Behavioral Officer, Dr. Daniel Crosby, whose book you should check out if you get the chance. Some of the capabilities I saw whether it’s in the client portal in risk assessment in financial planning, I think it can be really helpful for advisors to help build tighter relationships with their clients. So behavioral finance, or BFi as they’re calling it was the unifying theme of the conference.

Orion also announced a wealthtech survey and some of the stats include 57% of advisors are currently focused on generational wealth transfer as a growth opportunity with another 36%, that’s 90% of advisors altogether will be doing so over the next three years, which of course makes sense.

We heard from new CEO Natalie Wolfsen at the conference, she made a strong case for BFi being the driver of all aspects of wealth management, and her keynote was almost entirely focused on technology and didn’t really mention Orion’s TAMP capabilities, which was surprising or maybe not surprising, considering where she came from. She came from AssetMark, where she was previously CEO. Orion has made a big move into the TAMP space, as many people will partially in order to compete better with Envestnet. And also the exhibit hall was seemingly overflowing with asset management partners, which I heard they made a big push to bring more of them on for this conference. Some new software products and new feature functionality that were being highlighted at the conference include estate planning, we’ve been surprised to see this.

This tool includes visualization, workflows, what ifs, you can model hypothetical scenarios and it’s accessible through the advisor or client portals. I was surprised just because estate planning is more higher end, more higher net worth than I thought was the core of the Orion client segment. I felt more that their core advisors are more mass affluent, but maybe this is a sign that they’re looking to move more upstream, offer more features or functionality to compete in that space. Although partners such as Vanilla who was at the conference had a booth may not be so keen on attending next year, if they are running up against competition from from Orion and that space. Another application or sweet part of their their application suite they’re calling the Compare tool. They describe it as an integrated dashboard that enables viewing the impact of multiple changes to a client’s portfolio side by side.

One thing I liked about it was one of the demos they gave showed how you could compare different rebalanced scenarios with a single click. Now in other applications that have multiple different rebounds options, you have to run each one separately to see what the outcome is. With the Compare tool from Orion, it shows it all on one screen. So for example, for a complex portfolio I could show a partial rebalance, I could show a sell only rebalance, I could show a full rebalance. I could show rebalance halfway to target and it would show me for example, what’s the capital gains expected? What’s the number of trades expected? What’s the the current risk score of that portfolio? What’s the risk score after you when the rebounds of all those different three or four rebalances? So I thought that was interesting because it really that’s really wasn’t available before in any of the other systems that I’ve seen, then that seems pretty handy. What else would it show risk score, and the deviation for the model. So whatever model it’s attached to, there may be some sort of drift from the model it will show you the current level of deviation and then what that would change to for each of those rebalancing options. So pretty cool way to see all this in one click so I like their Compare tool.

A lot of functionality there and they’re looking to integrate that with other parts of the platform, such as advisor trading. So what is advisor trading, it’s a simplified version of their Eclipse trading platform. And this is just basically a light trading tool for advisors to use, very simplified. I think that’s also something useful because a lot advisors do still want to get their hands dirty or clean, depending on how you look at it. And they want to be able to access some trading functionality, some very high level capabilities. Not everything that you would have in Eclipse. And again, Eclipse is a complicated tool. A number of our clients use it. It’s very powerful, but it’s also complicated. There’s a learning curve. You wouldn’t want all of your advisors jumping into Eclipse to make changes or to make trades. So having the advisor trading tool is pretty helpful.

They have a roadmap. They’re talking about offering household management and trading in this advisor trading tool, bringing in tax management, tax loss harvesting, real time portfolio monitoring, basically turning it into an advisor as pm tool. So we like that there’s definitely a still a need from advisors, even though we don’t think it’s a good idea. Still a very strong demand for advisors for trading tools.

Another area we didn’t talk about was their advisor portal. They have tried to make the advisor portal, a single technology hub for both advisors and the home office. It connects from the advisor portal from what I saw. You can run proposals, IPS, you can look at risks and models Investment Management. You can do advisor trading from the portal, you can open up new accounts, you can use rebalancing. And you can do risk assessment, risk tolerance also from the advisor portal. So they’re really building it into a hub a centralized hub for advisors, which we like we want to see everything in one place.

Next up in this list here, 3D risk profile. Now this is an interesting branding exercise. I never knew there was something called 2D risk but they there was 2D risk, and now there’s 3D risk. So Orion considers 2D risk where you’re only measuring risk capacity, and risk tolerance. And 3D risk includes risk composure, which is basically how the client feels about losing money. So risk capacity is how much money the client can afford to lose, but risk composure is how they feel about losing the money. And was explained to me was, hey, if you maybe you’re doing well, you’re relatively wealthy. You may have a high risk capacity, but maybe you don’t want to lose any money. So your risk capacity is high, but your risk composure is low. So that’s how they would break those up. And there they’ve got defi infused into this there was profiling and it’s available through the the advisor portal and such.

More statistics only 50% of technology at RIAs is integrated, according to Orion’s recent wealth survey. And we know that for sure that’s a huge opportunity for Ezra Group and our integration services so I wasn’t surprised to hear that. I think that number might even be a little high on the high side. From what we’re seeing with the RIAs we work with. There is a serious lack of integration. And the integrations they have, they may say they’re integrated, but they really don’t do what they need to do don’t provide the data they need to provide and it’s always breaking.

So for all in one vendors like Orion, they can deliver more fully connected tools and services across the entire advisor value chain and provide better experiences. So we like that. I’m interested to see going down the road in the roadmap, especially this year, how Orion continues to integrate Eclipse their advanced trading tool advisor trading their lightweight trading tool, their compare tool, differential planning tool and the advisor portal like see how all that comes together. Things to be very smooth advisor experience be able to support multiple workflows in one place. Here’s another stat from their survey 62% of advisors using behavioral finance techniques, edit new clients twice as quickly as those who didn’t. Not surprising their view our view understand your clients, why they’re behaving in certain ways and you have more empathy because you understand the client’s point of view of depending on their particular persona, most likely you will add clients quicker.

Generative AI also made an appearance just wrapping up this review of the Ascent conference. Generative AI had to make an appearance and their president and former CEO of Redtail Brian McLaughlin demoed some screens, which I thought were interesting, where they’re showing how advisors can generate talking points for use with clients, emails and other content. And it pulls in data from a BFi questionnaire that the clients take that puts them slots down into one of 10 Behavioral Finance personas. So whether they are communicative or non communicative or if they are they want to save or they want or they’re willing to take risks. Those different personas feed into the generative AI and it changes the output based on that.

So this is just 1.0 version, minimum viable product. I think we’re going to see these tools really level the empathy gap is how I call it where some advisors as you know, if you’ve met we’ve worked with as many advisors as we do, some are just more empathetic. And those advisors tend to be more successful. They bond better with clients, they understand their client’s needs intuitively, and other advisors maybe not so much, but they want to so these generous AI tools and other AI tools will level that empathy gap by gathering that information, and then feeding it to the advisor and giving them tips recommendations. Hey, you need to call this client and use these key words when you talk to them. Or this client prefers email. This client prefers a phone call. This client prefers a letter, whatever it might be different communication styles. And all that will help make clients feel more connected to their advisors even if they maybe weren’t. The it’s not the advisor doing it themselves. It’s the software doing it, but that’s going to level the playing field. So that’s really my wrap up. It was a great conference. Thanks again to everyone at Orion first for inviting me and for hosting such an incredible event.

2. Plenty launches app targeting couples blending finances

Craig: A new robo advisor has launched. Their name is Plenty FinTech platform, Plenty launches to modernize wealth building for everyday couples. So this is an interesting story. We don’t often hear a new robo advisor so it’s not these days. So I’m pretty interested in this company and bringing on a special guest for the this News episode. It is David Rossien. Industry consultant extraordinaire. Welcome, Dave.

David: Thank you.

Craig: Thank thanks for being here. You’ve got a tremendous history in the industry and we’ve worked together a long time so if you would have some interesting stuff to talk about Plenty, especially with your background. Well, let me just do a quick intro so Plenty the first of its kind platform, their goal is to help couples discuss, manage and invest their money has announced $2.75 million in pre seed capital raise from investors including Phenomenal Ventures, Kevin Durant, the basketball star, the former CEO of Wealthfront, Adam Nash, who we have had on the program recently, and Inovia capital.

Craig: What’s interesting about this company founded by a couple who are now married, they felt that working couples didn’t have a robo advisor or an online advisor that was designed just for they call it an affordable, fresh, whatever that means a fresh tech first approach. They both came from Silicon Valley, which of course shades your eyes a bit you know as to how you see the world but they decided they were going to build this new robo advisor, they don’t talk about what the A when this is brand new, I guess they have no AUM but they seem to have gotten a lot of interesting people behind them, including Adam Nash, CEO of Wealthfront so they’ve definitely had some traction. What do you think of this Dave? What’s your opinion of this particular robo?

David: Well, I think we should start off by saying that there are certainly many pundits out there who think the robo phase has waned. And that quite frankly, as you can see from the top robos they’re pretty legacy. So we have firms like Vanguard and Fidelity and firms that decided to add robos but already have the ability, either the mining share because people know their names or the ability to turn clients who might come to them for other reasons. Vanguard and Fidelity. Certainly get clients just out of that.

Craig: Thanks for mentioning that so the top robos just so we can put put things into perspective Vanguard is still the number one robo by AUM with as of last October 228 billion, then Schwab was 66 billion Betterment 36 West Wealth portfolios I never heard these guys 30 billion

David: Me neither, so I don’t trust I don’t trust this list entirely.

Craig: Forget I said that Betterment 36 billion then Wealthfront 25 billion Wealthsimple 23.

David: I should say Wealthsimple, I’m sorry, dropped out entirely of their view of US. They basically gave all their US accounts over over the I think it was Betterment and Wealthfront is seeing the Wealthsimple is now Canadian only.

Craig: Good point. Yeah, so the market really hasn’t grown very much. If you look at these guys, it’s a top 10, they can’t be more than 500 billion here total. We’ve seen some crazy numbers that they expect the worldwide robo market to reach 1.8 trillion by this year, which is impossible would have to triple.

David: And similarly a number of firms, JP Morgan, as an example have basically dropped out of the robo market. They just decided the margins weren’t there. So with that in mind, that is you know, it’s a tough market. Three things that I would point out first of all, they do have a point that none of these firms are directly focused on couples that are one of two possibilities. They’re either focused on individuals and then specifically, they’re looking on for the individual retirement money because as Willie Sutton said, I rob banks because that’s where the money is. The retirement money, particularly in a rollover, 401k to IRAs is often where the money is.

David: But the three things that come to mind with this first, as you’ve already pointed out, they have some impressive backers, Adam Nash and as I understand it, also former C suites from Personal Capital, which as you mentioned, was on the top few list. So the fact that they caught the attention of folks who are already deeply in the business is interesting.

David: Item number two, from their ADV, it looks like there’ll be charging subscriptions of $10 to $25 per month. That is pretty much in the in the sweet spot of subscription based robos. Recall that basically invert robos were 100% AUM based the issue there is that they would get a tens perhaps hundreds of thousands of accounts with very, very low amounts in them $1,000, $2,000, $5,000 And so you know, 25 basis points of $1,000 is just not enough to be profitable. So most firms, at least at the smaller ranges have moved to subscription based. And 25, frankly, is somewhat at the high end. 10 to 12 to 15 is typically around what if they’re able to provide something interesting for couples, for example, and I don’t know if they do this, because we really don’t know enough about what their secret sauce might be. But one of the issues that folks have, that couples will have is they have different views of for example, their own risk tolerance, or their own goals and objectives and herizon. One member of the couple may have a goal that another member doesn’t have or they both look at retirement or saving for college with different levels of importance. So if you can solve that problem, give couples a process that enables them to communicate and enables them to see their differences and come to some conclusions about how they should invest, then that’s pretty interesting.

David: And the last point I would make on the other hand or is that they really do have a pretty heavy hill to climb, the ability to gain clients. New clients are fairly expensive to find it’s not necessarily like good like they are. They start out with a name like Schwab or Vanguard so they’re going to have to get their name in front of people and get mindshare and whether that’s typically 50 to 100 to 500. Cost of dollars cost of client acquisition, you know at several $100 of client acquisition, it would take several years before that $10 a month begins to pay off that $10 a month subscription. So it’s intriguing, it’s interesting, it does fill an interesting potential niche or there’s the possibility of it. But whether they will be able to make money in the long run and be able to have clients who you know, make them revenues in the shorter run so that they can stay abreast that’s really what’s important.

Craig: And one thing I forgot to mention David is you’ve got a little bit of experience here being the first non female employee hire at Ellevest.

David: Which by the way, just rang the bell for hitting $2 billion, rang the bell at the New York Stock Exchange for hitting $2 billion in AUM. So great for them. But to put that in perspective, as you know, Betterment is 36 billion plus, they have quite a ways to go before they before they’re in the top tier of robo advisors. But I will say that our best along with the Betterment and Wealthfront of Google really have not been concentrating on couples. So this is an area where, you know, there is a gap but that’s whether the gap can be met profitably is something that we we will see.

Craig: And Ellevest just as you mentioned, just hit $2 billion. How long have they been in business?

David: They were a twinkle in the eye in 2014. So that would be 10 years.

Craig: And it was started in 2016. So they’ve been in business and for eight years or seven years.

David: That’s right.

Craig: They’ve just hit 2 billion and they’ve got selling projects name behind them. It’s still took them that long. So these guys they’re no names, not that they’re not smart but they’re still they don’t have the names of Sunday project to help advertise their their products, but it’s going to be as you said a tough road for them to to make enough on Twitter bucks a year and 2.2% in 20 basis points to generate profit but we’ll see maybe they’re battling with their exit strategies. We’ll find out.

3. Innovayte and ETC Brokerage combine to create new custodian

Equity Advisor Solutions has a new custodial competitor, this story was on WealthManagement.com by Rob Burgess. Check that out for more details so RIA custodian Equity Advisor Solutions, and ETC Brokerage, both affiliated with the family that founded Equity Trust Company, have combined to create a new custody and clearing platform called Innovayte. It spelled in an innovative way with a Y instead of an E the end, Innovayte, that seeks to work with entrepreneurial RIAs and broker dealers. The new entity currently clears through Axos Clearing but it will go self clearing eventually.

We work a lot of custodians, we were of course a lot of RIAs and broker dealers and they all need a custodian. Everyone’s got at least one usually more in custody is a lot like plumbing. You don’t even know what’s there until something goes wrong. And with with custody, we’ve got the Big Four of course, we’ll turn to the big three, could be the big four if we add LPL, Schwab, Fidelity, Pershing, I would even throw Raymond James in there big five.

I think the big five firms those firms hold over 85% of all RIA custody assets, maybe even more. Cerulli didn’t include Raymond James and that 85%. So clearly more there. And some 73% of all RIAs manage less than $250 million when combined, also, according to surly RIAs manage approximately $7 trillion of investable assets in the US which I also think is a little low. Just looking at all the numbers here but let’s go with 7 trillion. We’ve seen that RIA custody as with any custody business is a scale business you got to have assets in order to make money because the rates are so low you’re charging single digits for custody to clients. And that has spurred a wave of M&A back to Etrade acquiring Trust Company of America and then they then being acquired by Morgan Stanley and then spinning off. Altruist started off as a reseller of Apex custody then they built their own custodian platform, and then they acquired Shareholder Services Group. On the sidebar, Altruist last year also raised over $100 million in a series D round because you need money. Custodians need money to build out the there’s a lot of tech and a lot of balance sheet you need in order to be custodian.

Of course, TD Ameritrade acquired ScottTrade way back in the day and another couple other smaller firms and then they themselves were gobbled up by Charles Schwab to form the largest RIA custodian over $3.4 trillion dollars. And of course, a lot of RIAs aren’t happy with Schwab because they compete with them with their direct retail offering. But I don’t see them leaving, they still have they still custody the assets at Schwab. And they just complain about it. So go figure. Now of course Schwab also plans to they want to be very supportive of their independent RIA clients. And they’ve been developing up market resources in areas such as asset management, banking, lending solutions, even private banking and trust services from sources we’ve heard. And these these custodians have a lot of assets. As I mentioned, $7 trillion total.

I mentioned a couple of numbers there. Fidelity’s got $1.5 trillion Raymond James about the same that’s 3 trillion right there. It’s half and then Fidelity with $3.4. Then Schwab with $3.4. That’s already $6.4 trillion. Then Pershing $350 billion that’s $6.78 trillion. LPL has got $200 in fee only, that’s already $7 trillion right there, boom, market’s got to be bigger than 7 trillion. LPL has to $200 billion of fee only RIA assets another $400 billion of hybrid RIA assets and 25,000 advisors. So there you’ve got some scale and some backing there.

Word on the street is that there are a lot of former TDA RIAs that aren’t really happy with the Schwab trade business model and looking for a new home and that’s attracting a lot of the next level of custodians who aren’t the Big Four, such as Interactive Brokers, Trade PMR and Trade PMR actually is a reseller of first clearings custody. Goldman which acquired Folio Institutional to get into the RIA business, and those three custodians. I think they’ve got around 40 billion each in assets. Trade PMR won’t say Goldman I don’t think they say either. Interactive Brokers I saw a number of 40 something billion there’s also SEI, which is a publicly traded company think they’ve got almost 100 billion in in custody assets and about 5000 clients. Betterment is in the mix. I’m not sure what what traction they’ve even gotten. Of course, we’ve got old standby reliable Apex Clearing, and as I mentioned before Axos Advisor Services, which brings us back to Equity Advisor Solutions that is reselling Axos Services.

Custody in general is so profitable even though it’s a very low, a low profit a low number right the lower the low basis points per asset. Because of the scale, it’s so profitable, and because there’s not a lot of work involved, are you just us holding these assets that most custodians give away a full tech stack for free. Of course, it just works on their on their platform on their custody, with the exception of Pershing which has their Wove platform which is coming out soon that will be multi custodial.

When choosing the right RIA custodian careful consideration is required of aspects like their technology. What are they giving you, Support Services, investment options, NTF platform cost. So with this new custodian, Innovayte from Equity Advisor Solutions. Innovayte will be led by Catherine “Cat” Davies, who most recently served as Chief Solutions Officer for Hightower and the Equity Advisor Solutions and ETC Brokerage are both owned by the Desich family and Davies believes custodians should be more accommodating of RIA firms that want to be multi custodial. Yes, we like that.

They said in the article, they’re targeting RIAs with between 100 and 800 million AUM. That’s a tough segment. Everybody wants that. Because they are it’s really a sweet spot with firms and that’s where a lot of our clients come from as well. On the on the consulting side. Usually 500 to 1.5 billion. But the it’s the sweet spot of advisors because their technology is growing, their assets are growing, and they are often multi custodial and have a lot of interesting needs. So they’re going to be there’s a lot of competition there. I’ve counted, I think there are at least 13 or 15 RIA custodians including all the different tiers. Do we need one more? I don’t know. What I always say is in every category. I think there’s enough vendors and there always seems to be room for one more. So go for it. Innovayte and Equity Advisor Solutions looking forward to your new custody platform.

4. Apex acquires portfolio rebalancer AdvisorArch

Moving right along our next story, Apex acquires portfolio rebalancer AdvisorArch. This is an interesting story. We always like mergers and acquisitions, and this is no different. So Apex FinTech services formerly Apex Clearing is a clearing and custody firm. A very interesting company that has been around since 2013 came out of another earlier firm that was reorganized called Penson that was reorganized into to Apex and Apex has really built a niche for themselves as the high tech custodian, the API driven custodian, the headless custodian. Anyone wanting to build a FinTech that offers stock trading in any way, shape, or form, needs to go with Apex they seem to be able to gather those type of clients very readily. Firms like Robinhood, Stash, SoFi, eToro all launched on Apex now, some of them eventually moved off of Apex like Robinhood, Altruist started on Apex and then eventually left, built their own custodial platform. And M1 Finance, another popular robo advisor was on Apex for a couple years and just last year, moved off to self clearing. Doesn’t say anything bad about Apex, it just says that firms when they grow to a certain size, and they have the scale, they can build themselves and they they save money that way if they’ve got that capability. So because people speak well for Apex’s API’s and their robust technology infrastructure that allows some of the hottest and techiest startups to go to work with Apex first, but why are they buying AdvisorArch? The latest creation of former Robust Wealth founders Michael Kerins and Robert Cavallaro. So I’ve known these guys since they were Robust Wealth, Robust Wealth was an interesting TAMP-like platform with portfolio management, rebalancing, and other tools that was acquired themselves acquired by Principal Financial a couple years after they launched, in July 2018. And the rumors were they paid about $40 million for it. So good for good for Michael Kerins and his team as investors.

Apex has been trying to expand their footprint in the RIA space for a number of years. It’s not easy to do. As I said, Apex is a good company. So they’ve got some very solid technology but the RIA business is not easy to break into. Apex has over 120 billion in AUM, which makes it one of the larger smaller custodians, as we mentioned in the earlier article. Lots of the smaller tier custodians have around 40 billion that’s big for that tier, so having 120 makes them three times as large. So they are relatively successful compared to the big four. They’ve got 21 million brokerage accounts, 236 million in revenue, as of 2020. So again, imagine they have more by now, and 220 clients according to their website. Earlier 2021 Apex agreed to go public via merger with Northern Star investment Corp, which was a SPAC that all fell through in December of 2021, that was fast. And then recently, they announced they’re going public they’re gonna go IPO. So now after that SPAC has been in the rear view mirror for a couple years, the Oh here is clearing from Apex FinTech confidentially files for US IPO. So I’m not sure why it’s confidential but it is. Clearing from Apex is owned by Peak6 Investments.

And they also have been, as mentioned building out their RIA infrastructure for a number of years, and they had some stops and starts starts and stops. Now it’s not as I’d mentioned, it’s not easy to build this kind of a team. And it’s not easy to break into the RIA world for example, they had with large fanfare hired my friend and someone very well respected in the industry, Tricia Rothschild, former longtime Morningstar, executive and head of all Morningstar products at one point was hired as their president at Apex to help push them into the RIA world, as well as Garrick Valverde, former Pershing and Fidelity executive was head of RIA. He left, Tricia eventually left and they now have Olivia Eisenger who is gm of advisory at Apex formerly a TEA executive. So hopefully this team under Olivia will stick and they’ll have much success.

I’m always interested when vendors launch products that I feel there’s too many of them out there. And I’ve always said this, no matter how many vendors are in space there’s always room for one more thing. I said that in this news podcast a little earlier. And just in Portfolio Management rebalancing, there’s at least 44 products out there. If you include portfolio management products, we look at the Kitces-Ezra Group map. The March version you can find on Kitces.com 25 portfolio management vendors, they’ve all got trading rebalancing. There’s seven just trading rebalancing vendors, that’s 32. And then of the custodial platforms, at least 12 have rebalancers that’s 44 total products with rebalancers but hey, Mike Kerins decided to build another one and good for him good for him. got bought out really quickly. So they were they were there and gone.

Very few standalone portfolio rebalancing engines are hanging out for too long before they get acquired. There’s a long list of those firms. Back in 2016, TiA acquired MyVest, which is actually a full featured wealth management platform but portfolio management rebalancing is at the core. Let’s see LPL bought Blaze Portfolio and other standalone rebalancer in October 2020, took them about 10 years before they got bought out and Addepar just in early October, October 2021, two and a half years ago, acquired Advisor Peak, was founded by Damon Derue, the former founder of Trade Warrior portfolio rebalancing engine.

So lots of these guys start up rebalancing engines or portfolio management tools they get bought out and they build another one. So that seems to be their their special sauce. So this is news for Apex. I would expect them to be expanding the systems that they’ve been building one of their new user interface that they launched at the T3 conference is called Astra, and to me it looked mainly like a dashboard with some new account opening functionality and not a lot there. But now with AdvisorArch plugging that in now you’re moving into a full featured portfolio management platform that Apex can offer to their 220 clients and it makes them very much like mostly other custodians that we talked about in the previous previous article. All of them have portfolio management platforms that they’re they want their advisor to use, and they give it away for free because custody is profitable.

Couple of minor little notes here I saw an article as I was researching for this, their stock rewards API received a new patent approval, congrats Apex. That stock awards API enables companies to award their their customers stock like in a rewards program for buying products or whatever they buy, or we’re spending certain amount of money on a credit card or store. They can award the customer stock using the apex stocks stock rewards API. So that sounds really cool. But you can learn more about apex at ApexFinTechSolutions.com.

5. AdvisorTech Map

Craig: So David you are in charge at Ezra Group of integration scoring. And every month, Michael Kitces and I meet and we review the map and all the new vendors and products that want to be added to the map. And then once we decide on what gets on the map, that data then goes into the directory that that gets sent over to us at Ezra Group and your team. And then what does your team do with that data, can you give us like a five minute review of that?

David: Sure, so the first thing that we do is we go to the website of the new app. And we review it and we look for information about their integrations, often when they are new integrations, when they are new applications, frankly, they don’t have many integrations because they’re just trying to get get out the door. But in some cases, they’ll say we’re a new application and we integrate with these three CRMs or this financial teams, financial planning packages, or these bill paying packages or whatever. If they if on their websites, they tell us exactly what that level of integration might be. So is it just a single sign on? Or do they take data in real time through API’s today, enable data to be passed to them in real time. And in some cases, there are really strong integrations where they are usually in partnership with other applications.

David: In any event, for every application that they integrate with, we give them a score based upon what we can see on the website, and I shouldn’t say if there’s nothing if there was a mention of an integration without any details. Frankly, we ended up giving them the lowest score we can so our scores range from 1 to 5, while they’re 0 if they have no integrations with a with a particular app. But one is single sign on and 5 it’s very, very deep integration. And if all they say is for example, we integrate with Wealthbox without saying anything else or they just show a Wealthbox logo under their integration partners with nothing else, then they’re only going to get 1. But if they tell us more than we’re happy to score them higher. And then the other thing we look at is various on their website. Various descriptions they may have, what it would be like for developers to integrate with them. Do they have API’s? Do those API’s enable folks, the ability to get information from them and post information to them are the API’s well documented. And then we also tried to score them on a series of other technical features. So for example, do they have a data dictionary? Do today have penetration tests on a periodic basis? Are they sock certified, or ISO certified, etc.

David: We take all of that and we create integration score, and those integration scores go basically from 0 to 10. And we compare though their scores with the other apps in the category. So for example, we could imagine a specific category stay business valuation that you’ve just added, which would be used by an advisor to help their clients value their own business that might not need it have to be well integrated with portfolio management systems or bill paying systems or compliance systems or whatever the the category is somewhat standalone. So we take that in consideration and we compare within categories. So and then each, as I said, each of the vendors is given a score.

David: The other point is that simultaneous to them being added that is that the new vendor being added as a sentence out an email requesting that vendor, that they fill out a survey. So everything that I just described is if we don’t get a survey back, we go to their website and do the best we can. But if we do get a survey back, then we use the information that we get from that survey, and therefore the survey information is generally much more accurate than what we find on the website.

Craig: There you go. All right. So that’s a great overview. Thank you. So let’s go through quickly the new applications that are on the March map just came out of Michael and I are monthly meeting a SIGNiX is a new vendor in the e-signature category, and assuming it’s pronounced SIGNiX.com. They claim to be the largest provider of true digital signatures in North America, whatever true digital signatures mean. And they also have they claim to have a flexible API, at least on their websites. That’s a good thing for integration scores and the competition is always a good thing. So DocuSign and other e-signature vendors need some competition. It’s good for the industry to have that so you can check out SIGNiX.com.

Craig: Next up is Cashmere AI is a prospecting tool, which is in the process, which is now in the prospecting category, in under business development, on the Kitces-Ezra Group map and they believe in putting Data Automation behind client acquisition. Intelligence platform discovers researches and engages ideal prospects for you. We’ve seen a flood of these guys, the last couple of months have come out with these what they call AI based prospecting tools, which is why Michael now launched the prospecting category, because now we’ve got 7 applications under prospecting. So I’m not sure how all of these can possibly work. And I’m expecting anybody with any kind of money movement, anybody who sells their business or gets anything public that they’ve gotten some money is going to get flooded with AI based messages from all of these applications. What do you think of that, David?

David: I am concerned that, AI will become the news, the smarter spammer nobody needs smarter. Smarter spammers, one of the ways we tell that stuff is spam, and just because of the the use of poor grammar or various phrases and as AI gets smarter, it’s going to it’s going to be a little bit harder. I would like to say with regard to with regard to Cashmere AI, they’re an example where if you go to the website, they do mention integrations and they mentioned MailChimp and HubSpot and SendGrid but then after that, it just says “and more”. And it doesn’t say exactly what sort of integrations they provide. All it shows is the logos of those three. So in that case, we would end up rating them just the 1 and we would only rate them along for the three that we can see because we don’t know what “and more” means, which is why overall they got a 3.45 score. So and and some of that score is because of their API, because they do describe their API a little bit more.

Craig: So for new vendors, make sure your website describes your API’s and Lister at your integrations, and what each integration does and you’ll get a better score, or else come to our website and fill out the survey for your for your product. Right so that’s Cashmere ai.com.

Craig: Next up is RegVerse, which is click on the link here. It’s RegVerse.com. One platform to automate regulatory compliance so of course they are in the compliance category, which is also a crowded category. If you look at if you look at compliance for a 18 products in the compliance that’s only standalone so vendors like Orion and Enveestnet Tamarac, and others who are in the portfolio matching category also have compliance capabilities Nitrogen well, for example, as compliance capabilities there and sales enablement. So, there’s way more than 18 options for compliance. But as I keep saying, no matter how many vendors are all in the category, there’s always room for one more it seems right to keep getting more vendors. So RegVerse believes they have a simple way to stay up to date. They’re going to do a quicker you can save time, and they work with any size firm, so you can check them out at RegVerse.com

David: I’m sorry but just going to interrupt. You can pop this out when you need it. But the actual it looks like the actual product is called Avery, RegVerse the company but it’s Avery by RegVerse and then they just they keep they keep talking about it as Avery.

Craig: Oh, thank you. Yes they call it Avery by RegVerse which is even more confusing, but why not? Keep going guys. Maybe the product is good and it doesn’t matter what the name is. Wealth Management GPT standalone AI tool for advisors to create content. It is just as its sounds wealthmanagementgpt.com is their website. And they are going under digital marketing because they’re basically right now that the over $20 A month application which helps advisors write content.

Craig: I believe that this company was founded by Mark Butler, former CEO of Albridge and former president of Skience so we’re excited to see his new venture. We’re always interested to see new companies come out using AI tools. Not sure how well they’re going to succeed. Since a lot of digital marketing vendors are building similar tools into their products. I know for example, Snappy Kraken has built in generative AI tools into their digital marketing platforms, as well as a couple other vendors have also done something similar so but there’s no reason why you can’t have more. There’s always seems to be room FMGs got some AI tools. Of course the main vendors like HubSpot and others have some AI as well but there’s always room for one more vendor if you can do it a little bit differently. So that’s wealth management gpt.com.

Craig: Next is a new company in a new category, business valuations as David mentioned earlier. It’s not for advisors to manage to value their business but it’s for advisors to help their clients value and evaluate their own businesses. And this vendor that is added to the map this month is called Capitaliz. They are helping a tool that advisors can use they can resell it somehow to their clients. They’ve got some pricing which they don’t give a lot of information about the pricing but in fact they give no information about the pricing, but they have a couple different categories, Exit Planning advisors, business advisors, Wealth Advisors that have some different categories of services that they can then offer business valuation to their client seems interesting. I certainly wouldn’t might want that kind of functionality over there that kind of service for my advisor it seems like a way to differentiate yourself if they work the other application so if you looking for this on the March map, it’s on the far left side under specialized planning light blue baby blue section financial planning towards the bottom under specialized is business valuation squeezed between healthcare Medicare and other and there’s two vendors in there. One’s capitalized as I mentioned, the other one is BizEquity, which does the same thing. This is an innovation in our industry. New applications create new categories. So we like to see that that’s a fifth application that came up this month. Six is EstateView, innovative and comprehensive estate planning software designed to take the state tax strategies and calculators to a new level. They think they can do a better job than the existing specialized sophisticated estate planning software that’s out there. So you can check them out at Estateview dot info. Then we have Sequence.io. It’s rare to see.io vendors these days, every single day recently David?

David: I mean, the simple answer is if they can get a good deal on on the domain name, but you’re right it doesn’t really mean anything you just have to have something to do with IO meaning input output. I’ve seen that business and dados that have nothing to do with their know that name.

Craig: What’s even funny people don’t even realize that that.io is a country is a country code. So that’s the British Indian Ocean territory, .io So we have to find the .io domain name you’re paying the British Indian Ocean Territory, some money so they can they you you can have a domain in their country domain. Llittle known fact.

David: The best one is the .tv name which Tuvalu which is a Polynesian island.

Craig: Alright, so I was really interested in this product, Sequence.io. And because it’s a sort of a mind mapping tool that allows clients or advisors to show where your money’s moving show cash flow. And they there was it was kind of like a mix of Personal Capital and Zapier and other mind mapping tools that you could make this cool map and show where the money’s coming in from when you link it to an account your checking account, and then say, well, I want to pay my rent and I want to pay this and pay that and I want to put this money into my savings account and you could do all this cool stuff. I couldn’t get it to work. I tried to play with a bit it seemed overly complicated. It’s a great idea. If you look at the websites, it’s cool looking. You can drag and drop these things and sort of this Mind Mapping way. It just seemed too complicated. I mean, I got a degree in computer science, it was it was a long time ago. And we’ve looked at applications all day long. I couldn’t make it work. Not that this isn’t gonna work, but it just seemed to be a little too complicated.

David: Quick question for you on that because I know you put it in their cache management area, but am I correct that the others in that category actually manage your cash?

Craig: Michael and I were going back and forth. We didn’t know where to put this.

David: I don’t know either.

Craig: I think you have exactly right into advisor engagement advice, engagement. Because it was kind of its own workflow, because it’s kind of a workflow tool. And it really specific to cash flow, right.

David: I mean, it struck me as more like Asset-map. I mean, not exactly at all like Asset-map, what Asset-map does for your overall holdings and assets. It just does for your cash. But all it does, it seems, is showing you pictures, it’s not really doing something.

Craig: Yeah, that’s just where we put it because it was cash related. It was best to go there. It was a toss up between workflow support, and cash management and cash management won out I think because their website is so cashflow oriented. That we put it into cash management even though it doesn’t mean the other applications under cash management. actually manage your cash.

David: Exactly.

Craig: So the map is imperfect. Alright, so unfortunately, we can’t have the category that’s perfect for everything.

David: Everything goes in its own category which becomes useless.

Craig: One thing we agreed upon was at we wouldn’t have a category without at least three applications which I think we already broke. I think there’s one category where there’s only two.

David: I think business valuation now only has two right now the two you just added.

Craig: We broke the rule. And AI assistant and AI system is under client engagement only has two. Got it? Yeah, who was supposed to be three, right? So that’s Sequence.io last and last but not least. Luminary, they are state services. I think they had been trying to get into the onto the map for a long time. But we didn’t let them on because it didn’t have a product.

David: Well that’s a good reason.

Craig: Boy, that sounds it sounds a little sillier than it really is that they were a service. They offered estate planning as a service as rather than a product, a software product. So we didn’t put them on the map because this isn’t a services map. So firms like trusted will are not on the map. Because they are an estate planning service. They will build estate plans for you. They have software that’s they don’t make money selling software and make money on the service luminary was the same way. They just came out with a software product that you can buy a software product without their estate planning services, which is why they are now on the map. Because this map is a software map designed to be that way. I believe Michael at some point is going to make a services map as well. So now Luminary has software which you can buy. And it’s on the map now under estate planning. And all these applications have a score or not. They could have a zero scores but as David said, but you can check that out at EzraGroup.com. That’s a wrap for everything you do but thanks for persevering. Appreciate it.

David: My pleasure. Take care.

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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 craig@ezragroupllc.com

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