LAS VEGAS — Digital upstarts first attempted to disrupt the wealth management industry with slicker user experiences and greater automation in portfolio management.
That movement has now translated into wide-ranging rollouts from popular industry providers, incumbents and new firms alike, as the barrier to disruption falls and competition expands across the advisor tech space.
Several products and services announced at the T3 Enterprise conference this week in Las Vegas are geared toward digital advice and advisor service, as firms engage in wider competition by broadening the scope of their offerings.
Young financial planning software firm Advizr showcased a new white label hybrid advice platform for RIAs, broker-dealers, banks and 401(k) providers, extending into the space occupied by Vanguard, Betterment and Personal Capital.
ETF provider WisdomTree Investments, with analytics firm FinMason, launched a portfolio construction tool for advisors that automates and speeds up the recommendation process, following the moves of larger fund providers like BlackRock to lay claim to the advisor desktop.
Apex Clearing launched Equilibrium, a new tool that can perform large-scale daily rebalancing — a low-cost challenge to the traditional custodial clearing model; while a collection of RIAs including Mariner Wealth Advisors and RMB Capital borrowed a strategy from custodians and banks, launching their own fintech accelerator, dubbed ScratchWorks.
Even an ambitious attempt to create a standard for client data transfer and protection in the industry, cleverDome, was announced with the support of several popular vendors, including Orion Advisors, Riskalyze and United Planners Financial Services.
It’s time for industry players to embrace change and rethink offerings to serve advisors, says Advizr CEO Hussain Zaidi. “Our perspective from day one was not, ‘How do we build a retirement income tool?’” he says. “That was needed 25 years ago. Instead, it is how do we build a versatile, intuitive solution, flexible enough for large financial institutions and can reach all different types of advisors and clients?”
The momentum is now with industry-fed disruption with advisors at heart, adds David Yates, chief information officer at WisdomTree.
“There’s a lot of technology already out there,” Yates says. “How do advisors put those pieces together in a way that makes sense for their company?”
Forrester senior research analyst Davis Janowski says firms are switching up strategies and expanding offerings as they attempt to bridge the gap created by the advent of digital wealth management.
“Advice firms are finally awakening, they need to do something downstream to land millennial clients,” Janowski says. “It’s very good for the industry. It’s creating more competition around feature sets and adding more younger technology stacks into the mix. What used to be a sedate industry has become hypercompetitive.”
In addition to its hybrid offerings, Advizr also launched Advizr Accelerate, a direct execution feature for advisors using its software. Zaidi acknowledges the added competition his firm faces from incumbents and new firms, but also welcomes the opportunity to partner with a major firm if they liked the offering enough.
“It’s a really noisy space — there is competition within planning and competition in a periphery of other groups, including robo advisors, risk solutions and advisor platforms,” Zaidi says. “Many different groups are vying for the budget of advisors.”
WisdomTree has reacted by making strategic investments in enterprise provider AdvisorEngine, while still continuing to develop its core fund offerings, Yates says.
“You still need to be good at products,” he says. “But we need to educate advisors on how to use their funds and help them with portfolio construction and how to automate their practice. It goes beyond just being an asset manager; you have to become a solutions provider.”
With its new tool, named Digital Portfolio Developer, WisdomTree’s disruptive idea is allowing an advisor to make a portfolio recommendation digitally versus using an expert in modeling, Yates says. Powered by analytics that once were only available to large institutions, the program narrows down the process to mere seconds “The goal is to scale that digital portfolio option and make it so easy for an advisor to use.”
Simplifying an advisor’s job, or at least automating routine tasks, has been a rallying cry for advisor tech development. ScratchWorks, the newest fintech accelerator headed by RIA leaders, is promoting that goal.
“We felt it was our duty to help expand and accelerate the possibilities for fintech companies whose solutions would allow us to better serve our clients,” stated Marty Bicknell, CEO and president of Mariner Wealth Advisors, and a co-founder of ScratchWorks. The accelerator is now open for proposals, and will select three finalists to judge in March for potential investment support.
The reveal of cleverDome at the conference was disruptive in its proposal that competing vendors and wealth management institutions can join a closed, secure network, under the control of a new type of corporation that must act in the public interest, explains Aaron Spradlin, the organization’s chief executive.
The initiative is an altruistic one, aimed at a long-standing issue: data sharing and reducing the advisor vulnerability with sharing sensitive client data among third-party tech providers and custodians. With support from several popular providers, Spradlin hopes cleverDome can work as a utility for the industry’s precious data.
“Meeting regulatory compliance with a fully secure network for financial communications, including personal data of consumers, has been a great challenge across the financial services spectrum. We have created a community based platform to protect confidential client information in the cloud,” Spradlin says.
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