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How advisor fintechs are adapting to the coronavirus crisis

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With financial advisors facing revenue declines and other headwinds from the global COVID-19 pandemic and ensuing market decline, the technology vendors serving them are having to adjust.

For many, it means cutting or even eliminating fees.

Orion Advisor Services is offering what the company calls a “Business as Usual” program for advisory firms unable to access legacy portfolio management, reporting or billing technology from home. Advisors who sign up for Orion’s cloud-based services will receive prioritized onboarding, free access to the company’s suite of technology through July 1 and deferred payment through October 30.

Orion is making access to Orion Planning — the financial planning technology formerly known as Advizr that Orionacquired in July — free to non-customers.

The company is also providing marketing materials on the benefits of planning to help advisors reach out to people impacted by the coronavirus crisis, even on a pro bono basis.

“How can we help during this time? We don’t make masks or respirators, but we can help advisors grow and acquire clients,” says Orion chief revenue officer Kyle Hiatt. “We hope advisors use [Orion Planning] for people affected, people who filed for unemployment claims … prospective clients who potentially have retirement savings and want to know if they’ll be ok.”

Besides Orion, Advicent is giving free access to the client portal on its NaviPlan financial planning software. Envestnet MoneyGuide is offering free use of MyBlocks, a suite of self-service tools to help clients do small parts of a financial plan, and 90 days of complimentary data aggregation through Yodlee. And Fidelity’s eMoney is providing free access to its Advisor Branded Marketing product.

All-in-one tech platform Advyzon is offering free data migration and payment flexibility to new customers through June. The incentive is an attempt to both attract new advisors and hold on to existing customers who may be forced to cut technology costs in the face of plummeting revenue, says Advyzon chief business development officer John Mackowiak.

“There is a lot of uncertainty about how things will look going forward,” Mackowiak says. “At the end of the day we’re here to help, whether that be someone new to Advyzon or someone already on the platform.”

Startup AdvisorPeak sees an opportunity to introduce trading and rebalancing technology to first-time users rather than try to lure customers away from competitors. The vendor is offering its entire trading and rebalancing platform free of charge for Q2 2020, for both new and existing customers.

Advisors are trading heavily to keep clients aligned with model allocations and risk profiles, says AdvisorPeak chief product officer Pete Giza. March trade activity on the platform was up 81% compared to January, and average trade size increased 19%.

Yet many advisors still rely on Microsoft Excel spreadsheets to rebalance portfolios and harvest tax losses. According to Financial Planning’s 2019 Tech Survey, 41% of advisors still don’t use rebalancing technology.

“They need [trading and rebalancing] now, and if we don’t offer it to them now we lose the opportunity in the long run,” says Giza.

Giza says the decision is primarily based on helping reduce stress for advisors experiencing significant decline in revenue rather than concerns about t advisors leaving the platform. While the company may have to rethink its strategy if the coronavirus crisis extends beyond Q2, Giza says they will cross that bridge when they get to it.

“As far as keeping the lights on and paying everyone, this was a calculation done with our war chest and we feel very comfortable in doing it,” he says.

In these moves by advisor fintechs, Celent head of wealth management William Trout sees the influence of consumer tech giants who use low- or no-cost platforms to build up a user base before deciding how to monetize.

“The challenge is perception: what is the value of a product that you can’t or won’t charge for?” Trout says. “With a new or unproven business, perception is fluid rather than fixed, so not a really big deal. But once you start to give away what you charged for previously, it can be tough to regain pricing power.”

The other challenge is funding. According to CB Insights, the coronavirus ended the “growth-at-all-costs environment” startups had enjoyed for the better part of the decade. Private equity and venture capitalists are keeping funds closer to the vest, which could challenge aggressive growth plans.

“A flight to cash will mean that fintech companies will have to tighten their belts, and focus more on profitability and positive cash flow,” says a recent CB Insights report on the impact of COVID-19 on fintech financing. “Ultimately, in a frozen economy, fintech companies will have serious financial challenges ahead if they are unable to reduce costs or rely on their balance sheets to get them through this difficult period.”

Robert Sofia, CEO of digital marketing firm Snappy Kraken, says it’s the responsibility of each vendor to prove its value and get advisors to stick around through eventual price increases. That’s why beyond pricing cuts, Snappy Kraken is introducing new services designed to help advisors through the crisis.

“When you’re dealing with people who are concerned about what the future holds from them financially and the economy, they start asking themselves a lot of questions,” says Sofia. “They’re also home more, spending more time on the internet and more time on social networks. The combinations means its categorically the best time to be marketing online.”

Snappy Kraken is making weekly content around crisis management that advisors can send to clients and has a new tool for advisors to send branded video messages. Sofia says the last thing advisors want is to appear tonedeaf during a global crisis, so marketing approaches have to adapt.

YCharts is adding new data to its investments research and analytics platform tracking COVID-19 cases and deaths throughout the world and per state. CEO and President Sean Brown hopes it will help advisors better understand how the coronavirus is impacting markets to better communicate with clients about their portfolios.

“There is so much muck in the media that people don’t feel like they are able to get objective viewpoints, so they are looking for objective truth through the software,” says Brown. Using YCharts’ data and graphics, Brown says advisors can better communicate with clients about the market dip and if clients need to make portfolio adjustments.

The good news for fintech vendors is so far, the revenue dip doesn’t appear to be impacting advisors’ willingness to spend on technology. Though three-out-of-four advisors have seen revenue declines, three-fourths also said their firm is investing more in technology to facilitate working from home, according to a survey by Arizent, the parent company of Financial Planning.

Cutting fees is a gambit for fintechs during a time of crisis, but it could pay off. A temporary revenue cut to support advisors and offer relief could generate a lot of goodwill and long-term loyalty.

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