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Aging advisory clients spur new TAMP offerings

An aging population of clients is forcing advisors to rethink how they approach retirement savings and tech firms are taking notice.

Two of the top turnkey asset management providers are looking to grab a larger chunk of the advisor desktop by pushing out tools targeting aging clients from very different ends of the financial spectrum. Envestnet recently unveiled software aimed at ultrahigh-net-worth families with upwards of $25 million in investable assets, while AssetMark rolled out a new product designed to provide a steady stream of income for mass-affluent retirees.

By targeting the demographic margins, tech firm are addressing significant gaps in the planning software toolkit and solving a problem that an increasing number of financial advisors are facing: How do I help a growing number of clients manage retirement?

“There’s a lot of people not prepared for retirement,” says Dennis Gallant, senior analyst with Aite Group. “They’re expanding their addressable marketplace."

Called Guided Income Solutions, the AssetMark product offers portfolios that manage stable cash flows by automating the pooled approach to retirement savings. Before the roll out, advisors had to manually apply this retirement strategy, by toggling through multiple applications and couldn’t access goals-based performance reporting, says David McNatt, an AssetMark senior vice president.

Jud Bergman, Envestnet

“Instead of just launching new products, firms are focusing on client needs,” McNatt says. “For UHNW clients that may look more like a legacy orientation tool. But, for the mass affluent, these clients are really going to need income replacement.”

With a growing number of clients retiring, the firm’s enterprise clients demanded an updated retirement tool, he says. “It’s the first generation in history where only one in four retirees are going to have any guaranteed income,” McNatt says.

In fact, 10,000 baby boomers reach retirement age every day, according to the Pew Research Center. However, Social Security benefits only replace approximately 40% of the average retiree’s earnings. “Advisors are suddenly having a lot more clients come to them with these conversations,” McNatt says.

"Retirement is the point where advisors become absolutely essential, regardless of investable assets,” Gallant says.

For Envestnet, the opportunity was with the ultrarich. The leading TAMP by assets created a new fintech firm called Apprise, a joint venture with MoneyGuidePro and former eMoney CEO Edmond Walters. The new dashboard gives advisors the ability to show clients cash flow projections in real time, through focus areas, like retirement savings, inheritance gifts or endowment contributions.

“If you take a step back, the problem we are all trying to solve for is a need for a high-end tool that can manage tax and estate planning that our software just didn’t do,” says CEO Jud Bergman.

Envestnet, MoneyGuidePro and Walters own 33% of the new fintech company.

The world’s largest TAMP will charge on a subscription model basis, although the firm would not comment on the exact pricing.

“When it comes to setting up an estate plan for multi-generational wealth transfers, clients want the best of the best,” Gallants says, especially after clients may have seen significant gains in a prolonged bull market. “It makes perfect sense for estate planning tools to become more robust.”

With more than $1.2 trillion in assets on its platform, Envestnet has now gained about 10% of the market share, according to T3’s 2019 Software survey. With more than $44 billion in assets, AssetMark gained over 6% of market share, according to the survey, and was also ranked highest in customer satisfaction in the survey.

“There are various needs for clients in an aging society,” Gallant says. “Boomers are on both ends.”

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