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Rebel spirit prompts advisors to develop their own fintech

ST. LOUIS — There was a rebel spirit uniting all the entrepreneurs in XY Planning Network’s fintech competition. Advisors are taking matters into their own hands by funding their own platforms or software partly because they feel the industry has failed to address RIA practice concerns.

For instance, Scott Huff, CEO of Yourefolio, wants planners to control more of the estate planning process. His software simplifies and automates many of the form-filling tasks involved, including asset declarations and estate valuations.

Huff is one of the six finalists competitors in the third annual competition, which pits the latest advisor tech tools against each other. Last year’s winner, Vestwell (a digital employer retirement plan platform for advisors) has now raised over $12 million in funding to date, and inked partnerships with established firms including Allianz Life Insurance Co. of North America.

Contestants this year were notable in how many were focused on helping advisors strengthen their value proposition amid advice commoditization. This is true for Huff, who included novel features in his software including a gamified module for parents and children, meant to help decide how to divvy up an estate without a fight. But driving the development of his software, Huff explains, is a trend he sees being fed by parties within and outside wealth management.

"I do think a lot of the big custodians are driving the business to consumer direct, and we have venture capitalists now funding robo solutions," he says. "They are trying to squeeze us out."

That’s why there are “glaring gaps,” in the technological tools being offered to advisors, says Michael Kitces, a Financial Planning contributing writer and a partner and director of wealth management at Pinnacle Advisory Group in Columbia, Maryland.

Bill Winterberg questions Robert Bolen, CEO of Touchstone Pathway, during the XY Planning Network's 2018 fintech competition.

“Most of the products being created for advisors are great at facilitating sales, but for the real problems that advisors have, it’s advisors who have come up with the solutions,” Kitces says.

He rattles off several popular brands that were started by advisors — Junxture, Redtail, Orion, Oranj, TRX and Tradewarrior — as examples of advisor-led innovation that can help the industry at large.

But Kitces also notes nearly all the XYPN fintech finalists are funding their products out of their own pockets because there’s little investment in actual financial planning. “If you went to a broker-dealer competition, how many startups would be venture capital funded?” he asks.

When advisors integrate tech innovation into their practices, they preserve financial planning overall, says Robert Bolen, a CFA from Brentwood, Tennessee, who presented Touchstone Pathway, a financial planning software suite.

“The advisor that has good listening skills, has knowledge of behavioral finance and is backed by good technology, I believe is irreplaceable,” Bolen says.

The big challenge for the industry, Bolen says, is giving advisors the tools to translate at scale what they do at a very personal level for their clients. "We're not going to be crunching numbers better than a calculator can," he says.

And the best tools are those rooted in a personal story that advisors and their clients can relate to, says Jack Hooper, CEO of Dallas-based Take Command Health, a health insurance platform for independent professionals and small business owners.

During the competition, Hooper showed how his platform could help advisors asses the best health insurance for their clients and save them thousands in the process. Motivating the development of the platform, Hooper says, was his own experience trying to budget for grad school expenses and the birth of twins.

Observing all of the competitors, J.D. Bruce, president of Abacus Wealth Partners in Santa Monica, California, was impressed by Hooper's pitch, agreeing that financial advisors had to have a greater role in their client's health insurance discussion, since health care costs later in life can greatly impact finances.

He appreciated that all the competitors put forward software and platforms developed for specific solutions, as opposed to attempting to control an advisor's entire workflow. "They are all bolt-ons to an advisor's practice that can help them serve a need for a specific client, which I think is smart," he says.

It was good to see a variety of initiatives being presented by planners, says Jud Mackrill, CEO of digital marketing and technology firm Mineral Interactive, which was also among the competition's finalists.

“I love the innovation, I love the ideas,” says Mackrill, who became Carson Group’s chief marketing officer as a result of his firm's acquisition in July. “All of us really are trying to address the problems of advisors. XYPN is like an open source conference. We're all sharing information with each other to make the practice better.”

Before the conference’s closing event on Tuesday, Mineral was declared the winner of this year’s XYPN fintech competition.

Mackrill says that advisors don't have to build software to bring change. They can start with a question: "How can you be innovative in your practice every day?"

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