ABOUT THIS EPISODE
On today’s broadcast, Vanare becomes AdvisorEngine after a $20 million dollar investment, RightCaptial gets a favorable review, and Addepar opens up about the capabilities of its technology.
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Here are the links to this week’s top stories:
Vanare gets $20M in funding from WisdomTree, and rebrands itself from Financial Planning
[First up is news from Advisor Engine, which you may recognize under the company’s former name of Vanare. The name change was carried out as WisdomTree, the exchange-traded fund sponsor and asset manager, announced a $20 million dollar investment in Advisor Engine for 36% equity in the company.
This investment is the latest example of ETF issuers getting in the automated investment service space, but remember, BlackRock acquired FutureAdvisor, Invesco acquired Jemstep, yet WisdomTree chose to make a minority equity investment. I’m just not exactly sure why they didn’t acquire the whole business, but then again, I’m not the one that has to cut a check for $50 million dollars.
So let me connect some dots. All of the automated investment services are putting downward pricing pressure on asset allocation and periodic rebalancing. So in general, margins for traditional portfolio management are being compressed. You can either add value elsewhere, or look for ways to save on operational costs for your business.
AdvisorEngine’s new capital means it likely won’t shut down anytime soon, AND, the company recently added support for custody services at Apex Clearing, which could be a potential way you reduce your operational expenses AND allow you to pass some of those savings directly to your clients, all from a white-labeled solution.
For me, that’s why this transaction is an interesting one to keep an eye on.] WisdomTree is providing [Vanare] with an injection of funds in a bid to better position itself for industrywide changes wrought by new technologies and stiffer regulations, according to CEO Jonathan Steinberg.
Is RightCapital the right fit? from Financial Planning
[Next up is news about RightCapital, as Financial Planning magazine columnist Joel Bruckenstein reviewed the financial planning software and offered his take of where it fits in the marketplace. One of the distinctive features RightCapital offers is the ability to generate simulated tax forms so you can actually see how decisions on deductions, distributions, and taxable withdrawals will impact a client’s personal tax return.
Also, just because RightCapital has a fresh and modern UI doesn’t mean it’s a solution only for younger clients. RightCapital’s robust modeling of asset withdrawal strategies was highlighted in the review, allowing clients to simulate the best withdrawal strategies when factoring in Social Security and tax-deferred tax-free retirement accounts.
Of course, there’s much more to the review, but overall, RightCapital gets recommended as a more-than-adequate application for the mass affluent market. A 14-day free trial is available so you can evaluate the solution for your clients’ needs.] The middle ground in financial planning software is exactly the niche that RightCapital is targeting, according to co-founder Shuang Chen.
Addepar’s strategy: Focus on HNW, arm advisers with digital tools from Financial Planning
[But, if your business serves high net-worth households, this week’s final story on Addepar should be worth taking note. The investment management technology company appears to be opening up a bit more about exactly what it is they do.
In an interview with SourceMedia managing editor Suleman Din, Addepar’s CEO Eric Poirier described how much of the high net-worth marketplace has been historically addressed by custom Excel spreadsheets.
When clients start identifying assets like their limited partnership interests, equity investments, venture capital, and so on, most off-the-shelf solutions just aren’t compatible with the esoteric properties of these assets. But that’s been Addepar’s focus for five years, according to Poirier.
That kind of development sets Addepar apart as the Ferrari of the investment management technology space and is appropriate for households that require that kind of horsepower, and while that power certainly scales down to more traditional accounts with stocks, ETFs, and mutual funds, I suspect you’ll find it’s a bit overkill in capabilities and price if your business primarily serves the needs of mass affluent households.] While other fintech startups claimed they would disrupt the wealth management industry, Addepar has taken the tack that it can make it better.
Here are stories that didn’t make this week’s broadcast:
Future ready: Seismic moves for digital wealth management from Financial Planning
A close examination of the [2016 FP Tech Survey] data reveals other interesting trends, including which broker-dealers, custodians and third-party tech providers seem to be the best at meeting advisers’ needs, where advisers can get a good return on tech investment and how the next generation of advisers approaches tech.
Digital advice expects big growth from banks from Financial Planning
Digital advice as an industry will take off once it is built into retail banking, capitalizing on an investor segment ignored by wealth managers, says SigFig CEO Mike Sha. That’s why, announcing his firm’s newest partnership with Citizens Bank, Sha predicts his platform will reach half of all U.S. households by next year.
