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December 2016 Fintech Report Card—Top 9 Tech Events

Welcome to the latest edition of the Riskalyze Fintech Review, where Riskalyze CEO Aaron Klein gives you the thumbs up or thumbs down on the biggest pieces of news to hit advisor technology in the last month. Regardless of your risk number, failing to read this piece may be the riskiest move of all.

Yahoo: Two Hacks, Over a Billion Accounts

• Thumbs Down

What happened: The last few years have been tough for Yahoo, as they suffered from two crippling hacks that reportedly compromised over a billion accounts. The FBI and other security experts claim it’s the work of a foreign government fishing for data on specific people. This has now put Yahoo’s $4.8 billion deal with Verizon in jeopardy.

Why it matters: Yahoo has been unable to pull out of its downward spiral, and massive security lapses are just the latest in a line of bad news. If you’re going to break a record, don’t let it be for breaking your own record of the biggest security breach in history. Memo to advisors: We hope you weren’t sending any client information through a Yahoo account.

Fidelity’s eMoney Reports a Record-Breaking Year

• Thumbs Up

What happened: eMoney hit record revenue in 2016 by offering cheaper and less complex planning tools. For those advisors who “lead with planning first,” eMoney was able to increase their revenue as well—by 31 percent, according to their CEO, Ed O’Brien.

Why it matters: I’m not going to lie; I’m biased on this news because Riskalyze happens to be eMoney’s fastest-growing integration partner. We’re thrilled to hear they’ve had a record-breaking year, and it proves that the need for financial planning and integrated services isn’t slowing down anytime soon.

TD Ameritrade Launches New Veo One Platform

• Thumbs Up

What happened: In November, TD Ameritrade introduced Veo One, which allows advisors to sign on to multiple platforms with one password. Updates flow seamlessly through the application, and advisors can see all pertinent information in one spot. For those advisors struggling to adopt new technology, this new system is ideal.

Why it matters: Gone are the days of having to remember 27 passwords, or writing them down on post-it notes (not a best practice). Veo One is riding the trend of seamless integration and better data in one view. We’re excited to be one of TD’s partners and hear more at TD LINC in February 2017.

Schwab Rolls Out Hybrid Robo Service With Human Advisors

• Thumbs Sideways

What happened: In a way, Schwab just announced the sequel to Schwab Intelligent Portfolios, but this time, it’s a hybrid. The new offering, “Schwab Intelligent Advisory,” is built on the same framework, but will offer access to human advice and financial planning. Account minimums will be $25,000 and fees won’t exceed $900 per quarter.

Why it matters: Schwab claims that this won’t cannibalize the RIA market, but the news undoubtedly has independent advisors who utilize their custodial services a bit concerned. If I were in that category, I know I’d at least be wondering whether or not Schwab was trying to compete with me. On the flip side, this is the way innovation works—advisors with a stronger value proposition will thrive.

Tamarac Rolls Out Yodlee’s Data Aggregation

• Thumbs Up

What happened: Envestnet Tamarac has rolled out integration with their sister company, Envestnet Yodlee, to give advisors a holistic financial picture for their clients. Investors will have access to a “real-time” pulse on their assets and liabilities. “Advisor Xi” helps advisors strengthen existing relationships through a portal.

Why it matters: This is an important step as Envestnet tries to demonstrate the virtue of its Yodlee acquisition to Wall Street, which hammered the stock when it was initially announced. Reaching that holy grail of clients keeping their outside holdings up to date for their advisors has been elusive, but Yodlee’s reach and history in this space are going to make it interesting.

Smarsh Acquires Mobile Archiving Technology

• Thumbs Up

What happened: Smarsh, the cloud-based compliance archiving company, has officially acquired MobileGuard, a technology that monitors various types of mobile communication. Smarsh’s compliance package will now allow companies to archive text messages across all operating systems, carriers and device ownership scenarios.

Why it matters: Do you text with clients? If so, you may be violating compliance rules because all client communications are supposed to be archived. This is one solution to the problem. Another is the soon-to-launch Redtail Speak platform, which will let you chat and text with clients, with those specific communications archived and accessible in your CRM.

Finicity Raises $42 Million Led by Experian

• Thumbs Up

What happened: Real-time financial data aggregation company Finicity secured new funding in a round led by Experian, the consumer and business credit reporting giant. Their Series B will be used primarily to expand support and engineering teams.

Why it matters: Finicity is a Yodlee and Quovo competitor, syncing financial account information between systems and giving advisors a holistic view of client holdings. Is Experian’s investment a financial one, or could we see credit reporting come into play as advisors help clients navigate mortgages and debt?

New Financing Follows Personal Capital’s AUM Growth

• Thumbs Up

What happened: Digital advisory firm Personal Capital wrapped 2016 by reporting an additional $1.5 billion in AUM and $100 million in financing. IGM Financial invested $50 million with an additional $25 million contingent on reaching growth goals. Not only did Personal Capital greatly exceed those goals, they also received a $25 million credit from Silicon Valley Bank.

Why it matters: Eighty percent growth in less than 12 months isn’t too shabby. I believe Personal Capital’s trajectory can be attributed to the balance they’ve struck between digital services and investment advice. If anyone’s wondering what 2017’s winning business model will be, it’s a firm of human advisors leveraging robo technology to provide investment advice.

Orion Introduces Fee-Benchmarking Tool

• Thumbs Up

What happened: In preparation for the DOL rule later this year, Orion has launched a new fee-benchmarking tool. Now advisors using Orion can slice and dice visibility into average industry fees by type of firm, services provided, account types, account size ranges and more.

Why it matters: One of the challenges we’ll face with the DOL rule is that it’s ridden with subjective semantics like “fee reasonableness.” Orion knows it, and is releasing just the right updates to measure these parameters. Advisors will sleep well knowing Orion’s tool can provide a multitude of quantitative benchmarks to assess their level of “fee reasonableness.”

Aaron Klein is the CEO of Riskalyze.

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