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Riskalyze Fintech Report Card: November 2020

Riskalyze CEO Aaron Klein provides his take on the biggest news to hit advisor technology in the previous month.

Oranj Set to Close at Year-End

What Happened: Portfolio management and model marketplace provider Oranj disclosed to clients it would shut its doors at the end of 2020, leaving advisors six weeks to transition to a new platform.

Why It Matters: This was one of the more impactful stories of this year, but it appears that the balance of value to pricing just didn’t gain traction with financial advisors. The speed with which the firm needed to shut down was certainly unwelcome news for advisors given the worsening pandemic and coming amidst the holidays, but candidly, it could have been worse—small companies facing a liquidity crisis can go out of business practically overnight. Our thoughts are with David and the team at Oranj having to go through this difficult transition.

Disclosure: Riskalyze has offered former Oranj customers promotional discounts to help them through the transition.

Addepar Raises $117 Million

What Happened: Addepar closed a Series E funding round by announcing it had raised $117 million to put toward new technology development.

Why It Matters: Addepar was funded by 8VC, a venture capital firm that specializes in companies that underhire in sales and service, and overhire in engineering, with the theory that they can build technology so great it sells and services itself, a la Google. It remains to be seen if this approach can work in the high-touch financial advisory space, particularly in the unique segment that Addepar has filled with family offices and alternative investments, but that hasn’t stopped the company from being a prolific raiser of capital!

Wealthfront Doubles Down Its Short Sell of Human Advice

What Happened: While speaking at a conference, Wealthfront’s co-founder, president, CEO and executive chairman, Andy Rachleff, said that digital-only investing is the future—and that hybrid approaches that combine human advice with software don’t work.

Why It Matters: Give Wealthfront this—it is consistent. It has steadfastly refused to add a human component to its digital investing service, keeping it 100% self-directed. Its bet is that it can move upmarket and keep its early clients without providing the kind of advice that only humans can provide—empathetic behavioral coaching that is invaluable in times of volatility when an investor’s natural instincts can be deadly to its financial future.

Redtail 2020 Remote Workplace Study Released

What Happened: Redtail announced the results of a new study it conducted to discover the sentiments and behaviors of advisors who transitioned to remote work during 2020.

Why It Matters: Our good friends at Redtail are leaders in CRM software, but it also has tremendous insights into how advisors work. For a firm with the 10-year mantra “work where you want,” the 2020 pandemic was a big proof point of Redtail’s 17-year bet on the cloud-to-power advisor technology. This new study sheds light on some encouraging trends—including that a vast majority of advisors felt that they were prepared to work from home. While most advisors don’t want to be technology architects, it goes to show that thinking carefully about constructing your tech stack is a competitive differentiator.

Disclosure: Redtail CEO Brian McLaughlin serves on the Riskalyze board of directors.

Envestnet Brings on New CTO

What Happened: Envestnet has brought in industry outsider Robert Coppola—formerly the chief information officer at Cision—to be its new CTO as the firm looks to take its product development processes to the next level.

Why It Matters: I’m lucky enough to work with WealthManagement’s “CTO of the Year 2020” here at Riskalyze, so I know all about the importance of having a great one on your team! Envestnet has been making rapid changes in leadership over the past several months, and Bill Crager is not one to settle for the status quo. This looks like a great move for one of the industry's titans.

Canadian Financial Planning Tool Comes to America

What Happened: Canadian financial planning software tool Planswell announced it is making its platform available to advisors in the United States.

Why It Matters: As the industry has shifted toward financial planning as a primary value, we continue to see more software providers try to get into the mix. Their model for infusing lead-gathering into planning is interesting, and it certainly takes a unique value proposition to try to compete against incumbents like eMoney, MoneyGuide, Orion Planning, RightCapital and all the others. Good luck!

Match Making Site for Advisors of Color Launches

What Happened: LPL advisor Dana Wilson has launched a new website designed to connect investors searching for an advisor of color.

Why It Matters: One of the major factors driving lower levels of wealth and affluence among people of color is a lack of trust in financial institutions and investing as a whole, and that lack of trust compounds just as quickly as market returns do. If we’re really going to create equal opportunity for all, we need to recruit more people of color into the profession of financial advice, to build that trust and extend the power of wealth creation to everyone.  

Fidelity Readies New Advisor Platform

What Happened: Fidelity announced its new advisor platform, called Fidelity Managed Account Xchange (FMAX), in an effort to provide its advisors with a unified planning and investment management solution.

Why It Matters: This is a fascinating play by Fidelity that really looks like an attempt to disintermediate Envestnet and attract custody clients from Schwab/TD. What will be fascinating is to see where Fidelity takes FMAX next. Do they keep it 100% proprietary, or do they open it up for key integrations with the rest of an advisor’s workflow? The Fidelity tech strategy has taken some twists and turns, but betting against Big Green has rarely been a good idea.

FMG Suite Acquires Twenty Over Ten

What Happened: FMG Suite, a website builder and marketing automation platform for advisors, acquired its competitor Twenty Over Ten.

Why It Matters: FMG has been on a private equity-fueled run the past several years, engaging in consolidating acquisitions of competitive companies, and now Twenty Over Ten is the latest addition to its portfolio. Congratulations to our friends at TOT on this deal! It’ll be interesting to see how FMG chooses to integrate this new prize into its product offering. It also sets up quite the “duel of the titans” between FMG and the primary independent competitor that is left: Snappy Kraken. (Disclosure: I’m a Snappy board member.) It’s a big industry and there is room for a lot of innovation here, but this should be interesting.

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