Welcome to the September edition of the Riskalyze Fintech Report Card, 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 ratio number, failing to read this piece may be the riskiest move of all.
Betterment Teams with Wall Street Firms, Adds Portfolio Options 
What happened: The automated investing service Betterment announced a partnership with Goldman Sachs and BlackRock to expand portfolio options. The Goldman Sachs Asset Management portfolio strategy will skew heavily towards emerging markets and small-cap stocks, incorporate real estate investment trusts, and invest in high-yield bonds with longer durations. The BlackRock income-based strategy will invest all assets into U.S. bonds and international bonds issued in U.S. dollars for the more risk-averse investor. Betterment founder and CEO Jon Stein said the additional strategies are designed to serve Betterment’s increasingly diverse customer base, a departure from the platform’s historically tougher stance on Wall Street firms.
Why it matters: In its short history, Betterment has more flip flops than a politician. It’s interesting that their “tough” stance on Wall Street softened once they saw the data, value and experience these firms can bring to the table. Broadening investment partners is probably a good move, but given that they’re still using a qualitative, stereotypical approach to place clients into those portfolios, this just isn’t a game changer for Betterment’s business model.
Fidelity Launches Robo for Advisors 
What happened: The automated advice platform, developed in partnership with eMoney Advisor, is available to advisors affiliated with Fidelity’s Clearing and Custody Solutions through Wealthscape, Fidelity’s technology platform. The robo advisor can be customized for the end investor with the advisor’s own branding and marketing materials. Advisors whose clients opt to transition from automated advice to more hands-on financial planning can transition through the platform. Clients can do the onboarding process themselves, set goals, monitor account performance, and open and fund accounts through Fidelity’s brokerage.
Why it matters: We’ve long been fans of the planning solutions eMoney (owned by Fidelity) brings to the table. It’s cool to see Fidelity equip RIAs with a B2B2C (Business-to-Business-to-Consumer) model and empower the investors to do some of the driving if that’s what they prefer.
Ellevest, the Women-Targeted Robo, Adds Human Advisors
What happened: Ellevest, the robo advisor aimed at women and co-founded by a former head of Merrill Lynch, Sallie Krawcheck, is introducing human advisors to the platform. Ellevest’s hybrid advisors will work with clients on personalized plans across financial aspects, including career, family, cash flow, taxes, debt and other concerns. The fees associated with the hybrid platform were not disclosed. The news comes as Ellevest closes a $34.6 million funding round.
Why it matters: My thumbs-down on Ellevest a year ago shifts to a thumbs-up with this latest move from Krawcheck, known to be one of the smartest executives in the industry. The shift to building a digital hybrid wealth management firm is still an uphill battle, but it’s a much better strategy than an advice-free robo advisor.
JPMorgan Partners with Bill.com to End Paper Payments
What happened: JPMorgan announced a partnership with Bill.com, the largest U.S. business-to-business payments network. “Bill payment is a huge source of pain for businesses,” said Stephen Markwell, a product strategy head for JPMorgan’s commercial bank. “Every step of that process is manual, inefficient, error-prone, and ripe for electronification.” The Bill.com system, which will be integrated into JPMorgan’s online and mobile tools in 2018, helps users get paid faster and halves the time spent managing bills, according to founder and CEO Rene Lacerte. It also automates data entry and record storage for businesses. JPMorgan hasn’t decided how much it will charge for the service. It is also taking an undisclosed stake in the Palo Alto, Calif.-based company.
Why it matters: JP Morgan is not only investing in payment innovators, they’re inventing new words like “electronification.” Still, Bill.com is a really interesting solution for any company still issuing paper checks. Time to move on!
Apple Brings Facial Recognition Mainstream
What happened: Apple Inc. unveiled the iPhone X will have facial recognition at their September launch event. Apple’s Face ID feature works by projecting and analyzing more than 30,000 invisible dots to create a precise depth map of the user’s face; an infrared camera confirms the match. Apple says its feature works in the dark, should resist getting tricked by photos or masks, and functions even when it’s cold—something no other facial recognition software has done successfully. It’s been rumored that over the next three to five years, facial recognition will account for more than half of all logins, validations, and authorizations for mobile financial services and mobile payments. The market for facial recognition technology is expected to double to $6.84 billion in 2021 from $3.35 billion last year, according to researcher MarketsandMarkets.
Why it matters: Apple doesn’t always make it first—but they’re great at making it better. Just a couple of months ago, we skeptically mentioned Cetera was leveraging software claiming to be able to read risk tolerance from facial expressions. However, it’ll be fascinating if Apple exposes some of the core technologies in Face ID and the TrueDepth camera. Experts say facial recognition will be huge for mobile financial services/apps and other technology for hacking prevention (cough, Equifax, cough). We can’t wait to see how it changes the fintech compliance landscape in the future.
Fintech Veterans Form A.I. Labs To Improve Tech Integration
What happened: Wealthtech industry veterans from Envestnet, Pershing and eMoney joined forces to build A.I. Labs, which stands for advisor innovation, to provide the networking piece between advisors’ technology systems so that firms can run their applications more efficiently. Lori Hardwick and Mike Zebrowski created the firm after seeing many advisors frustrated by how poorly their favorite systems communicate with each other and share data, thus limiting the benefits they’re supposed to gain. “We create a connective tissue around everything advisers depend on and add in a layer of touch to encourage engagement and make those systems create better outcomes,” Hardwick said in a recent interview.
Why it matters: It’s a real pain in the assets when you’ve got tech that doesn’t talk to each other. Hardwick and Zebrowski are well-equipped industry veterans who can tackle this head-on and support the efforts of advisor technology solutions everywhere. Wealth management enterprises facing serious integration issues will be very anxious to see how A.I. Labs can improve their workflow.
Orion to Launch Prospect Portal
What happened: Orion Advisor Services announced plans for Prospect Portal, an onboarding portal that will give advisors on Orion’s platform a customizable way to collect information from prospects, along with a streamlined view of the account activity. Features include integration with third-party questionnaires and risk management providers like Riskalyze to create personalized risk assessments and secure file sharing with platforms like Dropbox and Citrix Sharefile. Orion announced at their inaugural Ascent conference in Scottsdale, Ariz. that it is partnering with Mineral Interactive, a digital design and marketing firm, on the portal’s development.
Why it matters: Orion continues to make their tools better and more robust for their advisors. An advisor’s ability to communicate clearly through the prospecting process is critical. Advisors know it, and our friends at Orion know it, too.
FutureFuel.io Wants To Bring Student Loan Refinance to Company Benefits
What happened: FutureFuel.io, a firm helping companies offer student loan repayment and refinancing as an employee benefit, has announced a collaboration with fintech firm Quovo that provides employees with access to real-time sign up, account linking, account aggregation and account verification capabilities, as well as a new mobile experience. The system also allows firms to ease the flow of any employer matches they decide to make toward their employees’ outstanding loans. Several studies indicate that a significant number of employees with student loans would choose student loan assistance over a 401(k) as a benefit. Despite the narrative that student loan debt is generally a millennial issue, studies show student debt is a major burden on Generation X and student loans haunt baby boomers in retirement as well.
Why it matters: Having good benefits is a way to bring “A” players into your organization; any CEO can tell you that. Student loan benefits sound like a product of the times we live in, doesn’t it? It’s an interesting concept and adds a new, relevant layer to the benefits conversation. Could we see employers starting to bring in financial planners to advise employees not just on investing their 401K, but also on retiring student loan debt?
Equifax Hacked
What happened: Equifax, one of the three largest credit reporting bureaus, revealed that it had been hacked. The Atlanta-based company was penetrated in March, discovered the breach on July 29, and then sat on the breach for weeks without reporting it to consumers. Personal information from approximately 143 million customers was compromised, including names, social security numbers, birth dates, addresses, and driver’s license numbers. The company established a website where users can check to see if their information was compromised, but the site was quickly criticized for—you got it—security issues.
Why it matters: Where do we start? Sitting on the information long enough for three senior executives to unload hundreds of thousands of shares is just icing on the proverbial cake. Their CEO just left, ostensibly to spend more time with his family, but they’re all really busy dealing with identity theft. Advisors should keep a close eye on their client balance sheets, watching for fraud and recommending credit freezes where necessary. Yikes.