A couple of stories made waves across the industry this month, and we want to break down what it all means for advisors. We’ve handpicked five headlines for August’s Word on WealthTech to offer some insight into what’s ahead of technology in wealth management.
Bain Capital to Acquire Envestnet
With such massive news you’d have to have been under a rock to miss it, so we’ll skip the details and just say if done correctly, it will move the wealth technology universe forward. Looking at the financials associated with the transaction, we can’t imagine that they won’t have to sell off some portions of the business to fund the deal. And if they do, it’s not bad for the industry. It’s good because it'll allow some of those tools to focus on their niche markets.
Orion Unveils New Standalone Trading to Empower Advisors with Greater Flexibility
We’re starting to see an unbundling trend from platforms now. Allowing people to plug into Orion’s trading platform is both good for Orion because of the additional revenue sources they can now capture and for advisors because they have a choice — they can “buy the entire bottle, or they can buy by the glass,” which is helpful for the industry.
Wealth.com Launches Family Office Suite
The WealthTech landscape for financial planning is light, with historically two and three main players, so wealth.com coming to market with a good package and actually extending it into the family office space is great. It helps cater to the needs of the demographic shifts in the country. If you’re a wealth.com user, we’d guess you’re stoked, and if you’re not a wealth.com user and struggling with a comprehensive family office, this will be helpful.
Cash Sweeps
Several stories have come out about lawsuits, SEC investigations and revenue losses surrounding cash sweeps and involve many big firms like Fidelity, LPL, Morgan Stanley, Charles Schwab and others. Generally, the concept of cash sweep, if not abused, is fine. However, looking for higher returns on that cash may force advisors to invest in short-duration fixed income or a higher interest earning but less liquid instruments, and that becomes a slippery slope from a technology standpoint. It also shines a light on the disclosed versus the undisclosed revenue share arrangements some custodians have with advisors, which raises the potential for investor frustration and investor disillusionment. So ultimately, these stories cast a new light on different custodial arrangements as well.
Altexchange Raises $3M to Lead the Charge in Alternative Investment Automation
We’re excited to see continued attention and capital going into a well-liked, effective alternatives management tool. The technology and the lift that Altexchange gives to wealth firms are one major step in achieving better automation and more seamless client experiences.
If you’ve been following along, you’ll already know that we’ve been writing this column for more than a year. We look forward to making time to analyze the headlines and bring the critical elements to your attention each month. We hope you appreciate it too. See you after Labor Day.
