In this edition of the Wealthtech Roundup, we speak with our newest Wealthtech Leader of the Month, Rich Aneser, Chief Strategy Officer of Envestnet, on its national study of affluent investors.
Other entries this month include CapIntel forging 11 partnerships and being named a finalist in two awards last year, Vestwell raising $125 million in funding, FP Alpha integrating with Orion on client data, Addepar surpassing $5 trillion of client assets managed on its platform, TIFIN integrating with BetaNXT for asset managers and Franklin Templeton for plan advisors, Altruist announcing six more integration partnerships, Pontera raising $60 million and Smarsh enhancing its risk detection platform.
In Rich Aneser’s Q&A below, he mentions “next-best-action insights.” It’s about harnessing tech to get useful recommendations, in something approximating real-time. Ideally that’s what the best financial advisors can do for their clients. But who can do that for advisors?
Platforms that crack this code early stand to benefit greatly, in market share and brand reputation. In theory, that’s what so many of the new AI tools are moving toward. In practice, good “next-best-action insights” will help advisors to quickly answer tough questions that are unique to their business and for their clients.
This requires the technology to “communicate” clearly, concisely and in accordance with compliance and regulations. That is much easier said than done, so I am curious to see what progress wealthtech firms make on this front in 2024.
If you would like to discuss this Larry’s Take further, including how these trends might impact your business, please contact me at email@example.com.
1. Envestnet Talks Affluent Investor Findings, Wealthtech Trends And Alts Investing
The wealthtech, investment management and data analytics firm Envestnet recently partnered with The Center for Generational Kinetics on a study of 1,500 participants titled “Unlock the Mindset of Today’s Affluent Investor: Opportunities by Generation for Advisors.”
Envestnet has approximately $5.4 trillion in platform assets across more than 107,000 advisors, 16 of the 20 largest U.S. banks, 48 of the 50 largest wealth management and brokerage firms, more than 500 of the largest RIAs and thousands of companies. Effective March 31, Bill Crager will transition from the role of CEO and will continue with Envestnet as a Senior Advisor. Board Chair James L. Fox will serve as interim CEO as of April 1.
WSR: What major findings from Envestnet’s new national study are most relevant for independent financial advisors and their firms?
Aneser: There is an ongoing evolution toward more holistic advice, the scope of advice is expanding and advisors increasingly need to add value beyond investments for their clients. This can include estate planning, tax advice, loan and credit management, life insurance and health planning. We believe financial planning usage will also increase due to the movement toward holistic advice, coupled with adoption by younger advisors and streamlined planning trends.
The report highlights a growing demand among advisors for end-to-end technology platforms that extend beyond single sign-on capabilities to deep systems integrations and more efficient workflows. Client engagement tools are also receiving a lot of attention.
WSR: What are the major trends to watch in 2024 for advisors and their firms?
Aneser: We’re seeing a convergence point for the industry where personalization, integrated tech and solutions meet. Wealth and asset managers can focus their distribution efforts to capture share and serve more clients’ needs. Expanding value-add services also helps to manage advisor fee compression, stay competitive across consolidation trends and competition from digital channels, all while meeting client demands for more personalized advice.
In addition to more holistic advice and an end-to-end tech stack, the retirement market presents an underappreciated growth opportunity for advisors. Challenges in accessing workplace retirement plans, combined with regulatory tailwinds, and technology innovations are making it easier for non-retirement-expert advisors to offer retirement solutions.
WSR: What types of product / service launches or enhancements for advisors and their firms will Envestnet roll out in 2024?
Aneser: We’re using our leading technology solutions and data intelligence as powerful competitive advantages to go deeper and become even more essential to our customers. Through data aggregation and next-best-action insights (e.g., Envestnet’s Insights Engine) we will be able to disrupt an advisor’s standard workflow with alerts for advice opportunities across any range of wealth, lending or banking areas.
Further, based on advisors’ needs and opportunities, we will continue to bring more of the Envestnet ecosystem together for advisors – through continued enhancements and updates that streamline workflows, provide digital custody options, offer more opportunities to help them grow their advisory businesses and improve client engagement.
2. CapIntel Makes Deals, Upgrades And Awards Finalist Lists In 2023
In 2023, Toronto-based CapIntel, a fintech solutions provider for financial services wholesalers and investment advisors, forged 11 strategic partnerships in the wealth and asset management spaces, launched its OMNI platform and was named a finalist in two industry awards programs. One such partnership, announced in April, enables SEI to utilize CapIntel’s sales platform.
In September, CapIntel launched the fully digital wealth management platform OMNI on behalf of its approximately 12,000 financial advisor and nearly 1,000 wholesaler clients. The company was a finalist in the WealthManagement.com 2023 Industry Awards for contributions to ESG metrics, as well as a finalist in the Best Digital Solution Provider (Financial and Investment Advice) category at the 2023 Banking Tech Awards.
“In 2023, CapIntel has continued to drive innovation in the industry, solidifying its position as a key player in the wealthtech landscape,” said CapIntel Founder and CEO, James Rockwood. “Our partnerships are a cornerstone of our success. By joining forces with industry leaders, we aim to enhance the capabilities of our platform, ultimately empowering financial professionals to excel in their roles.”
3. Vestwell Raises $125 Million In Round Led By Lightspeed Venture Partners
Vestwell, an employer and individual savings platform, raised $125 million in its Series D funding round. Lightspeed Venture Partners led the round, which included existing investors Fin Capital, Primary Venture Partners and FinTech Collective as well as new investors Blue Owl and HarbourVest.
Justin Overdorff, Lightspeed’s lead fintech Partner, joined Vestwell’s board of directors. Vestwell will use the funding to accelerate its expansion, enhance its focus on state-savings program initiatives and develop other savings program initiatives. Vestwell serves more than 300,000 businesses and more than 1 million active savers, with almost $30 billion in assets saved in all 50 states.
“We weren’t expecting Lightspeed to proactively approach us with the offer to lead our next funding round, given we had not planned to raise any capital,” said Aaron Schumm, Founder and CEO of Vestwell. “But soon after they did, our mutual conviction – that this industry is crying out for innovation and that Vestwell is the one to deliver it – became clear.”
4. FP Alpha Integrates With Orion On Client Demographics And Assets Data
FP Alpha, which helps advisors identify actionable recommendations to clients, integrated with Orion Advisor Solutions to pull in client data that advisors already have on Orion. The integration aims to save advisors time by minimizing the need to manually enter client data.
Each client’s information will import onto FP Alpha’s General Questionnaire filled out with name, gender, family information, state of residence, occupation, net worth and assets. FP Alpha leverages artificial intelligence learning and subject matter experts across 16 financial planning disciplines including tax, estate and insurance.
“We are excited about our partnership with FP Alpha,” said Trent Mumma, Chief Product Officer of Orion Advisor Solutions. “This integration marks a significant step in our commitment to equipping fiduciary advisors with time-saving tools that help achieve better outcomes for investors. Tax and estate planning are critical components within the delivery of holistic advice, and we look forward to leveraging FP Alpha’s resources.”
5. Addepar Surpasses $5 Trillion Of Client Assets
Addepar surpassed $5 trillion of client assets managed on its platform. The company provides data management and aggregation, analysis and reporting, portfolio trading and rebalancing, billing and more for investment professionals. It serves more than 1,000 client firms including family offices, wealth managers, large banks and global institutions.
Approximately 60% of the $5 trillion in assets are in marketable securities held at custody banks. The other 40% of assets include more than 250,000 unique positions in alternative investments and other private assets, real assets, collectibles and other investment portfolio holdings. Founded in 2009, Addepar now serves more than 40 markets worldwide.
“Addepar’s founding thesis has been validated: investment professionals and financial advisors require robust technology, comprehensive and precise data, specialized tools and a contextual perspective to deliver high-quality, sustainable value to their clients,” said Addepar CEO Eric Poirier. “By creating a unified platform that significantly enhances client service, we have positioned ourselves uniquely to unlock value across the global financial world.”
6. TIFIN Integrates With BetaNXT And Franklin Templeton
TIFIN AMP and BetaNXT integrated to combine TIFIN AMP’s real-time, AI-driven insights with BetaNXT’s connected data capabilities to help asset managers improve their fund distribution to financial advisors and wealth management firms.
TIFIN also partnered with Franklin Templeton to launch TIFIN @Work, a financial wellness solution designed to help employees achieve their financial goals. TIFIN will partner with Franklin Templeton’s Workplace Retirement Distribution Business to deliver TIFIN @Work to plan advisors and the employers they serve.
“The partnership between BetaNXT and TIFIN AMP doesn’t just signify a collaboration; it’s a strategic position to actively support our clients,” said Tim Rutka, President of Beta, a BetaNXT business. “By leveraging TIFIN AMP’s unique AI capabilities and industry expertise, we are now able to transform wholesale distribution efforts into actionable strategies.”
7. Altruist Announces Six More Integration Partnerships
Altruist, a custodian built exclusively for RIAs, announced six new integrations in December – with Orion, Redtail, Kwanti, Moneyguide, IncomeLab and eMoney – to help advisors simplify and streamline business workflows. Altruist already had integrations with Wealthbox, Right Capital, Black Diamond, Advyzon and Nitrogen.
The custodian plans additional integrations with ACA, SmartRIA, Morningstar and ByAllAccounts in early 2024. Altruist combines a self-clearing brokerage firm with software for account opening, trading, reporting and billing. It also provides connections with accounts held at Schwab, Fidelity and Pershing.
“Disconnected tech is a massive pain point for advisors,” said Jason Wenk, Founder and CEO of Altruist. “Teams waste resources on duplicate data entry, manual reconciliation, and inconsistencies that can impact reporting and billing. When the tools play well together, you get faster account opening, higher quality data, simplified workflows … firms reclaim a lot of time, which drives better client service and better outcomes.”
8. Pontera Raises $60 Million, Bringing Total Funding To $160 Million
Pontera, which allows 401(k) participants to receive wealth management services by personal financial advisors, secured $60 million in a funding round led by ICONIQ Growth, raising Pontera’s total funding to $160 million.
The fintech company more than quadrupled revenue since its last fundraise, which was announced in February 2022. Thousands of financial advisors use Pontera’s platform to manage 401(k), 403(b) and other retirement plan assets. Pontera has partnerships with Dynasty, Benjamin Edwards, OneDigital, Savant, Wealthspire, Addepar, Envestnet and Morningstar.
“This funding is not just an investment in Pontera; it’s an investment in the future of every U.S. worker striving for a secure and fulfilling retirement,” said Yoav Zurel, CEO of Pontera. “We are proud to partner with investors who recognize the nation’s looming retirement crisis and Pontera’s role in helping everyday families.”
9. Smarsh Rolls Out Enhanced Risk Detection Scenario Catalog
Smarsh – a digital communications compliance and intelligence provider for organizations including financial services firms – enhanced Enterprise Conduct, its AI-powered communications surveillance solution, with a catalog of new and updated risk detection scenarios.
Enterprise Conduct combines customizable machine-learning models with an “app-store”-like experience for selecting products. It aims to reduce false-positive results and increase escalations of messages meriting scrutiny. Enterprise Conduct is part of the Smarsh Enterprise Platform, which serves some of the world’s largest financial organizations.
“In compliance, we are all on the same team with the same goal – to protect our firms and financial markets,” said Tom Padgett, General Manager of the Smarsh Enterprise business. “Smarsh is on a relentless mission to enable our customers to stay ahead of risk in a changing world.”
Chris Latham, Managing Editor at Wealth Solutions Report, can be reached at firstname.lastname@example.org