Fintech Report Card: July 2019

13 Aug 2019

Below is the July edition of the Fintech Report Card, a monthly piece by Riskalyze CEO Aaron Klein originally published in WealthManagement.com. 


Cetera Financial Group Releases Tool for Creating Retirement Income Plans 👍

What happened: Cetera Financial Group announced the release of a retirement income strategy tool called “SetIncome” for its advisors. The tool gives advisors the opportunity to create a plan using Allianz fixed annuities and asset management models from American Funds.

Why it matters: Retirement planning isn’t just about getting there; it’s about managing finances throughout multiple life phases. Often, financial plans focus on meeting future goals and on retirement itself; once retirement arrives, though, the new plan becomes how to manage income and longevity risk. The more tools and options there are for advisors to do this right; the better off the profession is as a whole.


CFP Board Pushes Back Compliance Date for New Code of Ethics 👍

What happened: After a multiyear standards review, the CFP Board approved a new Code of Ethics and Standards of Conduct. After requests by the Financial Planning Association for the compliance date to be delayed, the CFP Board’s new date now coincides with Regulation Best Interest’s date on Oct. 1, 2019.

Why it matters: There’s a lot of controversy around the CFP Board’s adoption of a fiduciary standard in order to retain the “certified financial planner” credential, but the CFP Board has stood firm in its decision, despite the real risk that thousands of CFPs may have to surrender the designation because of their business model. While I don’t agree with the efforts of some to use government regulation to pick one business model over another, this is exactly the kind of decision that a private organization like the CFP Board can and should make, and bravo to them for sticking to their guns. Their decision to align the implementation date with the SEC’s implementation of Reg BI makes a ton of sense.


Orion Acquires Advizr 👍

What happened: Orion Advisor Services, a portfolio management platform, purchased financial planning software provider Advizr. The acquisition will integrate Advizr’s planning technology and client portal directly into Orion’s system.

Why it matters: First of all, congratulations to my good friends Eric Clarke and Hussain Zaidi at Orion and Advizr on joining forces. Financial planning is becoming increasingly important for advisors as they need to offer comprehensive service solutions to stay ahead of new competition. Reducing the barrier for advisors to employ holistic planning alongside investment decisions is a direct and immediate benefit to consumers. Disclosure: Riskalyze has key software integrations with both Orion and Advizr.


Robinhood Raises $323 Million in Series E Funding 👎

What happened: Last year, mobile trading app Robinhood raised $300-plus million in Series D funding, and they’ve done another $300-plus million this year. The company’s valuation is now at $7.6 billion.

Why it matters: $300 million a year in venture capital … that is a large pile of money to burn giving away “free” trading to investors. Of course, the last year or so has really brought Robinhood’s true business model into focus: selling order flow and profiting off their clients’ trades. Nothing is truly free, and if you’re not the client, you’re likely the product! The bright side? If Robinhood can help introduce people to investing, many of them will eventually need an advisor … but those advisors should be ready for “high digital expectations” because the quality of Robinhood’s app is top-notch.


Betterment Launches Cash Management Solution 🤔

What happened: Betterment announced Betterment Everyday, which includes FDIC-insured checking and savings products. The new products are also available to Betterment for Advisors customers.

Why it matters: The hidden secret of the banking industry is that wealth management revenues are dwarfed by cash management revenues, and adding advisors in a bank branch is usually a very secondary business for banks. Robos are flipping that paradigm and realizing that there’s a lot of revenue to be had by offering cash management as an add-on to their investing services. Schwab started this trend by putting cash allocations at the center of their Intelligent Portfolios service; now all the other self-directed investing services are racing to catch up. Even so, Betterment and Wealthfront are miles away from the assets they need to become sustainable, high-growth businesses, but Betterment is doing far better of the two.


TD Ameritrade Adds Apps to In-Vehicle Operating Systems 👍

What happened: TD Ameritrade has released new capabilities for the Apple CarPlay, Android Auto and Echo Auto software platforms. While driving, consumers can get real-time news, market commentary, balance updates and more.

Why it matters: TD shipped this for retail investors, but it’s another signal of where client experience is going—access to your finances everywhere. Advisors don’t need to deliver hands-free trading from the wheel of a client’s Tesla, but this is another good example of digital expectations going up.


Swell Investing Shuts Down 👎

What happened: Swell Investing, a digital investing platform focused on providing access to sustainable investing strategies, is shutting down. The platform reached $33 million in assets after two years in operation.

Why it matters: It’s a bummer to see this kind of effort fall short and have to close its doors, but for me, this is a basic business strategy—you have to either have a very unique product, or a very strong distribution engine. Absent both, and you’re swimming against a tough current. Kudos to the Swell team for how they managed an orderly shutdown with a time period for tax-sensitive ACATs to other institutions.


Ethics Investing Completed Series A Funding 👍

What happened: Ethic Investing, an ESG-focused asset manager, completed its Series A Funding with $13 million injection of capital. Ethic is part of the Dynasty Financial Partners TAMP’s technology stack, and the funding will help its expansion in wealth management.

Why it matters: As an ESG-focused robo closes, an ESG-focused asset manager finds itself on the ascent. There’s no doubt that clients are looking for ways to invest in accordance with their own values, as seen by the tremendous growth of firms like Ethic, Vident Financial, Trillium, Inspire and the arrival of great industry consultants like Sonya Dreizler who help advisory firms implement these solutions. Disclosure: Vident and Inspire are partners in the Riskalyze Partner Store.


 Aaron Klein is CEO at Riskalyze.

Editors note: The views expressed in this column are Aaron Klein’s, and do not necessarily reflect the opinions of Wealthmanagement.com.


For more great content, visit WealthManagement.com.

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