Fintech Report Card: November 2019

12 Dec 2019

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


Charles Schwab Agrees to Buy TD Ameritrade 🤔

What happened: Charles Schwab Corp. has agreed to acquire its second-largest competitor, TD Ameritrade, for $26 billion in an all-stock transaction. If the deal goes through, the combined mega-custodian will manage over $5 trillion in assets.

Why it matters: This deal is fascinating at so many levels. It’s highly logical for the retail businesses of both companies, and yet it’s bringing together two RIA custody units that have had wildly different strategies in the past. Schwab took a big leap forward in retaining TD’s RIA clients with the hire of Tom Bradley, a TD veteran who has a beloved reputation in RIA circles. Now comes the big question: will Schwab start charging RIAs for custody? Or does that change get delayed until after the deal integration is complete? Only time will tell.


LPL Upgrades Account Opening Technology for Advisors 👍

What happened: LPL is updating its account opening technology using bots to speed up the process and achieve near-instant correction requests and approvals. They’ve also upgraded their client-facing mobile app and added texting capabilities for their advisors.

Why it matters: LPL claims these new account opening tools can shave 6 minutes off each new account workflow, and if that pans out, that’s a huge cost saving for their advisors! Put another way, I don’t know exactly how many accounts LPL advisors open every year, but quick math tells me they could be saving 4+ years of time during the next year.


Motif Brings Direct Indexing Direct to Investors 👍

What happened: Digital brokerage Motif announced it will make direct indexing available to retail investors. The service will invest in each of the stocks in the S&P 500 and allow investors to customize their investments.

Why it matters: Direct indexing is a compelling set of capabilities that can trim costs and give investors near-limitless customization capabilities for their investments. The ability to replicate indexes inside of an account is the first step, but when you combine that with where the industry is going—zero transaction fees and fractional shares—all of a sudden mutual funds and ETFs are facing some interesting challenges to find new ways to differentiate their value proposition.


Alpaca Aims to Bring Investing to Apps Everywhere 🤔

What happened: Alpaca, a commission-free trading platform, announced new funding as well as an API that it wants to operate as “middleware” for other platforms to add investments into their apps.

Why it matters: Here’s an interesting idea: why can’t investing be in every single app? I’m not sure I buy into this idea— what’s the benefit of allowing me to buy and sell securities from within Microsoft Word, or Slack, or Photoshop? But it’ll be interesting to see what developers do with this service and whether any innovative business models crop up.


Advisor Group Aquires Landenburg Thalmann 👍

What happened: Advisor Group will acquire Ladenburg Thalmann and its five broker-dealers—Securities America, Triad Advisors, Investacorp, Securities Service Network, and KMS Financial Services—for $1.3 billion.

Why it matters: The consolidating wealth management enterprise is upon us! Congratulations to our friends at Advisor Group and Ladenburg Thalmann on this transaction (and all the advisors we serve at both firms who are getting the benefits of scale). This is another step in the transformation of independent broker-dealers into next-generation wealth management businesses. (Disclaimer: Both Advisor Group and Ladenburg Thalmann are Riskalyze partners, and I serve on the Invest in Others board with AG CEO Jamie Price and LT COO Adam Malamed.)


United Capital Announces Marketplace for FinLife CX 👍

What happened: Goldman Sachs has unveiled the first big update to United Capital’s FinLife CX since its acquisition in May of this year. The Marketplace will give advisors easy access to approved providers like mortgage lenders, estate planners, and more.

Why it matters: When Goldman Sachs acquired United Capital, many said they were doing it to “push” proprietary GS products into the UC client base. This new Marketplace looks like a much smarter way of taking advantage of those synergies, delivering options and choices to those advisors. One could imagine Marcus banking products competing for advisor attention alongside their competitors.


Advisor Episodes Invests Advisor-focused Social Media Platform 👍

What happened: Advisor Episodes launched a social media management tool built to provide trending video content for advisory firms to use in their digital outreach. The product is in beta now and will be available for a monthly subscription.

Why it matters: With the SEC’s proposed changes to bring advisor advertising out of the Cold War era, understanding how to effectively use social media and video for business development is becoming all the more critical for advisors looking to grow.  Advisor Episodes is producing unique video content that can feed directly into an advisor’s social media. Now the question is: Can they find ways to make that video content customizable enough to avoid advisors all having the same look to their social feeds? (Disclaimer: Advisor Episodes is helmed by several great Riskalyze alumni.)


 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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