Here is your FPPad Bits and Bytes update for August 8, 2017.

FinaMetrica merges with PlanPlus

FinaMetrica announced its merger with PlanPlus, a Toronto-based financial planning software provider. Founded in 1998, FinaMetrica is one of the first companies to gain significant traction for its risk tolerance assessment software, though the company has seen its market share decline over the last few years due to increased competition from Riskalyze, Pocket Risk, RiXtrema, and others.

The combined company will be called PlanPlus Global, and will offer solutions for comprehensive financial planning, goals-based automated investing, and psychometric risk profiling to its 12,000 current users in over 30 countries worldwide. Terms of the deal were not disclosed.

Advicent adds integration with Envestnet

Advicent announced a new integration this week with Envestnet, which allows advisors to extract client demographic, investment account, and investment portfolio data from Envestnet and populate the data into the company’s NaviPlan financial planning software.

Advicent is a leading provider of financial planning software in the enterprise space, with over 100,000 financial professionals across 4,000 clients worldwide using at least one of the company’s solutions. The integration also demonstrates Envestnet’s continued expansion of its Open ENV initiative announced last year.

Here’s Envestnet President Bill Crager with more information:

So as the platform began to take on a bit of a one-size-fits-all, we realized we had to open that up. So the core engine will fire into these user interfaces that will really speak to the adviser, will speak to the home office. And not only that, we’re building APIs to integrate with the full ecosystem of an adviser’s practice, whether that’s CRM or other applications that they’re using. How do you get information into the system to, again, provide really profound and comprehensive advice for that client that is not a moment in time, but is ongoing. And that’s really our goal, and Open ENV, I think, is a strategic breakthrough and I’m very excited about it.

PreciseFP adds iOS and Android Mobile Apps

For your client data gathering needs, PreciseFP announced new mobile apps for iOS and Android, giving advisors more convenient access to client information. The new app lets advisors add new information about prospect to their PreciseFP database, send data gathering forms to clients and prospects on the spot, and review any existing client data or forms right from their phone.

And finally, if you’re looking for ways you can leverage technology to enhance your client engagement, save the date for Wednesday, August 16 at 4pm Eastern, 1pm Pacific, as I’m hosting a webinar with two advisors who’ve doubled down on technology and seen a huge increase in their client satisfaction. Head over to fppad.com/webinar to register today, that’s FPPad.com/webinar to secure your spot

Those are the headlines for today, I’m Bill Winterberg, be sure check back in for more FPPad Bits and Bytes Updates.

CFPB Requests for Information: Consumer Access to Financial Records:
https://www.regulations.gov/document?D=CFPB-2016-0048-0001

This week’s update starts with a quiet, yet noteworthy escalation in the battle for access to consumer financial data collected by many of the account aggregation companies, as eight of them announced a new coalition called the Consumer Financial Data Rights industry group.

Who’s part of this group? Names that should be familiar are Envestnet | Yodlee, Betterment, and Personal Capital, with less-familiar B2C startups Affirm, Digit, Kabbage, Ripple, and Varo Money rounding out the list.

See, back in November 2015, large banks like JPMorgan Chase, Wells Fargo, and Bank of America “throttled” access to customer account data by account aggregation services that ultimately ended up on sites like Mint.com, Personal Capital and others, causing users of those services to have inaccurate information on their account transactions and investment holdings.

The banks acknowledged the throttling, saying they did it out of concerns for account security and to protecting customer data. Oh really?

Because by my research, account aggregation has been around for the better part of 28 years. How many known security breaches have been reported by the account aggregators? Zero.

So now all of a sudden the banks are concerned about security?

Obviously, there is some tension here, and I’m sympathetic to both sides.

And the tension is significant enough that even the Consumer Financial Protection Bureau has taken interest in the issue.

So here’s what I want you do to. When you’re done listening to, or reading, this week’s update, go to fppad.com/204 where I have links for this week’s stories, and at the top I’m going to link to the CFPB’s request for information about the use of account aggregation services.

If you’re using account aggregation to enhance the advice you give to your clients, or even just to see a comprehensive picture of their net worth, consider adding your comments on the rights you feel consumers should have to give permission to third-party aggregators in order to access their data.

Because if you don’t take the opportunity add your two cents, you can’t complain about what happens with the future of account aggregation.

I’m going to stay on the topic of account aggregation with the next story, because I find it interesting that this week JPMorgan Chase just announced its own agreement with Intuit to offer client account data access through an API.

So what’s different about this API? With most of the existing aggregators, a Chase customer would have to enter their username and password into account aggregation which would then go out and log in to the Chase servers, usually overnight when it’s not very busy, and pull in the account transactions. This new API, however, allows Chase customers to grant access to Intuit right within their Chase account. They don’t need to give their username and password to Intuit.

That’s great if customers who want aggregation operate within the Chase and Intuit ecosystem, but where I live in the real world, accounts are held all over the place.

I’m concerned that Chase will start reducing account access to aggregators like Envestnet|Yodlee, Fiserv’s CashEdge, and maybe even eMoney and force them to program to this new API. Now if the new API doesn’t cost anything, it’s probably a good thing, and certainly helps protect the security of a customer’s username and password, but if Chase starts charging a fee for access to this new API, well, that starts to get a bit political.

And another unknown is how Finicity may or may not be affected by this, because if you recall, Intuit said it was shutting down support for its account aggregation APIs and transitioned sales and support entirely over to Finicity. If a Chase client enables the API for Intuit, does that mean the Chase account data will be available through the Finicity relationship as well?

If *you* happen know the answer, let me know, and I’ll post a follow up and keep you in the loop.

So why spend all this time on account aggregation? I’m glad you asked! It’s because I continue to see strong demand for account aggregation services, with one example just this week where Wealth Access, operating out of Nashville, TN, announced that it now has $41 billion in assets tracked on its platform from 130 wealth management organizations, with both figures up over 50% from this time last year.

And in an email I received from Personal Capital, they’ve now crossed over $300 billion in assets that are tracked with their digital tools, of course, all powered by account aggregation.

And with the Department of Labor’s fiduciary rule, even with it’s fate in jeopardy, the momentum is already growing where advisors may need to use account aggregation to get the full picture of how a client’s existing portfolio is allocated BEFORE making a recommendation on how to make changes in a new portfolio.

How can you do that?

Unless you want to gather reams of paper statements from clients, the answer is account aggregation.

I’ve linked to all of the stories mentioned in this week’s broadcast over on my website, so be sure to check them out over at fppad.com/204

And next week I’ll be attending the TD Ameritrade Institutional National LINC conference along with my executive producer Steve Biermann, so if you’ll be at that event, be sure to stop me in the hallways and say hello.

And that wraps up this week’s broadcast on the best in advisor technology and more. If you have something to say, or have a story you think should be featured in a future episode, please send me a tweet on Twitter, I’m @billwinterberg, or if you’re not already receiving my email newsletter, you can sign up at fppad.com/subscribe

Thank you so much for listening, I’m Bill Winterberg, see you next time.

In this week’s top advisor technology stories:

• Starburst Labs, the creators of Wealthbox CRM, raised $6.25 million in new capital
• The XY Planning Network inks an enterprise pricing deal with eMoney Advisor
• Morgan Stanley pays a $13 million settlement for billing mistakes across 149,000 customer accounts, and
• Document management provider Cabinet Paperless gets acquired by PSIGEN Software

Starburst Labs raises $6.25 million in new capital

This week, Starburst Labs, which is the New York City-based company (formerly known as Gotham Tech Labs) that makes Wealthbox CRM, announced it raised $6.25 million in Series A funding. Back in December when the Financial Planning Magazine technology survey came out, Wealthbox CRM was one of the few movers and shakers in that survey who rose up the ranks in overall adoption. Most of the other companies basically stayed in the same positions as in previous surveys.

So Wealthbox CRM basically launched from zero on February 11th 2014 (which I remember because February 11th is my birthday) and in under three years has ascended to the level of industry adoption to compete with well-known CRMs like Redtail, Salesforce, and Junxure.

What’s interesting, though, is that Starburst has three other products in addition to Wealthbox CRM which are InvestorSay, an online community centered around investing ideas, PaperTrade.io, a plugin for simulated stock trading contests, and Wealthbase, a question and answer website that reminds me a lot of Quora.

So the Series A funding won’t exclusively support Wealthbox CRM, because I’m sure it’ll be allocated across all four products, but at least the new investment will do more than just keep the lights on at Starburst’s SoHo offices. Now, they don’t have a personal chef on site, but the offices are more than adequate to support the work the team needs to get done.

And don’t forget, Wealthbox CRM is included in the technology package for anyone who is a member of the XY Planning Network, which is growing at its own eye-opening pace, so I’m not at all concerned that the product might go away anytime soon. An acquisition is a whole other story, but that’s a risk you take with any independent technology provider you use in your business, and isn’t a risk that’s exclusive to Wealthbox CRM.

So with that, let me just say that I believe Wealthbox CRM deserves a little more respect and recognition in the industry for the adoption it has already earned among advisors in just a few years.

The XY Planning Network inks pricing deal with eMoney Advisor

Speaking of XY Planning Network, they’re also in the news this week after announcing a partnership with eMoney Advisor, where members of the network will receive enterprise pricing to emX Pro.

emX pro is the top of the line package that offers planning modules for cash flow, estate, investment, and retirement illustrations above and beyond the client portal and account aggregation in the less expensive tiers.

Retail pricing for emX pro is around $3800 a year, so enterprise pricing probably knocks off 10 to 20 percent, but it doesn’t bring the price down to the $1000 a year range for planning software like MoneyGuidePro and inStream that offer pricing discounts to XYPN members.

Morgan Stanley pays a $13 million settlement for billing mistakes

I have two more quick stories worth mentioning: First, I saw that Morgan Stanley was ordered to pay $13 million to settle civil charges brought by the SEC after the Commission found that more than 149,000 clients were charged excess fees of more than $16 million between 2002 and 2016 as the result of billing errors. The firm also failed to comply with custody rules by not conducting surprise audits on client accounts for which the firm had custody.

So accurate billing is one of those things than often goes under appreciated inside your advisory business. If you have robust portfolio accounting systems like Orion, Envestnet | Tamarac, Advent, AssetBook, and others, it’s probably built in and pretty seamless. But I know some firms still calculate fees using custom Excel spreadsheets, and if that’s you, this action against Morgan Stanley should be a reminder for you that it’s probably time to replace your Excel spreadsheets with a more robust and less error-prone accounting system.

Cabinet Paperless gets acquired by PSIGEN Software

And to wrap up advisor technology news, I saw that Cabinet Paperless, a document management company based in Huntsville, Alabama, was acquired by PSIGEN Software for an undisclosed amount. PSIGEN offers document scanning and capture technology, and it’s safe to say that once you capture a document electronically, you’ll need a good solution to index, store, and archive all that information, hence the acquisition of Cabinet.

Someone challenged me last week about why I think advisers are behind on technology adoption, and when I think of document management, this one of the solutions where I think I’m correct in that a minority of advisors have purchased and implemented a robust solution here. Your top contenders here are Laserfiche, Cabinet, NetDocuments, and possibly Sharepoint if you can justify the cost and customization required to make it work right in your firm.

Soapbox: Incremental Care > Acute Care

So moving on, I didn’t come across any cool or disconcerting apps this week to share, so i’ll get right to the soapbox to wrap up this week’s update.

Sometime in the next few days, I hope you’ll take about 20 to 25 minutes to read an essay in the New Yorker by Dr. Atul Gawande about incremental care, or primary care, and the differences and tradeoffs of that kind of physician interaction compared to acute care, or the interaction one might receive from a specialist.

Yes, there are some connections with health insurance and health insurance , but this essay helped me set aside my own political believes and consider what I want from my long-term healthcare interactions.

I’m one of the fortunate ones; my wife works for a big employer that offers a high deductible plan with subsidized premiums and very good coverage. I try not to loose sight of how much of a privilege it is not to have to worry each year about our family’s coverage. But that’s not true for millions of americans nationwide. And I’m sure many of your clients, especially your small business owners, spend a lot of time each year evaluating some very difficult choices around the coverage for their employees, as well as coverage for their own household. Many of you, as owners of independent RIAs, are in the same boat.

So that’s why this essay was a compelling read for me. It was worth 25 minutes of my time, and I hope you’ll find it’s worth your time, too.

I’ve linked to all of this week’s featured stories over on my website, so be sure to check them out over at fppad.com/203

And that wraps up this week’s broadcast on the best in advisor technology and more. If you have something to say, or have a story you think should be featured in a future episode, please send me a tweet on Twitter, I’m @billwinterberg, or if you’re not already receiving my email newsletter, you can sign up at fppad.com/subscribe

Thank you so much for *reading*, I’m Bill Winterberg, see you next time.

In a follow up to our first stop on FPPad Tech Tour, we reconnected with LPL CIO Victor Fetter to tour the finished Carolinas campus complex in Fort Mill, SC.

Fetter gives us an overview of the spaces created to encourage collaboration and innovation, all in support of the tens of thousands of financial advisors who work with LPL Financial.

(Click here to watch the tour on YouTube)

On today’s broadcast, Schwab announces its Schwab Intelligent Advisory services, Finicity raises $42 million for account aggregation, Envestnet|Tamarac rolls out Yodlee, and more.

So get ready, FPPad Bits and Bytes begins now!

(Watch FPPad Bits and Bytes on YouTube)

Today’s episode is brought to you by eMoney Advisor, featuring a new Client Onboarding process as a part of their leading client experience. Onboarding replaces printed fact-finding documents with an automated, digital workflow, allowing clients to populate their own personal financial information online from anywhere — adding an extra layer of convenience and efficiency to your service.

For more information on eMoney’s Client Onboarding tool, visit fppad.com/emoneyonboarding today.

Here are the links to this week’s top stories:

Schwab Announces Schwab Intelligent Advisory from Charles Schwab

[Now the big story this week is news from Charles Schwab, as the largest custodian for RIAs announced plans to introduce Schwab Intelligent Advisory in the first half of 2017. In the press release, Schwab’s Neesha Hathi said that Schwab Intelligent Advisory is designed for emerging or mass affluent investors who don’t have complex financial situations, features access to CFP® professionals who are available by phone and videoconference, and charges fees of just 28 basis points (disclaimer!) with a maximum of $3,600 a year.

Now this isn’t as much of a technology story as it is a marketing story, because the technology for Schwab Intelligent Advisory portfolio management is that same that powers Schwab Intelligent Portfolios for retail investors and Institutional Intelligent Portfolios that you can use in your own RIA if you custody assets with Schwab.

But, how does that make you feel knowing you’re using the same technology that your custodian will use to offer its own human-assisted advisory services to mass affluent clients?

So I was asked if I thought RIAs should be concerned about this announcement, and I said yes, RIAs should absolutely be concerned. Look, when it comes to getting a prospect to buy what you do, most of the time it’s not what you say, it’s what people hear, and I’ve gotta admit, prospects are hearing comprehensive plans by CFP® professionals with 24/7 access, all for 28 basis points (disclaimer!)? Unless your prospects hear something far more different and compelling from you, I just can’t believe they’ll be willing to pay more than three times the price of Schwab Intelligent Advisory for your services.

And I’m not ignoring Vanguard’s Personal Advisor Services, which also employs hundreds of CFP® professionals and charges 30 basis points (thank you!), with more than $40 billion on the platform and growing. A few of you have told me that you’ve lost clients to Vanguard’s service, which is also likely going to happen with Schwab Intelligent Advisory, but the difference with Vanguard is that they’re not also soliciting your custody business while simultaneously soliciting mass affluent clients.

But the executives at Schwab surely know what they’re doing, and I think they know their target RIA client pretty well, which I suspect largely enforces client account minimums of a million dollars or more, so Schwab Intelligent Advisory really isn’t a competitive threat, because it’s not intended for the high-net worth clientele targeted by the largest RIAs that generally choose to custody with Schwab.] Charles Schwab today announced plans to expand its suite of wealth management and advisory services with the launch of Schwab Intelligent Advisory, a hybrid advisory service that combines live credentialed professionals and algorithm driven technology to make financial and investment planning more accessible to consumers.

Finicity Secures $42 Million in Funding to Accelerate New Solution Development from Finicity

[Now one of the things not mentioned about Schwab Intelligent Advisory is account aggregation, which is the focus of my next two stories, starting with Finicity, as the company announced it secured $42 million in a new funding round led by Experian.

This is the first time I’ve mentioned Finicity in my broadcast, but I have a popular post on FPPad from March of this year when Intuit announced it was shutting down their Financial Data API and selected Finicity to offer façade APIs to developers who needed to transition off of Intuit’s aggregation.

In the wake of that change, Guide Financial, which was acquired by John Hancock in the summer of 2015, shut down back in October, but other than that I haven’t heard of other significant disruptions among other tech providers.

What remains to be seen is whether or not Finicity makes an attempt to offer aggregation services to advisers, either directly or by partnering with existing technology providers, so if you have some intel you can share with me, I’d appreciate the heads up, otherwise advisers can continue to engage aggregation providers such as Morningstar ByAllAccounts, Aqumulate, eMoney, Quovo Wealth Access, and Envestnet|Yodlee.] Finicity, a leading provider of real-time financial data aggregation and insights, has secured $42 million in new funding. Experian, a global innovator in consumer and business credit reporting, led Finicity’s Series B round, along with a venture debt facility provided by Bridge Bank and participation from existing investors.

Tamarac Incorporates Yodlee’s Data Aggregation into Advisor Xi® from PRNewswire

[And speaking of Envestnet|Yodlee, my last story highlights the rollout of Envestnet|Yodlee to the Envestnet|Tamarac platform. While at the Schwab IMPACT conference in October, I had a chance to connect with Brandon Rembe to get a quick update on what this new feature means for advisors.

I’ve linked the full interview over here and in the description below, but let me just finish by saying that technology like account aggregation is still a bit of a differentiator for you, since it helps you know as much as you can about your client’s total financial picture, and not just what clients have at one custodian, such as, ohhh, Charles Schwab, which is a complete coincidence.] Envestnet | Tamarac now enables advisors to add assets and liabilities to households in Advisor View, helping them expand their focus and deliver more holistic advice to clients.

A few parting words:

Before I sign off, you need to know that I have some big plans in the works for FPPad content in 2017. I’m not going to go into the details right now, but what you will notice is that this broadcast, the almost-weekly videos, will be taking a bit of a hiatus for a few months.

But don’t worry, I’ll still be providing my independent insight on financial technology that thousands of you count on as you navigate what I feel is an exciting, unprecedented opportunity in the business of financial advice.

So connect with me anytime on Twitter, I’m @billwinterberg, or sign up for my email newsletter at fppad.com/subscribe

Here are the stories that didn’t make this week’s broadcast:

Scottrade® Advisor Services Clearing Paths for Advisors with New Tech Agreements from Scottrade

Scottrade® Advisor Services now has agreements with two leading industry solutions providers to help RIAs run their day-to-day routines. Scottrade signed agreements with Morningstar, Inc. and Orion Advisor Services, LLC to offer their services at a discount.

Yahoo Says 1 Billion User Accounts Were Hacked from NY Times

Yahoo, already reeling from its September disclosure that 500 million user accounts had been hacked in 2014, disclosed Wednesday that a different attack in 2013 compromised more than 1 billion accounts.

A Note From Chris O’Neill about Evernote’s Privacy Policy from Evernote

We recently announced an update to Evernote’s privacy policy that we communicated poorly, and it resulted in some understandable confusion. We’ve heard your concerns, and we apologize for any angst we may have caused.

Introducing Asset Classes from Riskalyze

Advisors have been asking for better ways to visualize portfolio allocations, and we’re excited to announce today that we’re rolling out Asset Class coverage for all portfolios in Riskalyze!

Personal Capital Adds $1.5 Billion in AUM and Closes $100 Million in Financing in 2016 from PRNewswire

Personal Capital, the leading digital and professional advisor based wealth management firm, today announced that IGM Financial Inc. has completed the firm’s Series E round. Additionally, Silicon Valley Bank has extended $25 million in credit to the firm.

Watch FPPad Bits and Bytes for December 16, 2016

On today’s broadcast, Vanare becomes AdvisorEngine after a $20 million dollar investment, RightCaptial gets a favorable review, and Addepar opens up about the capabilities of its technology.

So get ready, FPPad Bits and Bytes begins now!

(WatchFPPad Bits and Bytes on YouTube)

Today’s episode is brought to you by eMoney Advisor, the leading provider of digital wealth management solutions. eMoney just introduced two new Advanced Analytics products: Advisor Analytics Pro, offering advisors and support staff deeper business insights, and Office Analytics, offering never-before-seen firm-wide insights.

Featuring a customizable Analytics dashboard, an expansive library of new and interactive data charts, and more, eMoney’s Advanced Analytics solutions will help you put your data to work and uncover more opportunities. For more information the eMoney Analytics solutions, visit fppad.com/emoneyanalytics.

Here are the links to this week’s top stories:

Vanare gets $20M in funding from WisdomTree, and rebrands itself from Financial Planning

[First up is news from Advisor Engine, which you may recognize under the company’s former name of Vanare. The name change was carried out as WisdomTree, the exchange-traded fund sponsor and asset manager, announced a $20 million dollar investment in Advisor Engine for 36% equity in the company.

This investment is the latest example of ETF issuers getting in the automated investment service space, but remember, BlackRock acquired FutureAdvisor, Invesco acquired Jemstep, yet WisdomTree chose to make a minority equity investment. I’m just not exactly sure why they didn’t acquire the whole business, but then again, I’m not the one that has to cut a check for $50 million dollars.

So let me connect some dots. All of the automated investment services are putting downward pricing pressure on asset allocation and periodic rebalancing. So in general, margins for traditional portfolio management are being compressed. You can either add value elsewhere, or look for ways to save on operational costs for your business.

AdvisorEngine’s new capital means it likely won’t shut down anytime soon, AND, the company recently added support for custody services at Apex Clearing, which could be a potential way you reduce your operational expenses AND allow you to pass some of those savings directly to your clients, all from a white-labeled solution.

For me, that’s why this transaction is an interesting one to keep an eye on.] WisdomTree is providing [Vanare] with an injection of funds in a bid to better position itself for industrywide changes wrought by new technologies and stiffer regulations, according to CEO Jonathan Steinberg.

Is RightCapital the right fit? from Financial Planning

[Next up is news about RightCapital, as Financial Planning magazine columnist Joel Bruckenstein reviewed the financial planning software and offered his take of where it fits in the marketplace. One of the distinctive features RightCapital offers is the ability to generate simulated tax forms so you can actually see how decisions on deductions, distributions, and taxable withdrawals will impact a client’s personal tax return.

Also, just because RightCapital has a fresh and modern UI doesn’t mean it’s a solution only for younger clients. RightCapital’s robust modeling of asset withdrawal strategies was highlighted in the review, allowing clients to simulate the best withdrawal strategies when factoring in Social Security and tax-deferred tax-free retirement accounts.

Of course, there’s much more to the review, but overall, RightCapital gets recommended as a more-than-adequate application for the mass affluent market. A 14-day free trial is available so you can evaluate the solution for your clients’ needs.] The middle ground in financial planning software is exactly the niche that RightCapital is targeting, according to co-founder Shuang Chen.

Addepar’s strategy: Focus on HNW, arm advisers with digital tools from Financial Planning

[But, if your business serves high net-worth households, this week’s final story on Addepar should be worth taking note. The investment management technology company appears to be opening up a bit more about exactly what it is they do.

In an interview with SourceMedia managing editor Suleman Din, Addepar’s CEO Eric Poirier described how much of the high net-worth marketplace has been historically addressed by custom Excel spreadsheets.

When clients start identifying assets like their limited partnership interests, equity investments, venture capital, and so on, most off-the-shelf solutions just aren’t compatible with the esoteric properties of these assets. But that’s been Addepar’s focus for five years, according to Poirier.

That kind of development sets Addepar apart as the Ferrari of the investment management technology space and is appropriate for households that require that kind of horsepower, and while that power certainly scales down to more traditional accounts with stocks, ETFs, and mutual funds, I suspect you’ll find it’s a bit overkill in capabilities and price if your business primarily serves the needs of mass affluent households.] While other fintech startups claimed they would disrupt the wealth management industry, Addepar has taken the tack that it can make it better.

Here are stories that didn’t make this week’s broadcast:

Future ready: Seismic moves for digital wealth management from Financial Planning

A close examination of the [2016 FP Tech Survey] data reveals other interesting trends, including which broker-dealers, custodians and third-party tech providers seem to be the best at meeting advisers’ needs, where advisers can get a good return on tech investment and how the next generation of advisers approaches tech.

Digital advice expects big growth from banks from Financial Planning

Digital advice as an industry will take off once it is built into retail banking, capitalizing on an investor segment ignored by wealth managers, says SigFig CEO Mike Sha. That’s why, announcing his firm’s newest partnership with Citizens Bank, Sha predicts his platform will reach half of all U.S. households by next year.

Watch FPPad Bits and Bytes for December 2, 2016

On today’s broadcast, Wells Fargo announces a partnership with SigFig, Cetera’s computers systems suffer a two-day outage, lessons from a hack at Lincoln Financial, and more.

So get ready, FPPad Bits and Bytes begins now!

(WatchFPPad Bits and Bytes on YouTube)

Today’s episode is brought to you by eMoney Advisor, the leading provider of digital wealth management solutions. eMoney just introduced two new Advanced Analytics products: Advisor Analytics Pro, offering advisors and support staff deeper business insights, and Office Analytics, offering never-before-seen firm-wide insights.

Featuring a customizable Analytics dashboard, an expansive library of new and interactive data charts, and more, eMoney’s Advanced Analytics solutions will help you put your data to work and uncover more opportunities. For more information the eMoney Analytics solutions, visit fppad.com/emoneyanalytics.

Here are the links to this week’s top stories:

Wells Fargo Goes Robo With SigFig Wealth Management from WSJ.com, and

Wells Fargo notice of an application for an exemption from certain requirements of rule 3a-7(a)(4)(i) under the Investment Company Act of 1940 from SEC.gov

[First up is news from Wells Fargo, as the bank, which finds itself in the middle of a very public firestorm over opening unauthorized accounts, announced this week that it is partnering with SigFig to release an automated investment service to customers of Wells Fargo Advisors sometime in the first half of 2017.

Other than the potential release date, there really wasn’t any concrete information on pricing or the types of investments to be used in the service. Will they be Wells Fargo mutual funds, or third-party ETFs? As of today, Wells Fargo doesn’t offer its own ETFs, but earlier this year, the company filed an exemptive relief request with the SEC, signaling some intent to enter the ETF space.

But that opens the door for potential problems with the Department of Labor fiduciary rule, highlighted by industry Nerd-In-Chief Michael Kitces, where automated investment services that recommend investments in proprietary products, Kitces calls out Schwab Intelligent Portfolios and BlackRock’s FutureAdvisor, do not qualify under the Level Fee Fiduciary exemption because of the variable compensation inherent in an allocation of proprietary ETFs!

So, this is all “industry” stuff, and not all that applicable to your business, but here’s my point. All the big banks, all the incumbent financial institutions are boarding the automated investment bandwagon. Sooner rather than later, your clients and prospects are going to get solicited by the very institutions they use today.

And clients are expecting an experience like Uber, but you’re still driving around a dirty taxi that has to be flagged down with a hand in the air that doesn’t have a functional credit card machine!] Wells Fargo & Co.’s brokerage arm is partnering with SigFig Wealth Management LLC to bring automated investment advice to clients, the latest example of how traditional wealth-management firms are working with startup robo advisers to offer new digital tools to investors.

Cetera Brokers Endure Two-Day Systemwide Crash from AdvisorHub

[Next up is news about Cetera Financial Group, as the independent broker dealer encountered a company-wide systems outage that affected 9,000 brokers as well as the company’s back-office and operations teams.

According to an AdvisorHub article, the outage started on Monday, and one broker with First Allied reported that he could not sign in to view emails, access performance reports, or even call Cetera using their standard phone number. Cell phone numbers were eventually sent out on Monday evening.

In a firm-wide conference call on Tuesday afternoon, Cetera Chief Executive Robert Moore apologized for the disruption and said systems had been fully restored, and added that no data had been compromised through hacking or any other unauthorized access.

So, let this be a reminder that if it’s been a while since you tested your business continuity plan, next week’s Thanksgiving break might be a good time to do so. It doesn’t matter if you manage your own systems or leverage the resources of a broker-dealer, you need to verify how you can perform the essential parts of your business in the event of a disruption.

Attackers are launching denial of service attacks every day against financial institutions, so it’s important that you know exactly what you need to do when the systems you depend aren’t available.] Just six months after emerging from bankruptcy, independent brokerage company Cetera Financial Group experienced a companywide systems outage Monday and Tuesday that walled off brokers at its seven operating broker-dealers from customer data, emails and other vital account management functions.

Lincoln Financial Unit Gets $650K Fine After Server Hack from Law360, and

LETTER OF ACCEPTANCE, WAIVER AND CONSENT NO. 2013035036601 at FINRA.org

[And speaking of attackers, my last story is about Lincoln Financial Securities, an affiliate of Lincoln Financial Group, as the company paid a $650,000 fine imposed by FINRA for failing to safeguard customer data stored on a cloud server used by one of its OSJs.

Sometime in 2012, hackers were able to access the could server configured by a third-party vendor and obtain records on approximately 5,400 customers. The FINRA Letter of Acceptance doesn’t say HOW the server was compromised, and didn’t identify what kind of server was in use. Was it an FTP server, a service like Dropbox, a proprietary server with remote access, or something else?

But more troubling to me is that FINRA goes on to say that the firm “failed to take adequate steps to monitor or audit the vendors’ performance.” Now hold on. One benefit of leveraging third-party vendors is that they bring expertise to the table that the firm doesn’t have, like, oh, I don’t know, cybersecurity expertise.

But for FINRA to say that the firm failed to test and verify the security of the cloud servers, that just doesn’t seem right. The firm doesn’t HAVE the expertise in cloud server security, which is why the firm hired the third-party vendor in the first place, but now FINRA says that the firm is the one that has to verify the security of the third-party vendor that it hired to bring security expertise to the firm? How is that even possible?

What I do know is FINRA just levied a heavy fine on a firm because their third-party vendor had a hole in their security that was exploited by hackers, and in my opinion, that’s a troubling precedent that has been set.] A Lincoln Financial Group subsidiary on Monday agreed to accept a $650,000 fine leveled by the Financial Industry Regulatory Authority and implement tighter security protocols after hackers in mid-2012 accessed its cloud server and lifted the confidential records of roughly 5,400 customers.

Here are the stories that didn’t make this week’s broadcast:

WisdomTree Makes Strategic Investment in AdvisorEngine from WisdomTree

WisdomTree Investments, Inc. announced that it has invested $20 million for a 36% equity interest in AdvisorEngine, formerly known as Vanare, an end-to-end digital wealth management platform which enables individual customization of investment philosophies.

PIEtech℠, Inc. Unveils Integration with MX for Aggregation and Personal Financial Management Functionality from PRWeb

PIEtech℠, Inc., the creator of the industry’s leading financial planning software, MoneyGuidePro®, today unveiled a new integration with MX to deepen the availability of aggregation for MoneyGuidePro® subscribers and add personal financial management (PFM) functionality via the client portal.

Combined Envestnet and Yodlee Data Offering Supports Morgan Stanley Wealth Management from PRNewswire.com

Envestnet | Yodlee and its parent company Envestnet, today announced a partnership for the combined organization, providing data aggregation, digital applications and data reconciliation solutions to Morgan Stanley, one of the largest, most established wealth management businesses in the industry.

Watch FPPad Bits and Bytes for November 18, 2016

On today’s broadcast, Brian Shenson updates Schwab’s technology roadmap, Riskalyze raises $20 million in capital, SS&C acquires Salentica, and more.

So get ready, FPPad Bits and Bytes begins now!

(Watch FPPad Bits and Bytes on YouTube)

Today’s episode is brought to you by eMoney Advisor, who just announced their Fiduciary Framework initiative to help advisors and firms comply with the recent DOL Fiduciary Rule. The framework weaves DOL-friendly solutions into each stage of the advisor-client lifecycle—like client acknowledgments, event logs, best interest workflows, and more—all within the existing integrated wealth management platform.

For more information on Fiduciary Framework, visit fppad.com/emoneyadvisor

Here are the links to this week’s top stories:

Riskalyze Raises $20 Million Growth Equity Investment to Accelerate Risk Number® and Robo Platforms for Independent Financial Advisors from PRNewswire

[Now first up, I attended Schwab IMPACT 2016 in San Diego last week and posted a few videos about Schwab’s technology updates, including a detailed discussion with Brian Shenson about the phase out of Integrated Office, new providers in OpenView Gateway, and the much anticipated timeline of Portfolio Connect. It’s an informative interview, and stick around for the tour of OpenView MarketSquare where I Brian and I practiced our sprints in the massive exhibit hall.

And then on Monday this week, Riskalyze announced that the company secured $20 million in capital from FTV Capital to fuel its future growth. Here’s CEO Aaron Klein on how this additional capital will help Riskalyze execute on its mission.

Aaron Klein: “Our mission every day is making sure that we’re empowering those advisors to really build fearless investors, to align the world’s investments with each investor’s Risk Number, and you know, for us finding the right partner to allow us to continue the incredible growth we’ve seen so far was the right move.”]

SS&C to Acquire Leading Advisor CRM Solution, Salentica from PRNewswire

[Next up is news from SS&C Technologies, which you should recognize as the company that acquired Advent Software for $2.7 billion earlier this year. Last week, SS&C announced it acquired Salentica, a professional services firm known for customizing Salesforce and Microsoft Dynamics CRM for institutions and large RIAs. Terms of the deal were not disclosed.

So this acquisition is important for its vertical integration, as thousands of advisors who already use Advent or Black Diamond for portfolio management today should soon benefit from better integrations of Salesforce and Dynamics CRM all from the same provider.
This also helps SS&C close the gap with a competitor like Envestnet | Tamarac, who has offered an all-in-one technology solution to advisors for several years.

But on the other hand, not all advisors want to be captive to an all-in-one provider, and prefer the best-of-breed approach to their technology, so with Salentica now under the ownership of SS&C, we’ll have to see how the political aspects of this relationship play out in the near future.
Nevertheless, I’m optimistic that SS&C will support Salentica’s integrations with a variety of portfolio management providers, but I definitely would proceed with a little more caution if my business used a solution other than Advent and Black Diamond.] SS&C Technologies Holdings, Inc., a global provider of financial services software and software-enabled services, today announced its acquisition of leading CRM solution Salentica.

TD Ameritrade to Buy Scottrade in $4 Billion Deal from the New York Times, and

TD Ameritrade Announces Essential Portfolios Robo-Advisor from BusinessWire

[And finally, I’m wrapping up with two updates involving TD Ameritrade, starting with the announcement of the acquisition of Scottrade for $4 billion dollars, then followed up by the soft launch of Essential Portfolios, the company’s own automated investment service for retail investors.

First, the Scottrade acquisition is likely to affect advisors with under $10 million in assets under management, as Scottrade has historically been welcoming of advisors with smaller accounts. So over the next year or two, I’d expect smaller advisors to be under pressure to grow their assets under management, or find another custodian altogether like Shareholders Service Group, or join a membership group like the XY Planning Network that leverages the size of its network to facilitate business with TD Ameritrade Institutional.
Either way, I think it means structural changes are on the horizon for dozens of smaller advisory firms.

And the second story about Essential Portfolios adds yet another retail-facing automated investment solution to the crowded marketplace. It features a $5,000 account minimum, fees of 30 basis points, and offers just five model portfolios, each made up of five ETFs, with allocations recommended by Morningstar Investment Management that are automatically rebalanced.

Look, clients are getting bombarded with all this marketing about low-cost, automated, intelligent investing services from nearly every provider in the business. So unless your marketing pockets are as deep as theirs, you’re going to have to craft a message that your technology rivals that of the automated services, and that you offer advice and services that go way beyond what the low-cost solutions provide. Not only do you have to say it, but you have to do it.] TD Ameritrade announced on Monday that it would acquire Scottrade Financial Services, a rival discount brokerage, for $4 billion, in a bid for scale at a time when small investors are losing their taste for stock trading.

Here are the stories that didn’t make this week’s broadcast:

Web Design Pros Enter the Financial Advisory Industry with the Public Launch of Twenty Over Ten from MarketWired

Twenty Over Ten, an unparalleled, compliant website-builder, today announced its formal public launch. Cofounded by Penn State Associate Professor of Graphic Design Ryan Russell and Designer and Developer Nick Dimatteo, Twenty Over Ten helps financial advisors create beautiful and compliant websites tailored to their unique brands.

PIEtech℠, Inc. to Complete Deep Integration With Riskalyze Creating the Most Powerful Client Risk Analysis Experience from PRWeb

PIEtech℠, Inc., creator of the leading financial planning software, MoneyGuidePro®, announced today that it is building a multi-faceted, deep integration with Riskalyze, the risk alignment platform founded upon the Risk Number®.

Junxure Cloud, Riskalyze Announce Integration from PRNewswire

Junxure, the industry leading CRM solution and technology company for financial advisors, this week announced new enhancements to its cloud-based CRM platform, Junxure Cloud®. As part of its ongoing work to integrate with leading platforms serving advisors, Junxure Cloud has partnered with Riskalyze, the industry-leading risk alignment platform and inventor of the Risk Number®, to integrate the two popular systems.

Get LastPass Everywhere: Multi-Device Access Is Now Free! from LastPass

I’m thrilled to announce that, starting today, you can use LastPass on any device, anywhere, for free. No matter where you need your passwords – on your desktop, laptop, tablet, or phone – you can rely on LastPass to sync them for you, for free.

Passing the Baton, Again from Wealthfront

After an amazing tour of duty, Adam Nash is handing the baton back to me [Andy Rachleff]. While Nash will be transitioning out of an operating role at the company, he will continue to play a strategic role as a member of our Board of Directors.

FOLIOfn, Inc. Acquires Leading Responsible Investing RIA, First Affirmative Financial Network from PRNewswire

FOLIOfn, Inc. announced today that it has acquired First Affirmative Financial Network, one of the nation’s most prominent registered investment advisor firms specializing in sustainable, responsible, impact (SRI) investing.

Invessence and PrairieSmarts Partner to Arm Advisors with Better Risk Assessment Tools for Easier DOL Compliance from PRWeb.com

Digital wealth management technology provider Invessence announced today that it has partnered with PrairieSmarts, an innovative risk analytics firm, to provide risk assessment tools for financial advisors and their clients. Enhancing Invessence’s comprehensive digital wealth platform, the robust risk tools from PrairieSmarts will assist advisors in calculating, documenting and managing the alignment of a client’s risk profile with a compliant portfolio recommendation.

Watch FPPad Bits and Bytes for November 4, 2016

On today’s broadcast, one Wells Fargo broker loses her job after a client spoofing attack, Envestnet acquires Wheelhouse Analytics, and another day, another new robo advisor.

So get ready, FPPad Bits and Bytes begins now!

(Watch FPPad Bits and Bytes on YouTube)

Today’s episode is brought to you by Envestnet | Tamarac, providers of Advisor Xi, an industry-leading fully integrated web-based suite for RIAs. Tamarac’s Advisor Xi unifies portfolio management, modeling, rebalancing, trading, billing, and reporting with a fully customizable client portal and enterprise-grade CRM.

On October 20th, two innovative and rapidly growing firms will share how they leveraged the Advisor Xi Suite in their business during an interactive webinar. Space is limited, so secure your spot today by visiting http://fppad.com/tamarac

Here are the links to this week’s top stories:

FINRA Disciplinary Action for Kathleen Kincade (enter Kathleen Kincade in the Individual Name search field)

[Now October is National Cyber Security Awareness Month, so my first story is about an unfortunate cybersecurity incident involving a broker from Wells Fargo. According to a FINRA letter released this month, Kathleen Kincade was targeted by attackers who used spoofed client emails to submit three wire transfer requests for nearly $350,000, two of which were processed before Wells Fargo became aware of fraudulent activity.

One wire transfer for $99,000 was reversed, but the company ultimately had to make the client whole for the remaining $250,000 that was transferred.

The letter goes on to say that Kincade used Wells Fargo’s forms to falsely report that she verbally confirmed the wire disbursement instructions with the client, which was not the case. Now I know you’ve heard me say time and time again that attackers are impersonating clients and are targeting you to get you to send money where it shouldn’t go.

So take this as a reminder that you need to continue to be vigilant and suspicious with respect to sporadic requests for client withdrawals, and always, ALWAYS follow a process to authenticate the identity of your client, usually with a phone call, or else you won’t allow any fund transfers to be processed.]

Envestnet Acquires Wheelhouse Analytics from PRNewswire

[Next up is news from Envestnet, as the company announced the acquisition of Wheelhouse Analytics in a move executives said will provide more insight on key performance indicators for asset managers, enterprises, and financial advisors.

Terms of the deal were not disclosed, and I have to admit, Wheelhouse Analytics was not on my radar at all until this announcement, so I checked out their website and learned about their solutions for data analytics, online education, and document management for sales and business development. This is more business intelligence than it is financial technology, but I can see how Wheelhouse Analytics can connect to the data stored in the Envestnet platform and ultimately deliver timely insight to financial advisors.

Also, think back to Envestnet’s acquisition of Yodlee last summer, and consider how data on client spending and consumption can generate key indicators on which clients might warrant a follow up phone call, versus those who are on a steady path to meet their goals. I think this is worth watching in the near future.] Envestnet, Inc. announced today that it has acquired Wheelhouse Analytics LLC, a technology company that provides data analytics, mobile sales solutions, and online education tools to financial advisors, asset managers and enterprises

Zacks Advantage Form ADV

Merrill Egde Guided Investing Form ADV

[And I think it’s safe to say that my broadcast wouldn’t be complete without a little robo news, so up first, Zacks Investment Management announced the launch of Zacks Advantage, an automated investment service built on the Schwab Intelligent Portfolios platform that adds a bit of active management to balanced portfolio investing. The minimum account size is $5,000, and fees are 50 basis points for accounts up to $100,000, which drops to 35 basis points for accounts greater than $100,000 according to the Form ADV.

And Bank of America offered more information about Merrill Edge Guided Investing, the company’s automated service that also has a $5,000 account minimum, but charges 45 basis points no matter how much money is invested in the account.

So, I want to ask two questions about all this robo stuff. First, if all the other financial firms have a low-cost automated investing solution, why don’t you? If the solutions are so commonplace, prospects might think that your firm is behind the times because you’re not leveraging a solution that is offered pretty much everywhere else.

But second, assuming you DO provide an automated investing solution, the next question you’ll face is why should a prospect choose your business over all the others, when they appear to do the same thing? And THAT is your opportunity to communicate why your business is different, identify your value proposition, and describe all the things you do that go far beyond portfolio asset allocation and frequent rebalancing.

No robo solution can compete with that!]

Watch FPPad Bits and Bytes for October 14, 2016

eMoney hosted its first-ever Hack-a-thon at this year’s Advisor Summit in Dana Point, CA.

At the conclusion of the conference, four teams presented their solutions to a room full of judges and advisor attendees, where one team was ultimately selected as the winner of the hack-a-thon.

Get my summary of each team’s hack-a-thon creation in the video above, and then see how the winner was revealed on stage to close out the event.

(Watch the eMoney Hack-a-thon winner presentation video on YouTube)

eMoney is hosting its first-ever Hack-a-thon at this year’s Advisor Summit in Dana Point, CA.

Four teams were assembled, made up of four eMoney product managers, developers, and engineers combined with a diverse group of nearly a dozen advisers to explore ways to push the eMoney roadmap.

Witness the energy and activity of this event in the vlog embedded above, plus get a few tips on how to apply the design thinking process to your next brainstorming session.

(Watch the recap of the eMoney Hack-a-thon Day One video on YouTube)