Welcome to the August 2024 issue of the Latest News in Financial #AdvisorTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors!
This month’s edition kicks off with the news that Orion and Riskalyze have both announced that they are “unbundling” several key components of their previously all-in-one offerings, highlighting how, after more than a decade and hundreds of millions of dollars of investment into building all-in-one solutions, providers may now be finding that approach to be too restrictive for their own growth – since in reality, many advisors would rather ‘just’ buy the individual parts they want (instead of needing to buy the whole package)!
From there, the latest highlights also feature a number of other interesting advisor technology announcements, including:
- Envestnet has announced that it is being acquired and taken private in a $4.5 billion dollar deal with Bain Capital after more than a decade of building and buying tech solutions to compliment and amplify its asset management marketplace core – only to find that assembling a whole that’s worth more than the sum of its parts turned out to be a bigger challenge than expected (and even more so at the scale of an asset management business)
- Altruist has announced the launch of two new features to its custodial platform and technology suite: A high-yield cash management account offering 5.1% APY, and a tax loss harvesting tool for which it will charge advisors 10bps for accounts using the feature – which perhaps highlights how custodians are finding ways to layer on more direct “platform” fees as the flaws of traditional “indirect” revenue sources like cash sweeps have been increasingly exposed as of late
- Powder, which makes an AI-enabled client document parsing tool to reduce the work for advisors of reading through investment account statements and estate planning documents, has announced the completion of a recent $5M seed funding round – but in light of the success of tools like Holistiplan (for tax returns) and VRGL (for investment statements) that have each honed in on one specific use case, the question is whether Powder will similarly find a salient pain point for advisors (that advisors will actually trust technology to handle for them) to build its solution around
Read the analysis about these announcements in this month’s column, and a discussion of more trends in advisor technology, including:
- Future Capital has emerged as a new solution for managing clients’ held-away 401(k) assets, competing with Pontera (which had previously been the only major player in this space) – though as new regulatory scrutiny of Pontera has emerged that could conceivably extend to Future Capital as well, the big question is whether held-away asset management tools will need to significantly amend their technology and business practices to comply with regulation, and if so, how that would affect the cost and the value of the services they provide
- RISR, a new tool designed to make it easier for advisors to engage with business owner clients by enabling basic business valuation and analysis, has announced a $1.5M pre-seed funding round, highlighting the desire for tools that can demonstrate an advisor’s value for business owners for whom what really matters has less to do with traditional investments and more to do with growing (and eventually a successful exit from) their business
And be certain to read to the end, where we have provided an update to our popular “Financial AdvisorTech Solutions Map” (and also added the changes to our AdvisorTech Directory) as well!
*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to TechNews@kitces.com!
