The latest in financial #AdviserTech — November 2021

The November edition kicks off with the big news that Schwab is working on its own internal Personalized [Direct] Indexing solution, which is expected to become available to both its retail investors and the registered investment advisers on its platform, in what Schwab itself describes as a “freight train” coming for mutual funds and ETFs and a new era of “personalization” — from the advice that advisers provide to the (direct indexing-based) personalized portfolios that Schwab will bring to the table. And in the process, attempt to win away a potential of trillions in market share from the existing mutual fund and ETF complex?

From there, the latest highlights also feature a number of other interesting adviser technology announcements, including:

  • Fidelity launches real-time fractional share trading in what’s widely viewed as a signal that it, too, is working on a direct indexing offering.
  • Addepar acquires AdvisorPeak rebalancing software to expand from performance reporting to full-scale portfolio management.
  • White Glove acquires Gainfully as service companies to help financial advisers increasingly acquire their own (proprietary) tech to better scale themselves.
  • Panoramix rolls out a new Pro edition that provides both GIPS-compliant composite tracking and its own rebalancing software tool that’s aggressively priced for smaller or newer RIAs.

Read the analysis about these announcements in this month’s column, and a discussion of more trends in adviser technology, including:

  • Envestnet partners with Healthpilot to help advisers facilitate better Medicare enrollment choices for their clients.
  • Flourish Crypto launches a solution that will allow advisers to trade their clients’ directly held Bitcoin and other cryptoassets in discretionary portfolios.
  • Microsoft launches a new Financial Services Cloud to compete against Salesforce FSC for the largest adviser enterprises.
  • Riskalyze overhauls its Portfolios engine for major speed enhancements (and a signal that it’s investing in itself for the long run).

Be certain to read to the end, where we have provided an update to our popular Financial AdviserTech Solutions Map as well!

#AdviserTech companies that want their tech announcements considered for future issues should submit to [email protected]!


For most of its history over the past 20 years, direct indexing was a relatively narrow niche offering for a small subset of ultra-high-net-worth investors. In part, the reach of direct indexing was narrow because the transaction costs of holding hundreds of individual stocks comprising an index — instead of just a single index mutual fund or ETF — meant that a sizable amount of capital was needed to ensure that each per-stock trading commission was not a material drag on total returns (i.e., $9.99 trades on hundreds of stocks in a $250,000 account would be quite problematic, whereas the same trades on a $25 million account would be a rounding error). And in practice, direct indexing was also narrowly applied to HNW investors simply because the primary driver of direct indexing was the tax alpha generated by being able to do tax-loss harvesting on the individual shares, which is inherently more valuable for those in higher tax brackets (who generate greater marginal tax savings from the losses that are harvested).

In recent years, though, the advent of “ZeroCom” — zero trading commissions on stocks — has fundamentally altered the potential reach and scalability of direct indexing. One of the originating purposes of mutual funds (and later exchange-traded funds) was to aggregate together individual investors on a pooled basis so professional managers could use their institutional economies of scale to implement trades at a lower cost. But when trading costs are eliminated, in theory anyone with the technology to track and manage their allocations to a wide range of stocks can implement their own strategies cost-effectively. In other words, direct indexing technology plus ZeroCom trading have the potential to make mutual funds and ETFs unnecessary and irrelevant.

Over the past year, this realization has spawned a massive wave of traditional asset managers acquiring up-and-coming direct indexing technology providers, in an apparent attempt to either capitalize on the trend or at least recognize that if direct indexing is going to be a threat, it’s better to have it occur by them (via their own newly acquired subsidiary) than to them. Accordingly, in the span of barely 12 months, BlackRock acquired Aperio, Fidelity funded a capital round into Ethic Investing, Vanguard acquired JustInvest and Franklin Templeton acquired Canvas.

And in September, Schwab revealed that it is working on its own internal direct indexing solution. Dubbed Personalized Indexing, Schwab’s new offering is somewhat unique in that it appears to be positioned to capitalize on several different direct indexing trends, including using direct indexing for tax-loss harvesting benefits, using direct indexing as a way to craft ESG portfolios (e.g., by screening out undesirable companies or industries like tobacco or fossil fuels, or setting client-specified overweights to desired areas of investment like green energy or women-founded enterprises), and more generally using direct indexing to implement whatever thematic investing approach the client wishes. In other words, while tax-loss harvesting benefits remain a highlight of the Schwab offering — in fact, the strategies will reportedly only be available in taxable investment accounts to start — the emphasis is on “personalized” (i.e., customized to client preferences) over just “tax-efficient.”

The significance from the Schwab perspective is that the rise of direct indexing represents a much greater revenue opportunity than the current trend of ETF investing. ETFs are uniquely low revenue for platforms like Schwab, as there are no 12b-1 or sub-TA fees as exist for mutual funds, limited securities lending opportunities (as most ETFs do not present much opportunity for short-selling), and a limited number of trades on which payment for order flow can be earned. By contrast, when investors using the Schwab platform implement via direct indexing — and hold hundreds of individual stocks instead of a single ETF comprised of those stocks — Schwab has far more securities lending opportunities, far more trades on the table for PFOF, the opportunity to earn index licensing fees by having its own Schwab-designed indices be the ones that Personalized Indexing replicates and most substantively, the potential to charge a wrapper fee for implementing the direct indexing trades (and in practice, Schwab’s Personalized Indexing is indeed being filed as a separately managed account offering for which Schwab can/would ostensibly earn a management fee).

Accordingly, the rise of direct indexing not only represents a major threat to mutual funds and especially ETFs in general, it also represents an opportunity for brokerage platforms to recapture the revenue opportunities that come with investors who trade and hold individual stocks rather than using mutual funds and especially ETFs. So it’s no surprise that at its recent Schwab Impact conference, the company characterized Personalized Investing (a not-so-subtle nod to its own Personalized Indexing rollout coming soon) as a coming “freight train” and made the case that “’the idea that I’m going to take my money and simply turn it over to some fund or an ETF and just trust that that manager or maybe trust that that index is going to invest the way I want’ is no longer realistic.” Stated more simply: Schwab is planning to come like a freight train at mutual funds and ETFs with its new Personalized [Direct] Indexing solution.

Given this opportunity, Schwab has indicated that it expects to make direct indexing available both to investors directly and to advisers using its platform. But as with Schwab’s own Intelligent Portfolios robo-solution, it remains to be seen how willing RIAs who custody with Schwab will be to use a solution that’s also already available directly to investors using Schwab without an adviser. Schwab itself appears to be sensing the concern in advance and thus is emphasizing the personalization dynamic, emphasizing at its recent Impact conference that the RIA value proposition “has always been built on creating a personalized experience.”

The key point, though, is that when platforms as large as Schwab see direct indexing as the Next Big Thing — if only to bolster their own platform business as a more profitable alternative to ETFs — and are putting major resources toward making it available to investors and via advisers, the rise of direct indexing may be shifting from an emerging trend to a fait accompli.


Over the past decade, fractional share trading has become an increasingly popular way to bring stock trading to the next generation of (still young and small-dollar-amount) investors. Popularized by young-investor-focused stock trading apps like Robinhood and Stash, the ability to buy fractional shares makes it feasible to invest as little as a few dollars at a time into the stock market, as someone who doesn’t have enough to even buy a single whole share of stock can still become a shareholder.

Of course, the reality is that those with relatively small dollar amounts have long been able to invest fractionally by using mutual funds, which are divisible into small fractions of shares because they’re small slices of a large pooled investment fund, and trading is facilitated by the fact that mutual fund shares all trade once in the aggregate at the end of the day (which means that the fund itself can do however many whole-share sales are necessary to raise the cash to redeem each fractional-share investor).

However, fractional share trading in individual shares of stock or ETFs is more complex, because the trades aren’t naturally pooled together as they are with mutual funds. In fact, the early solutions to facilitate fractional share trading often did so by implementing it similar to mutual fund trading — where the platform would batch together fractional-share trades across multiple investors, either with limited-time trading windows in the day (or a single batch trade at the end of the day). By doing so, a large number of individual fractional shares would group together into a single (more manageable) fractional share transaction; for instance, 50 investors each trading 0.90 shares end up doing a single aggregated trade for 45.5 shares, which means 45 whole-share units and just one 0.5 share tail that the trading platform has to cover itself. Which means at a cost of one partial share that the firm has to round out, it can offer fractional trading for all of its investors.

The popularity of fractional share trading — and the growing market share of upstarts like Robinhood and Stash — has pushed even traditional online brokerage platforms in recent years to roll out their own fractional trading options, from Schwab’s Stock Slices to Fidelity’s Stocks By The Slice, as they all try to capture their share of next-generation investors.

The caveat, though, is that the traditional approach to fractional share trading can be more problematic for RIAs, as it doesn’t always result in the ideal price execution (due to the delays of trading into specified time windows for batching purposes). That’s especially challenging for firms that are facing both greater pressure to meet and beat their benchmarks (which can be undermined by less-than-ideal trading execution), and an outright fiduciary obligation to ensure they get best execution for their clients.

In this context, it’s notable that in September Fidelity announced that it’s now implementing a system allowing advisers to do real-time fractional share trading. RIAs will be able to implement fractional share purchases of stocks and ETFs down to the 3rd decimal place (i.e., 0.001 units of shares), and the trades will be implemented immediately (though they must be market or limit orders, and the orders are only good for — i.e., must be filled within — one day).

The opportunity to implement fractional share trading as a service unto itself probably won’t be of interest to most financial advisers, who tend to skew toward more affluent clients — “at least” the mass affluent with $100,000-plus of investible assets — who generally don’t have problems buying whole-share units. That makes fractional trading at best a workaround for a small number of unusually high-price stocks like Berkshire Hathaway Class A shares ($400,000-plus per share) or Amazon stock ($3,300-plus per share), and perhaps a nice convenience for some accommodation clients (e.g., children of existing clients) who have smaller accounts and also have trouble buying even popular ETFs in whole units with smaller dollar amounts like their annual IRA contribution (though advisers can and often do simply use more-divisible mutual funds in such instances).

However, Fidelity’s rollout of real-time fractional share trading is a big deal for the potential implementation of any kind of direct indexing strategy on the Fidelity platform, where clients might split “a few hundred thousand dollars” across hundreds of stocks, which can more readily cause individual holdings to not be easily divisible into whole-share units (e.g., a $300,000 account split across 500 stocks is only $600 per stock, which is problematic if the stock is trading for $160/share and the investor cannot easily buy 3.75 shares).

Which means at a minimum, real-time fractional trading will make it easier for Fidelity advisers to use third-party direct indexing SMAs on their platform, from Parametric to Aperio to newer offerings like OSAM’s Canvas or Ethic Investing (in which Fidelity itself has made a strategic investment). In fact, Fidelity itself noted in its fractional share trading release that “with our industry offering more personalization for investors, advisers have been looking for a way to more finely tune investor portfolios,” a rather direct nod toward the emerging direct indexing trend.

But the real question is whether Fidelity is simply trying to facilitate the rising demand for direct indexing on its platform — including through its own Ethic Investing partnership — or if the firm is eyeing its own proprietary direct indexing solution to compete with Schwab’s in the years to come as well.


In the early days (e.g., the 1980s and 1990s!) of independent advisers managing client portfolios, all trading — typically of a client’s mutual funds — occurred through the RIA custodian’s platform, and the performance of those mutual funds was evaluated through third-party research tools like Morningstar. As mutual funds became increasingly accessible to consumers directly, though, advisers shifted from just buying mutual funds to creating entire asset-allocated portfolios of funds, where the value proposition was built not just around the selection (and performance) of individual funds, but the performance of the portfolio as a whole. That meant advisers needed software to track the performance of their asset-allocated diversified portfolios.

To meet this need, early players like PortfolioCenter and Advent Axys filled the void, rounded out with a new wave of players that saw rapid growth in the 2000s, including Orion, Black Diamond and Tamarac. The common thread across them all was the ability to download security-level transaction data directly from the RIA custodians and use it to generate client-by-client account- or household-level reports of their portfolios, and how the adviser’s investment performance compared to the appropriate benchmark.

However, as independent advisory firms began to grow and scale — gaining significant momentum in the 2000s — and increasingly began to systematize their investment management process into a series of standardized model portfolios that were offered to all clients, it became increasingly necessary not just to trade client portfolios (e.g., research a new fund and then buy it through the RIA custodian’s platform), but to monitor client portfolios for potential rebalancing trades of existing holdings as well. That was a unique use case, because trading was simply a function of the adviser researching a new investment and then implementing it in client portfolios, while rebalancing required drawing in information about the client’s existing holdings and allocation, relative to some target, to determine when, whether and how much of a rebalancing trade needed to occur in the first place.

The end result was a rapid growth by the late 2000s in the availability of rebalancing software as a stand-alone tool, which would integrate into the performance reporting software to determine the required rebalancing trades and then formulate a trade file that could be uploaded to the RIA custodian to implement the necessary trades of all the different clients across all their different accounts. Those could then be implemented efficiently across all of the adviser’s clients by tying each portfolio to an associated target model so the rebalancing software could monitor for deviations that would necessitate a rebalancing trade.

Because rebalancing software (to monitor for, calculate and then queue up the trades) and performance reporting software (which centralized the underlying portfolio data to monitor) fit together so naturally, it’s not surprising that throughout the 2010s, there has been an increasing unification between the two, from Orion, Black Diamond and Tamarac all building and expanding upon their trading and rebalancing tools, to other platforms building their own offerings (e.g., Riskalyze Trading), and the independent rebalancing software tools increasingly gobbled up into larger platforms (e.g., TD Ameritrade acquiring iRebal, Oranj acquiring TradeWarrior, Invesco acquiring RedBlack and LPL acquiring Blaze Portfolio). In fact, the end result is that by now, there are virtually no remaining independent rebalancing software tools left, short of newer, not-yet-acquired upstarts like Rowboat Advisors and AdvisorPeak.

Now as of last month, AdvisorPeak is also off the market as high-net-worth performance reporter Addepar announced that it’s acquiring AdvisorPeak (for an undisclosed sum) after rapid adoption of a prior Addepar-AdvisorPeak integration first brought the two together.

Strategically, the deal makes a lot of sense, pairing together one of the few remaining rebalancing software platforms that wasn’t already acquired with one of the largest stand-alone performance reporting tools that didn’t have its own internal rebalancing/trading solution. This continues an ongoing trend of shrinking the rebalancing-only and performance-reporting-only categories of the Kitces AdviserTech Solutions Map and expanding the all-in-one category of solutions that bring both together. Meanwhile, AdvisorPeak gets an immediate opportunity for accelerated growth by offering up its rebalancing tools to Addepar’s sizable base of existing mega-RIAs and multifamily offices, while for Addepar, the acquisition of AdvisorPeak gives it a more holistic offering to compete down-market for the midsize RIA, where Addepar’s ability to track and report on more esoteric investment holdings is less compelling but holistic performance-reporting-plus-rebalancing on traditional investments is more commonly needed.

Notably, though, for the AdvisorPeak team — whose owners include the former founder of TradeWarrior rebalancing and the former chief product officer of RedBlack — the stated intention of consummating the acquisition by Addepar is not only the growth of AdvisorPeak, but innovation toward the next generation of adviser trading and model management tools, in a space where very few of the remaining systems are built by anyone who has as much history and experience inadvisory firms as AdvisorPeak does. That raises the question not only of how much AdvisorPeak (and Addepar) can grow with midsize-to-large RIAs from here, but also whether AdvisorPeak can leverage Addepar’s internal resources to build “what’s next” in adviser rebalancing software.


One of the most dominant themes in financial services over the past decade has been the rise of fintech in general (or AdviserTech in the case of the solutions available to financial services in particular), with the vision that a wave of increasingly automated technology tools will bring a massive wave of productivity enhancements (and the associated culling of jobs, particularly in the middle- and back-office portion of advisory firms).

Yet in practice, while there is at least some data to indicate incremental improvements in back-office efficiency from the past decade of adviser technology, it has at best been more of an evolution than a revolution. In part, this is simply due to the complexity of advisory firms and what we do for clients, and the fact that just one operational mistake can have both significant financial consequences for the firm, and a devastating effect on the adviser-client relationship in a business that necessitates high trust.

But the slower evolution of technology-driven efficiencies also reflects the fact that even when technology heavily automates tasks, someone must still set up, implement and manage the technology. And ironically, the use of increasingly specialized technology tools for automation actually requires even more specialized (and expensive, and hard-to-find) talent than when such tasks were done by brute force alone.

The end result is that even as Adviser Technology continues to improve, it is being matched by a concomitant rise of done-for-you style services providers, who provide the technology but get paid more to be the human service provider that runs the technology for the advisory firm. That is particularly conducive to virtual support and fractional employment models for such highly specialized but limited-time-and-scope roles.

In this context, it is notable that last month, White Glove — which started out as a firm that provided seminar marketing presentations and training for financial advisers, and has increasingly expanded into a growing range of done-for-you fractional CMO services — announced the acquisition of Gainfully, a digital marketing technology solution for everything from email marketing to social media management to “no-code” landing pages, which had a particular niche of working in financial services.

From the White Glove perspective, acquiring Gainfully gives it an internal proprietary technology tool that can improve its efficiencies in providing done-for-you outsourced marketing services for advisory firms, in addition to an opportunity to go down-market and offer a do-it-yourself technology solutions for advisory firms that want to leverage some of White Glove’s capabilities but don’t want to fully outsource services.

In addition, because Gainfully had built extensive capabilities to manage within enterprises — given its roots in working with asset managers and insurance companies as a solution for their wholesalers doing B2B marketing to advisers (which needs a similar level of centralized home office and compliance controls and oversight) — the enterprise capabilities of Gainfully should provide White Glove with a technology infrastructure it can scale as it tries to move further upmarket into midsize-to-large broker-dealers and insurance companies to do outsourced marketing for a larger swath of advisers. That not only opens a new market for White Glove — providing its seminar (and webinar) support capabilities to the wholesalers that already use Gainfully for other marketing capabilities — but also increasingly positions White Glove as a competitor to other adviser-enterprise outsourced marketing providers — most notably, FMG Suite. With the notable caveat that FMG Suite was originally built around website design, a capability that White Glove hasn’t fully developed (at least, not yet — stay tuned for a future White Glove acquisition in this direction soon?).

The key point, though, is that even as AdviserTech becomes more and more sophisticated and capable, it’s actually the service providers built on top of the technology — from White Glove acquiring Gainfully’s digital marketing tools, to FMG Suite acquiring Twenty Over Ten’s Lead Pilot for similar purposes, to RIA In A Box building its compliance services on top of (its own proprietary) ComplianceTech — that are showing the greatest growth opportunity. The bad news about this evolution is that tech-enabled services aren’t necessarily as profitable as pure technology alone. The good news, though, is that to the extent services still price significantly higher than technology alone, tech-enabled services for financial advisers are actually proving to be a significantly larger market opportunity to capture?


The ongoing evolution in technology that makes it increasingly feasible for consumers to manage their own investments (from robo-adviser-constructed passive asset-allocated portfolios to online brokerage platforms offering a growing array of trading tools), combined with the ongoing evolution of the financial adviser business model itself, is creating an emerging schism within the financial adviser community when it comes to their value proposition as it pertains to client portfolios.

At one end of the spectrum are the advisers who are becoming more and more focused on financial planning, making it the core value proposition that clients pay for, which often entails de-emphasizing their investment management services and adopting a more passive investment approach (as there’s nothing wrong with just delivering index returns if clients aren’t paying the adviser to add any value beyond that in the first place!). At the other end of the spectrum are advisers who are trying to eschew the commoditization of investment management by building increasingly personalized portfolios, with a heavy focus on emerging solutions like direct indexing as a way to differentiate, with a distinctly non-model approach to investment management.

Yet in practice, the overwhelming majority of financial advisers are still charging an assets under management fee and have portfolio management as at least a major pillar of their value proposition. That  means still researching investment opportunities and crafting portfolios for clients, scaling that offering by adopting a model-based approach to implement the firm’s best investment ideas, and then being able to track the results of and report on their investment performance, and in the ideal case, building out a bona fide track record of their investment management results that they can share with prospects (especially given the permitted advertising of investment performance as a part of the new RIA marketing rules issued last year from the SEC).

And when it comes to publishing a track record of investment management performance results for clients, the accepted old standard is the CFA Institute’s Global Investment Performance Standards framework, which has a series of rigorous requirements that must be adhered to in order to claim GIPS-compliant results. Most notably, GIPS has strict rules about what constitutes a “composite” — the aggregation of client portfolios that adhere to a similar investment model or strategy, which must be grouped together consistently when reporting results (to avoid firms cherry-picking clients with more favorable results and excluding the rest). And because GIPS compliance is effectively determined at the firm level — as again, all clients following a similar strategy across the firm must be included in the associated composite when calculating results — it’s only feasible to build and report on a GIPS-compliant track record by having centralized portfolio performance reporting tools capable of building the requisite GIPS composites, and reporting on those results using time-weighted returns (as the whole point of composite reporting is not what individual clients earned when dollar-weighted for their own contributions and distributions, but specifically what the model earned on a dollar-neutral time-weighted basis).

Accordingly, this month Panoramix — a portfolio performance reporting solution for independent RIAs — announced its latest Panoramix Pro offering, which includes the composite tracking capabilities necessary for firms to report GIPS-compliant results in their marketing. Notably, a GIPS-compliant reporting feature is not unique to Panoramix — a number of others, from Orion to BridgeFT to Tamarac, can support GIPS, along with third-party solutions like Norwood Consulting’s CompositeBuilder (which integrates with a wide range of performance reporting tools, including PortfolioCenter as well). Consistent with Panoramix’s positioning in the marketplace, though, the composite tools in its new Panoramix Pro are significantly less expensive than many competitors, priced at just $1,500 for the capability as an add-on to what is already one of the least expensive performance reporting tools available to RIAs.

In addition to its new GIPS composites capabilities, Panoramix Pro also includes a new trading and model rebalancing module as well, shifting Panoramix from just a performance reporting tool that would have to overlay a third-party trading solution (e.g., iRebal, AdvisorPeak, etc.), to a capability that is available within Panoramix. That’s included as part of the just $1,500 add-on cost for Panoramix Pro — significantly lower than what competitors charge for trading and rebalancing add-ons, and providing RIAs an entry point solution that includes performance reporting and trading/rebalancing all in one place for only $6,500/year.

In the segment of portfolio management tools, where there are now more than 50(!) competing solutions, it’s inevitable that not all of them can and will survive, especially as pricing pressure grows from RIAs that are focusing more and more on non-AUM value propositions (which will inevitably pressure the fees that at least some RIAs are willing to pay for performance reporting and trading tools). From this perspective, Panoramix, like Advyzon, continues to be well positioned for small-to-midsize RIAs that don’t need and don’t want to pay for more enterprise-level capabilities from the larger incumbents, but need the full breadth of core trading and performance reporting (and billing) capabilities it takes to manage client portfolios on a discretionary basis.


While financial advisers primarily work with retirees to ensure that their money lasts for the rest of their life, consumer studies repeatedly show that the No. 1 worry of retirees is not mismanaging their money in retirement but the risk of having catastrophically high medical expenses that derail their retirement.

The good news, though, is that in practice, Medicare provides a remarkable level of stability in out-of-pocket retiree medical expenses, with median out-of-pocket expenses for a 65-year-old $3,400/year for those who are healthy and just $7,600/year for those who have a high number of chronic conditions. And most of those expenses are simply the cost of Medicare coverage itself, including Medicare Part B and Part D premiums.

Beyond variability in cost due to health conditions, though, the reality is that a number of decisions regarding Medicare itself can further impact the cost in retirement, including choosing a Part D prescription drug plan that most effectively aligns with the retiree’s actual prescriptions, enrolling in one of several standardized Medigap supplemental policies (which further increases the premium cost, but subsequently further reduces the variability of health care expenses in retirement by minimizing or fully eliminating most co-pays and deductibles), and evaluating whether it may be more appropriate to enroll in a Medicare Advantage plan based on the retiree’s health care needs and geographic location (which in some areas, entails a significantly lower premium cost than traditional Medicare Part B premiums).

The caveat, though, is that most financial advisers are not licensed to sell Medigap supplemental policies and lack experience in analyzing a retiree’s prescription drugs to identify the optimal Medicare Part D plan.

That makes it all the more notable that last month, Envestnet announced a partnership with Healthpilot to provide a solution for advisers who want to help clients make good Medicare enrollment decisions but don’t actually want to get too deeply involved in the actual enrollment process and potentially sticky medical trade-offs, with an offering that, not coincidentally, was rolled out just as the 2021 Medicare open enrollment season began (on Oct. 15, running through Dec. 7).

At its core, the Healthpilot platform is built to take in detailed health information from the adviser’s client, formulate recommendations regarding Medicare Advantage versus traditional Medicare, Part D prescription drug plans and Medigap supplemental policies to help the retiree make a selection, and then facilitate the actual Medicare enrollment process for the retiree. Through the Envestnet partnership, that will then automatically import estimates of the retiree’s out-of-pocket health care expenses in retirement (based on their Medicare choices) directly into their MoneyGuide financial plan as a retiree health care goal.

From the adviser perspective, the appeal of the Envestnet-Healthpilot partnership is that advisers can send co-branded invitations to their retiree clients as they approach Medicare enrollment to go directly to the Healthpilot portal to enter their health information, select a plan and complete the enrollment process. That allows advisers to show a value-add and differentiation in their ability to support clients through the Medicare decision-making and enrollment process, without necessarily going deeper than they want in an area that, for most advisers, isn’t a core expertise. (The whole point of Healthpilot is that its “decision-support algorithms” help guide retirees to a final decision without advisers needing to give their own advice on Medicare policy choices.)

The caveat, of course, is that if the Envestnet-Healthpilot partnership is widely adopted, advisory firms will struggle to differentiate with the value-add of helping clients through the Medicare enrollment process, when so many other firms are offering the same solution through the same partnership — a reminder that in the end, differentiation tends to come from the expertise within the advisory firm, not its third-party technology solutions or service-provider partnerships.

Nonetheless, as more and more advisory firms feel the pressure to show more value beyond just managing a retiree’s portfolio, being able to address the No. 1 most common concern of retirees by helping them make the right decision when it comes time for Medicare enrollment is an appealing value-add — especially since in the end, the solution has no cost to the adviser or the client. (Healthpilot is ultimately compensated by the commissions it earns through the purchase of the underlying insurance policies, but standardized Medicare pricing means that the retiree would have had the exact same cost either way, as there is no separate category of no-load Medigap policies.)


For most of its history, the best adviser technology belonged to the firms that were the largest and had the most advisers, the biggest tech budgets to invest and the largest number of advisers over whom they could amortize their costs. Technology for independent advisers was small, lightweight, undercapitalized and underdeveloped, and largely siloed and unable to connect with any other (desktop) applications.

It wasn’t until the internet came along — with the rise of cloud-based software and APIs to connect them — that suddenly an independent software company could compete with a large financial services enterprise. The ability to connect together independent software tools suddenly meant independent advisers could choose their own best-of-breed solutions in each category and leverage available APIs to integrate them together. And the technology companies blossomed — to the point that the largest independent AdviserTech tools today have far more users than even the largest enterprises.

The caveat, though, is that patching together independent best-of-breed solutions still leaves a patchwork of systems. That immediately becomes noticeable when the questions start to arise about which system will be the primary “source of truth” for data, and how to ensure that key data is mirrored appropriately across all the platforms. In the ideal world, a single system would exist to bring all of these together. In practice, the question for the single unified system has been so impossible to find for decades that it’s been dubbed the unfindable Holy Grail of adviser technology.

Arguably, the closest solution in practice has been the rise of Salesforce, which has such a depth of integration capabilities that if firms build their own data warehouses, Salesforce can pull in the data, trigger workflows off the data and integrate to a wide range of other systems (and a growing AppExchange of even more) to leverage that data. The caveat is that Salesforce is so complex to implement that it has spawned its own category of Salesforce Overlay providers, including Skience, XLR8, Practifi and more. And eventually Salesforce launched its own Financial Services Cloud to be a more readily usable out-of-the-box for adviser enterprises. Though in practice, Salesforce is still the software solution that most advisers end up buying and then ditching because they can’t figure out how to leverage its (complex) value proposition.

The biggest caveat, though, is simply that Salesforce is still just a CRM system. It’s leading the effort for the centralization of client data, and functions as the common dashboard and interface — which has made it overwhelmingly the CRM of choice for the largest advisory firms. But the firm still needs chat systems for its employees and file storage systems for client files, and it leaves employees still pushing and pulling data in and out of Word documents and Excel spreadsheets.

That makes it all the more notable that last month, Microsoft announced the launch of its own Financial Services Cloud (live as of Nov. 1). Unlike Salesforce’s Financial Services Cloud, though, Microsoft’s will include not only its Dynamics CRM system (as a Salesforce competitor), but also brings together its Azure cloud computing services to house a firm’s servers and data, Microsoft 365 for not only productivity apps (e.g., Word, Excel, and PowerPoint) but also Teams for communication and OneDrive for file storage, and Microsoft Power Platform for business intelligence reporting. All of that gives Microsoft’s Financial Services Cloud the potential to not just unify data through a CRM, but to host the underlying data warehouse for the advisory firm and then implement a unified system of client data and documents in a centralized ecosystem.

In other words, imagine opening up the client’s CRM record, clicking from that to view a Word document with a recent meeting agenda, which itself has charts embedded from Excel, whose values were calculated from the client’s financial data housed on an Azure server, and discussing that upcoming meeting agenda with the rest of the team in Microsoft Teams, and then capturing the final notes about the meeting, which are recorded directly back into the Dynamics CRM, and populate the firm’s business reporting dashboard, which tracks the number of client meetings and the status of meeting prep. That arguably is the closest we’ve seen yet to a Holy Grail unified solution for advisers.

Unfortunately, though, as Salesforce has demonstrated with its own (more limited) Financial Services Cloud, this level of multisystem deployment is very complex, to the point that only the very largest enterprises would likely have the depth of internal technologists to even be able to implement it. And in practice, Microsoft’s own launch of Financial Services Cloud highlights a number of large enterprise banking relationships as its launch partner — which is a long, long way away from the typical independent advisory firm. Nor has Microsoft yet built and attracted the layer of middleware builders and consultants that exist in the Salesforce ecosystem (e.g., the XLR8s of the world) to provide more out-of-the-box solutions for small-to-midsize firms.

So in the end, while the launch of Microsoft Financial Services Cloud is significant, in practice it won’t likely be useful anytime soon for any but the very largest of financial adviser enterprises (e.g., large broker-dealers and perhaps a handful of mega-RIAs). Nonetheless, when the reality is that an overwhelming percentage of all advisory firms still live within the Microsoft ecosystem of Word, Excel, PowerPoint and Outlook, and more recently Teams as well, if Microsoft can figure out how to develop (or partner with others to provide) a more feasible out-of-the-box solution that works for small-to-midsize independent advisory firms, it arguably is very well positioned to compete in the adviser CRM (and broader adviser-unified-data) marketplace?


In 2006, the category of personal financial management software went digital with the birth of Up until that point, maintaining one’s personal finances was relegated to largely desktop software (e.g., Quicken at the time), powered by a manual data entry process of entering account balances and personal expenses. But used the power of the internet to revolutionize PFM’s usability by automatically pulling in account balances and spending information directly from financial institutions, in what we now know as account aggregation.

In the years that followed, there was both a rapid rise in providers competing to be the “pipes” that powered account aggregation (from Quovo to Yodlee to CashEdge to ByAllAccounts), and growth in new PFM tools to display that data back to consumers in useful ways that would let them better manage their household finances.

Notably, PFM solutions (and the account aggregation that powered them) quickly became popular among financial advisers as well, as even though there were relatively few good PFM solutions built specifically for advisers, account aggregation was increasingly applied within both financial planning software (e.g., eMoney Advisor’s popular dashboard, and later MoneyGuide and RightCapital as well) and also within performance reporting tools (as a way to track and report on, and even bill on, held-away accounts under advisement). That also made it possible for advisory firms to get a better understanding of their own client base (and the advisers who were serving them), gaining perspective on everything from how many clients are still accumulating versus decumulating, the amount of held-away assets that might be a future business opportunity, and which advisers are most effective at capturing the entire client relationship.

The caveat to it all, though, was that the client portals and business dashboards were only as good as the data that was fueling them. That in practice has long been very messy, as a result of the lack of data standards across the financial services industry (at least when it comes to financial accounts, their balances, and their transactions). In practice, it often became an expectation of the platforms that were displaying the data — the PFM portals and business intelligence tools leveraging account aggregation — to clean and scrub the data themselves, so that it would display properly.

So it’s not surprising to see that Wealth Access, which was one of the early players in providing PFM tools that advisers could use with their clients, is now pivoting further into the domain of data unification and enrichment, taking the skill it developed in pulling in data from various sources and cleaning it for display in Wealth Access, and turning that into a service unto itself.

Notably, Wealth Access isn’t the only platform that recently launched an effort to help advisory firms better unify and standardize their data, from MileMarker’s launch of an “integration as a service” offering to help firms bring together their data and make it more actionable to Skience’s Data Consolidation module that helps firms draw in data from multiple sources to leverage within Salesforce.

Wealth Access’ solution is somewhat unique, though, in that building on its roots as a PFM and adviser dashboard solution, it is not necessarily trying to replace an enterprise’s other source-of-truth data repositories, but instead is expanding on its ability to clean and massage that data to put it into more usable form as an overlay — and then perhaps also porting some of that cleaned data back to the enterprise’s source for future use as well.

Across large enterprises with multiple divisions (e.g., the siloed retail and business sections of a large bank), this can provide a cross-enterprise look at a client’s consolidated household that most banks simply couldn’t glean before, as each division had its own data systems and standards. Though the solution also clearly has potential applications for individual advisory firms as well, particularly when trying to standardize data about held-away accounts that are outside the traditional broker-dealer and custodial platforms (where for better or worse, existing performance reporting tools tend to already do the scrubbing and cleaning). That in turn opens the door to better advice monitoring at the household level — for instance, spotting clients who are saving in an outside brokerage account but not maxing out their IRAs and 401(k) plans, or who have mortgages that could be refinanced at current rates.

As with many data systems solutions, though, the challenge for independent advisory firms looking for help is that when every firm has different key systems and different needs — and not much budget or dedicated tech staff themselves to handle a complex deployment — it will be difficult to find solutions until providers create more out-of-the-box capabilities that don’t duplicate the already-expanding breadth of capabilities coming from both portfolio management systems and CRM systems.

Or alternatively, the reality may simply be that most independent advisers will tend to standardize their data through those CRM and portfolio management platforms — which drive their most common workflows and data needs anyway — while companies like Wealth Access and Milemarker end up focused on larger enterprises that have the deeper resources to reinvest into more custom applications and uses of their client and firm data.


The explosive rise of Bitcoin and other cryptocurrencies in recent years, and the associated wealth that has been created as some have risen 1,000% or more in just a few years, has perhaps not surprisingly led to a rapid rise of interest in investing in cryptocurrencies. Given the limited supply of Bitcoin and other cryptocurrencies, that’s led to a large number of dollars chasing a fixed quantity of supply, further boosting the prices and feeding further on the frenzy.

The caveat, of course, is that “what goes up can come down, too,” and the incredible upside of Bitcoin and other cryptocurrencies has been accompanied by dizzying declines as well, with pullbacks of 50% to 70% or more, sometimes in no more than a few months or even a few weeks.

The end result is that in practice, most financial advisers have been very wary about making any recommendations to clients about investing in cryptocurrencies. After all, lawsuits and arbitration claims against advisers typically rise every time a mere 20%-plus bear market occurs, in some cases because advisers took more risk for clients than they were willing to tolerate (and thus want the adviser to make good when losses occur), and in other cases because the adviser really made the right recommendation but clients who take the risk and have it not work out are often still looking for someone to blame. If traditional equities with 20% to 40% market declines are so risky that advisers must be very careful in how much exposure their clients have in their portfolios, then cryptocurrencies can be outright terrifying.

Of course, the reality is that even if advisers wanted to invest their clients into Bitcoin or other cryptocurrencies, it’s been nearly impossible to do so. The structure of how cryptocurrencies are held, in digital wallets, and the attendant cybersecurity issues that entails, has meant that at best most advisers didn’t have a scalable solution to systematically invest and trade clients into cryptocurrencies — and at worst, advisers faced the risk that clients didn’t implement their wallets properly and had their cryptoassets stolen (again putting the adviser at risk for having recommended they make the investment in the first place).

But where there’s demand — at least from a subset of consumers who are enamored of the upside opportunity of cryptocurrencies and the media stories of explosive wealth creation — the market provides an answer. In September, MassMutual’s Flourish subsidiary announced the launch of Flourish Crypto, a platform that will allow advisers to serve as a discretionary manager and trade their clients’ direct cryptocurrency holdings (which are held with Paxos Trust Co. as the crypto custodian for safekeeping of client assets), with integrations to Orion and Tamarac (and eMoney) for advisers who want to pull in the client’s cryptocurrency holdings to track balances and report on performance results, as well as pulling in the values to allow advisers who are managing their clients’ cryptocurrency holdings to bill on the holdings. (Though notably, there is still much debate about how best to calculate an AUM fee on an investment that can change by 5% to 10%-plus in just a few days, with some suggesting daily-average or even per-second-average balance billing may be coming soon!)

Yet the reality is that this month also witnessed the launch of the first (and second, and soon many more) Bitcoin ETFs, providing advisers with a number of different ways to invest their clients in cryptocurrencies if they so wish. Technically, though, the currently available Bitcoin ETFs don’t hold Bitcoin directly — instead, they trade in Bitcoin futures contracts that could potentially deviate from the returns of the cryptocurrency itself. Though if cryptocurrencies really continue their dramatic rise, futures-based ETFs would still be expected to provide the bulk of those returns. Not to mention that ETF solutions have the added appeal of already fitting within an adviser’s existing trading platform and systems (like any other ETF), obviating the need for a specialized crypto custodian to hold and facilitate trading of off-platform assets for clients in the first place.

That means the launch of Flourish Crypto raises the question both of whether advisers will want to invest in cryptocurrencies at all — given the ongoing debate about whether cryptocurrencies even represent a long-term investment opportunity, not to mention the sheer volatility and its attendant risks (if an asset is so volatile it’s hard to even calculate an AUM fee on it, how comfortable will advisers be to hold and trade it for a client as a fiduciary!?) — and also whether there will be any advisers who want to go so far as to try to directly trade Bitcoin and other cryptocurrencies versus just taking on a small slice of exposure in a client’s portfolio via an ETF to give them at least some participation if Bitcoin continues its rise? At this point, the jury is still out on both, though Flourish Crypto faces a significant uphill battle given how slow adviser adoption of cryptocurrency investing has been thus far.


One of the most significant challenges for AdviserTech firms — or really, any technology — as it grows is the accumulation of “code debt.” In essence, code debt represents the ever-growing cost that technology firms face as the new layers of features and capabilities that they build increasingly necessitate rewriting some of their original code to make it more efficient — except that the more capable (and complex) the software becomes, the more expensive it is to do so. In some cases, the reality is that a new feature needs to be shipped with shortcuts that make it more expedient to build and launch, even though doing so virtually guarantees incurring additional code debt for when the new feature needs to be refined in the future.

In practice, all technology companies incur some level of code debt, and similar to the prudent use of other types of (financial) debt by entrepreneurs, it can actually enhance the growth and long-term success of the company. In practice, always keeping code debt at zero can actually be limiting to growth — because it’s much more time-consuming in the first place and can prevent the company from even getting off the ground (or alternatively being outpaced by competitors who are willing to incur more code debt to iterate faster). And in the ideal world, just as inflation tends to lift wages over time — literally making it easier to repay today’s debt with inflation-boosted future dollars — so too it’s often easier to repay code debt in the future with the additional software developers that a growing technology company can hire as it grows.

Except, unfortunately, not all companies get around to repaying much (or any) of their code debt, which over time, like other types of debt, accumulates interest that can make it exponentially harder to repay if it is allowed to compound for too long. That’s why in the long run, even the best software companies often eventually fall behind newer upstart competitors, because if too much code debt accumulates without repayment, by the time it becomes necessary to do so, it is no longer feasible to do, and the slowness that results (from slow software performance to the slower rollout of new features) just accelerates the company’s demise to its next generation of competitors. 

So it’s especially notable that at its latest Fearless Investing Summit, Riskalyze announced that it has completed a major rewrite and overhaul of the calculation engine underlying its Portfolios tool, effectively paying down a significant chunk of its naturally accumulated code debt from its recent years of growth. As shown directly from its stage in a side-by-side live demonstration, the new ‘P7’ version of the Riskalyze engine loaded out a complex portfolio (with hundreds of positions) almost instantaneously, as compared to nearly 30 seconds for Riskalyze’s prior P6 edition. (Especially admirable for Riskalyze, as you have to really believe in your product to be willing to do such a demonstration live for users!)

Arguably it shouldn’t really be news that a major AdviserTech software company announced that it made some investments to refine its underlying software for significant speed improvements — except that in reality, it’s quite rare among AdviserTech vendors that serve financial advisers, where it’s far more common to just keep building the next feature and the next feature and the next in an effort to expand market share and top-line revenue to boost (short-term) enterprise value for the next acquirer or PE investor, rather than do the less newsworthy work of overhauling the existing software for existing users to make their (long-term) experience better.

All of which can be interpreted as a very positive signal from Riskalyze that the company and its leadership are really in it for the long run, with a willingness to do what it takes in paying down code debt to stay more nimble and competitive and reinvest into the satisfaction of their existing adviser users.

In the meantime, we’ve updated the latest version of our Financial AdviserTech Solutions Map with several new companies, including highlights of the “Category Newcomers” in each area to highlight new FinTech innovation!


So what do you think? Will Schwab be able to gain traction with its new Personalized Indexing solution within the adviser community? Will Fidelity be forced to match with its own direct indexing tools for RIAs? Can Panoramix compete in a crowded portfolio management marketplace? And will advisers actually want to trade direct-held cryptoassets for their clients if Flourish Crypto makes it possible?

Michael Kitces is the head of planning strategy at Buckingham Strategic Partners, co-founder of the XY Planning Network, AdvicePay and fpPathfinder, and publisher of the continuing education blog for financial planners, Nerd’sEye View. You can follow him on Twitter at @MichaelKitces.

The post The latest in financial #AdviserTech — November 2021 appeared first on InvestmentNews.

Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.

Andrew Vincent
Andrew is half-human, half-gamer. He's also a science fiction author writing for BleeBot.
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