In this edition of the Wealthtech Roundup, we speak with our newest Wealthtech Leader of the Month, Andrew Altfest, CEO of FP Alpha, who discusses how financial advisors can enhance their estate planning capabilities with technology.
Other entries include Envestnet stockholders agreeing to Bain Capital’s buyout plan, Addepar launching trading and dashboard tools for advisors, Smarsh introducing Intelligent Agent and enhancing its AWS partnership, Pontera partnering with 401GO on retirement plans, Manulife advisors gaining access to Conquest Planning’s solutions, BetaNXT launching the real-time and open architecture DataXChange platform, Asset-Map giving LPL advisors discounted access to its tools, Flourish Cash integrating with eMoney’s Decision Center, and Morgan Stanley choosing 25 companies globally for its 2024 Inclusive Ventures Lab.
Larry’s Take
This week’s wirehouse entry about Morgan Stanley’s Inclusive Ventures Lab, and our recent coverage of the Cerity Partners merger with Touchdown Ventures, both demonstrate the value of investing in startups and early stage companies. Nowadays, the vast majority of promising VC candidates are technology-based.
Yet financial advisors and wealth management firms may hesitate to pursue the founders of such businesses as prospects, unless those founders already have significant assets not already committed to their venture. Wealthy founders with ample free cash are a relatively small pool of the overall venture capital market.
On the one hand, that is understandable, since untested businesses are risky endeavors and advisors need a reliable client base. On the other hand, technology-focused entrepreneurs often are well connected regardless of their asset level, due to the need for product integrations and the technical knowhow of other experts.
That’s why advisors and their firms might want to give more consideration to the VC space. Even if these founders might not currently make for the ideal client segment, when they receive quality financial guidance they are likely to refer prospects who would make great clients. And maybe someday one of those entrepreneurs will turn their tech startup into a winner.
If you would like to discuss this Larry’s Take further, including how these trends might impact your business, please contact me at larry.roth@rlrstrategicpartners.com.
1. FP Alpha CEO Discusses How Advisors Can Enhance Estate Planning With Tech
FP Alpha enhanced the Estate Lab offering of its Estate Planning Module. The Estate Lab enables advisors to visualize potential changes and quantify estate tax implications. Upgrades include the new the Asset Projection functionality, and the Automation for Joint Cases integrating into the Estate Snapshot Feature.
The firm is a provider of artificial intelligence-assisted planning solutions that helps financial advisors identify actionable recommendations to clients. Its other features include tax planning, insurance planning and automated prospecting software. And now for our Q&A with Andrew Altfest, CEO of FP Alpha.
WSR: How do the newest enhancements to FP Alpha’s Estate Lab add value for financial advisors and their clients?
Altfest: The Asset Projection feature enables advisors to input custom growth rates for each asset, allowing for detailed future balance projections. This is valuable with the upcoming changes to the Tax Cuts and Jobs Act, giving clients insights into potential future estate tax liabilities. This empowers advisors to make well-informed, forward-looking estate planning recommendations to their clients.
Our AI reading technology took a huge step forward and now reads joint cases. FP Alpha reads the documents, produces a highly visual summary, and provides tailored recommendations advisors can bring to their client. It’s an absolute game changer.
WSR: In general, what types of technology should advisors adopt to improve their estate planning capabilities?
Altfest: Advisors should adopt technology that addresses the complexities of estate planning.
Document Automation & Analysis: Technology that automates reading documents significantly reduces this burden. These tools leverage AI to analyze documents, identify key details and provide actionable insights.
Client Education: Advisors need to educate clients on their existing estate plans and options to consider with their estate attorney. Technology that simplifies this process, offering visuals and explanations tailored to each client’s situation, enhances client engagement and understanding.
Personalized Insight: Technology that can generate personalized recommendations based on individual circumstances, such as tax implications, is essential for delivering mass-personalized insights.
WSR: How can advisors most efficiently evaluate and select the best technology platforms for their specific needs?
Altfest: Prioritize AI-Driven Insights: The most valuable platforms are those that automate data analysis and turn that data into actionable insights.
Evaluate Future Vision: Select platforms that have a modern vision for incorporating AI to further enhance efficiency, client engagement and decision-making.
Integrations: Choose platforms that integrate seamlessly with the existing tech stack.
Scalability and Customization: Select platforms that can scale with the growth of the business and adapt to specific client needs.
User Experience and Support: Technologies that are intuitive and supported by robust training and customer service ensure long-term success and adoption.
2. Envestnet Stockholders Agree To Bain Capital Buyout
Stockholders of Envestnet, a provider of data intelligence and wealth management software, approved the pending acquisition of the company by affiliates of vehicles managed or advised by Bain Capital. Over 99% of the votes represented at a special meeting supported the merger, which Envestnet expects to complete in the fourth quarter.
Envestnet has over $6.2 trillion in platform assets, and serves more than 110,000 advisors, 17 of the 20 largest U.S. banks, 48 of the 50 largest wealth management and brokerage firms, and more than 500 of the largest RIAs. Bain Capital is a private multi-asset alternative investment firm with approximately $185 billion in assets under management (AUM).
WSR reported in July that Envestnet agreed to go private in the acquisition at a valuation of $4.5 billion, with Reverence Capital Partners also participating and BlackRock, Fidelity Investments, Franklin Templeton, and State Street Global Advisors set to become minority holders. The transaction was set to pay shareholders $63.15 for each share of common stock.
3. Addepar Launches New Trading And Dashboard Tools For Advisors
Addepar, a technology and data platform for investment professionals, launched several tools aimed at streamlining advisor workflows and deepening insights for clients. The company has more than 1,000 client firms managing over $6 trillion in assets across 45 countries, and makes $100 million in annual investments to research and development.
Addepar Trading offers model construction, client portfolio rebalancing, customized interactive worksheets and pre-trade compliance checks, as well as an Investment Book of Record for data accuracy and processing. Addepar Dashboards lets advisors create and customize dashboards with drag-and-drop elements, resizable widgets, refreshable scheduling and the ability to integrate data from across the Addepar platform.
“Addepar Trading and Dashboards, alongside our Analysis, Reporting, Client Portal and Billing products, come together to create a comprehensive offering for RIAs,” said Don Nilsson, Chief Product Officer at Addepar. “Together, these enhancements establish a new standard for ease of use and bring a more elevated approach to investment data management for the hundreds of thousands of wealth management professionals using our platform globally.”
4. Smarsh Introduces Intelligent Agent, Strengthens AWS Partnership
Smarsh will broaden its digital communications oversight offering to introduce the AI-powered Intelligent Agent. It will use advanced large language models (LLMs) to streamline the review, escalation and disposition of alerts generated in the Smarsh Enterprise Conduct Surveillance solution. Intelligent Agent will be available as an add-on starting in 2025.
In addition, Smarsh and Amazon Web Services (AWS) strengthened their existing partnership by signing a five-year agreement to bring generative AI offerings to the financial services industry. Smarsh will explore opportunities with Amazon SageMaker’s machine learning services, as well as with the generative AI services of Amazon Bedrock and Amazon Q.
“As the steward of the world’s largest financial services communications data, Smarsh is uniquely positioned to develop Generative AI through its cleaned, structured and queryable data hosted on AWS,” said Tom Padgett, President, Enterprise Business at Smarsh. “These industry-leading, AI-enabled innovations will make it possible for firms to rapidly surface business intelligence signals and improve the effectiveness and efficiency of their compliance operations.”
5. Pontera, 401GO Partnership Lets Advisors Charge Retirement Plan Clients Directly
Pontera, a fintech company that helps retirement savers receive professional 401(k) account management from their financial advisors, partnered with 401GO, a tech-focused recordkeeper that serves retirement plan sponsors, plan participants and advisors.
The integration allows advisors to directly debit clients for their services, from the client’s retirement plan accounts. Pontera anticipates that advisors using the 401GO recordkeeper integration will have the potential to serve more households as they manage assets in workplace accounts, while increasing operational efficiency for advisors who oversee clients’ 401(k) assets.
“Enabling personalized 401(k) account management through Pontera provides plan participants more choice in how they receive in-plan help, complementing target-date funds, managed accounts and other solutions,” said Jerry Bonnabeau, Head of Defined Contribution Partnerships at Pontera. “Our secure platform helps clients with more complex financial management needs receive a higher, more comprehensive level of service from their trusted advisor and optimize the growth of their retirement savings.”
6. Manulife Gives Its Canadian Advisors Access To Conquest’s Planning Tools
Manulife Wealth gave its network of more than 1,000 advisors access to Conquest Planning’s strategic advice manager (SAM) and financial planning technology. The two Canada-based companies aim for the partnership to help advisors streamline workflows, boost productivity and enhance client service.
Conquest’s SAM can help advisors create customizable financial plans that can be adapted for clients’ changing life circumstances, objectives, priorities and risk tolerances. Advisors with Manulife Wealth can provide planning services including goal setting, net worth and cash flow planning, investment management, retirement planning, tax planning, insurance, estate planning and philanthropy.
“We’ve designed Conquest to amplify the users ability [sic] to suggest potential financial decisions across all planning areas, and for clients in all stages of life,” said Mark Evans, CEO of Conquest. “By providing Manulife Wealth advisors with a solution to stress test plans and discover strategies that address client concerns, we’re confident the firm is in a strong position to deliver best in class client and advisor experiences.”
7. BetaNXT Launches Real-Time, Open Architecture DataXChange Platform
BetaNXT, which provides back-office wealth management infrastructure technology, launched the DataXChange platform operating on Snowflake’s AI Data Cloud. It is designed to simplify the exchange and commingling of internal and external data among wealth enterprises and their partners, in a secure environment for real-time and multi-partner collaboration.
DataXChange is a data-agnostic and partner-agnostic open-architecture platform. Customers also no longer will need to wait for batch delivery or overnight reports of client data. The outcome of the pilot program, with a select group of wealth management firms, will inform future use cases and solutions. BetaNXT plans to onboard clients by the second quarter of 2025.
“Across the wealth management space, many of our clients are grappling with data management challenges, which are often tied to other goals of moving to the cloud, integrating new partners or deploying AI,” said Robert Santella, CEO of BetaNXT. “That’s why we’re focusing squarely on data, because once we solve the root problem, everything else becomes easier and happens faster.”
8. Asset-Map Gives LPL Advisors Discounted Access To Its Products
Asset-Map, a provider of financial planning tools for financial professionals, partnered with LPL Financial to give LPL-affiliated advisors discounted access to Asset-Map’s products. LPL serves more than 23,000 advisors.
These include Asset-Map Reports, which displays a household’s entire financial picture; Stencils, which lets advisors overlay peer data on a client’s Asset-Map Report; Signals, which shows a household’s ability to endure financial disruption events and flags potential vulnerabilities; and Target-Maps, which helps advisors and their clients have goals-based financial conversations.
“Since our founding, we have endeavored to provide advisors with the tools to explore their financial well-being through a more authentic and trusting conversation, and we’re thrilled that LPL Financial shares that vision,” said H. Adam Holt, CEO and Founder of Asset-Map. “We hope that this relationship will further empower LPL Financial’s advisors to provide their clients with unparalleled advice experiences, and we’re excited to work with the community to reach that end.”
9. Flourish Cash Integrates With eMoney’s Decision Center
Flourish expanded integration between Flourish Cash, its cash management offering, and eMoney Advisor, to incorporate Flourish Cash into Decision Center, eMoney’s interactive collaborative planning tool.
Advisors who use eMoney and choose to access the new integration can view and model clients’ held away cash, as well as show projections on the impact over time of moving cash from low-yielding accounts to competitive rate accounts at Flourish. Advisors also can fill and send Flourish Cash invitations from eMoney. Flourish serves more than 850 RIAs managing over $1.5 trillion in combined assets.
“Incorporating Flourish Cash into eMoney’s Decision Center allows advisors to highlight the importance of optimizing cash reserves and the impact of extra yield on a client’s long term financial plan,” said Max Lane, CEO of Flourish. “Embedding key functionality, like our invite feature within existing platforms, saves advisors valuable time and will be an ongoing trend in the years ahead.”
Wirehouse Activity
10. Morgan Stanley Chooses 25 Companies For Its 2024 Inclusive Ventures Lab
Morgan Stanley chose the 2024 global cohort of its Inclusive Ventures Lab, which consists of 25 companies from the Americas and Europe, the Middle East and Africa (EMEA). During the next five months, the companies will participate in an accelerator program that aims to advance technology and technology-powered startups in the seed to Series A funding round stages.
The companies – which represent industries including Climate Tech, Retail, Healthcare, FinTech, SaaS, Enterprise Software, Consumer and Travel – will receive a $250,000 investment from Morgan Stanley, as well as mentorship opportunities, an entrepreneurship curriculum and business-growth resources from internal and external Morgan Stanley partners.
“In today’s challenging venture capital environment, we are proud to welcome our largest cohort of groundbreaking startups to the Inclusive Ventures Lab and are eager to support them as they scale their innovations and work to build a better world,” said Selma Bueno, Global Head of the Morgan Stanley Inclusive Ventures Group. “Each year since the Inclusive Ventures Lab’s launch in 2017, we have expanded our efforts to ensure that more entrepreneurs around the world can succeed – and this year is no different.”
Chris Latham, Managing Editor at Wealth Solutions Report, can be reached at clatham@wealthsolutionsreport.com.
