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Fintech Report Card: August 2016

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

Welcome to the August edition of the Riskalyze Fintech Review, where Riskalyze CEO Aaron Klein casts his vote on the biggest news in advisor technology over the last month. If you’re an advisor and you don’t read this piece, your Risk Number could be in the triple digits!

Industry Leaders Mobilize on Cybersecurity Standards.

What happened: Executives from firms like United Planners, Orion and others are forming a coalition of sorts to attempt to create higher standards of security among financial advisory tech vendors. They are looking to create new high-security protocols for sharing data between software applications, from CRM to risk alignment tools to portfolio management platforms to financial planning programs. These conversations follow the SEC’s recommendation that advisors create their own cybersecurity plans.

Why it matters: Cybersecurity is a major concern because of the sensitive information held by financial institutions. Hopefully with this coalition’s contributions, advisors won’t have to resort to the equivalent of using their own private email server for privileged communications. It’s great to see leaders like Aaron Spradlin from United Planners and Joel Bruckenstein from T3 being proactive on this much needed front. (Bonus tip for advisors: It still won’t work if your password is “password.”)

Salesforce Announces DOL Compliance Solutions.

What happened:Salesforce Shield” is a set of compliance-friendly features for the popular CRM that previously had been available for purchase, but now the package is being sold as a Dept. of Labor fiduciary rule solution for financial advisors. Data encryption and audit trail features can be purchased one by one, or as a package.

Why it matters: We know that tech solutions like these are starting to pop up in anticipation of the DOL’s rule, and that’s a good thing. We remain skeptical that advisors are going to buy them feature by feature, though. Salesforce is still behind the curve on chasing the advisor market, and it seems like bundling this functionality into their core product might have helped.

Cetera Making Moves on Platform, DOL and Digital Advice.

What happened: As Cetera bounces back from its reorganization, there’s a lot changing with the firm. From the unexpected Larry Roth-to-Robert Moore CEO switch, to the addition of dynamic board members, to the new appointment of LeAnn Rummel as “digital advice czar” at its Financial Institutions subsidiary, word on the street is that Cetera will be rolling out big changes to its advisory platform, including DOL solutions and digital advice.

Why it matters: Cetera hasn’t been known for a unified approach to technology, but the latest moves signal a firm trying to take advantage of their scale while still maintaining a multi-brand strategy. One thing is certain: Cetera is gearing up for some big changes, and the net effect will be to send the industry a message: we are back.

Trust Company of America Released Enhancements to Their Money Manager X-Change Platform.

What happened: Trust Company of America (TCA) launched the newest version of its Money Manager X-Change (MMX) Program, an open-architecture service that enables RIAs to mix and match a variety of third-party money managers and strategies as they see fit. The new MMX platform offers access to a wider variety of strategic and tactical investment options, including holistic asset allocation and niche strategies.

Why it matters: TCA CEO Joshua Pace predicts a movement toward outsourcing money management solutions in light of a more rigorous regulatory environment for RIAs. There’s a lot of data about industry trends to back up his point. Automated asset management has come a long way, far from the days of limited options and cookie-cutter approaches. Congrats to our friends at TCA. Robust platforms like MMX free up advisors and allow them to do what they do best.

Fidelity Launches a Self-Directed Robo.


What happened: Fidelity launched its self-directed robo advisor this month after beta tests with about 1,000 users. Investors will have direct access to portfolio selection and monitoring tools within the new portal. Retirement accounts within this “Fidelity Go” platform will use Fidelity’s funds exclusively.

Why it matters: Wealthfront, Betterment, Schwab Intelligent Portfolios… and now, another self-directed robo in the space. Will Fidelity be trying to drive acquisition using Fidelity Go, or is this a play to turn $10-per-trade brokerage accounts into basis point advisory accounts? Now the question is whether adding the word “Go” after Fidelity has the same effect that adding the word “Go” after Pokémon did.

New Software Acknowledged in XY Planning Network’s Fintech Contest.

What happened: XY Planning Network (XYPN), an organization of advisors who serve Gen X and Gen Y clients, is on the lookout to highlight innovative new software in the technology space. Six finalists, including Snappy Kraken, RightCapital, Totum Wealth, DataPoints, Ambitient and EFC PLUS, will be assessed by judges Michael Kitces, Betterment Institutional’s Tom Kimberly and Ben Welch of TD Ameritrade Institutional at the network’s San Diego conference in mid-September.

Why it matters: Alan Moore, co-founder of XYPN, says the retail financial advisory services industry in particular is hard to crack because advisors are so hesitant to try new technology. XYPN is a network of young, tech-savvy financial planners, so the finalists in their contest are worth keeping on the radar.

Fintech Investments Slowing.

What happened: KPMG International and CB Insights teamed up to publish a quarterly report called the Pulse of Fintech, and Q2 results are in. The global investment in fintech companies totals $99.4 billion, but VCs slowed the pace of new investments quarter over quarter.

Why it matters: Overall, more fintech investment drives more innovation in the industry, so signs of slower funding are concerning. The silver lining? Shifting capital away from fintech helps to sift the wheat from the chaff, leaving real and sustainable fintech companies that can build long-term businesses in the space. Another interesting note: Deals are rising in international markets, like India.

Hearsay Social Launches a Social Marketing Dashboard for Advisors.

What happened: Hearsay Social, a popular social media marketing platform in the financial space, has launched a new platform for financial advisors. Hearsay 360 promises to be a one-stop shop for advisors using social media, web and email marketing to engage with clients and prospects. The new tool even tracks user behavior and makes marketing recommendations based on what investors need.

Why it matters: With the DOL rule sure to change how advisors serve some of their clients, many small accounts will shift in 2017. With so much money on the move, advisors are looking for ways to capture some of that market. The challenge is whether advisors can see the “social attribution” of new clients clearly, and whether social can beat out the “chicken dinner meet-and-greets” in the minds of prospecting advisors.

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