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Fintech Report Card: January 2019

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

Fintech startup Plaid to Buy Quovo for $200 Million

What happened: Plaid announced plans to buy startup Quovo in a $200 million deal. Plaid’s technology links bank accounts to fintech apps like Venmo, Robinhood, Coinbase and Acorns. The San Francisco-based company said 25% of Americans with bank accounts had connected to Plaid through an app. Quovo, on the other hand, focuses on linking investment and brokerage account data to fintech apps, with customers like John Hancock, Betterment, Wealthfront, SoFi, Vanguard and yours truly, Riskalyze. Plaid and Quovo will now exist on a single platform that developers and large companies can use to build any financial application.

Why it matters: Quovo pioneered putting data aggregation in the hands of advisor apps using modern APIs, and Plaid came along and focused on the bank accounts. Together, these two companies should do great things. Data is the lifeblood of great innovation, but in this era of concern about data protection, security and privacy, will the big banks try to shut down their access to stop assets from moving? Let’s hope not—that would be a huge step backward for consumers.

Former eMoney Chief Executive Edmond Walters Launching Financial Planning Competitor

What happened: Former eMoney founder and CEO Edmond Walters is launching a new financial planning software platform through his new company, Apprise Labs. The company is backed by two of eMoney’s biggest rivals: Envestnet and MoneyGuidePro. A full rollout of Apprise Labs’ new software, which will include features for high-end estate planning and cash-flow based tax planning, will take place later in 2019. The new software will be integrated into Envestnet’s and MGP’s existing offerings. Walters founded eMoney in 2000 and resigned as CEO shortly after he sold the company to Fidelity in 2015.

Why it matters: This deal is a media dream—Edmond Walters takes $250 million of Fidelity’s money, and their two top rivals, and starts a new company to take financial planning to the next level. The reality is that the new product he’s launching is focused on a very high-end market of estate planners that eMoney isn’t focused on right now. If this was an actual eMoney competitor, I seriously doubt their chief rival, MoneyGuidePro, would have signed on, and Envestnet or MGP wouldn’t be building integrations. It’s like that old saying, “once you’re lucky, twice you’re good.” If Walters ends up building Apprise to a level that gets even close to his eMoney triumph, it’ll be pretty darned impressive.

Y Combinator Startup Upsolve Building Bankruptcy Software

What happened: Upsolve, one of the three nonprofit tech startups in Y Combinator’s winter batch, is building a software product that allows easy access to the bankruptcy system. Users go through a series of questions about their financial circumstances, and Upsolve provides automated bankruptcy forms reviewed by an Upsolve attorney—all for free. Upsolve CEO and co-founder Rohan Pavuluri describes Upsolve as “TurboTax for bankruptcy,” and much like tax, bankruptcy is convoluted. “There are 23 forms to file for bankruptcy,” he said. Since starting the dot org in summer of 2016 and launching their pilot in early 2018, Upsolve has processed $16 million in bankruptcies on behalf of 400 people and has diagnosed debt problems for 5,000 users during 2018.

Why it matters: First of all, what in heaven’s name is a “nonprofit” tech startup? With all due respect, give me a break. Second, I can’t imagine a worse “innovation” than making it easier to go bankrupt. While bankruptcy is an important tool for people who have encountered serious financial setbacks, Turbotaxing the process is a one-way ticket to higher interest rates and fees for people with lower credit scores.

Fiserv Acquiring First Data for $22 Billion

What happened: Fiserv Inc. will buy payment processor First Data Corp. in a $22 billion deal, making it one of the largest acquisitions in the financial technology sector. Fiserv Chief Executive Officer Jeffery Yabuki will become CEO and chairman of the combined company. After the deal closes in the second half of 2019, the combined company’s adjusted earnings per share are expected to increase by more than 20% in the first full year. Post-merger, the two companies would cross-sell along one continuum, to create what the respective leaders of Fiserv and First Data called a “one-stop shop” for integrated offerings to banks, merchants and a range of service providers.

Why it matters: Fascinating deal, Fiserv was better known in our industry for their wealth management and trading technology. I don’t think there’s much client overlap between Fiserv’s technology and First Data’s payment processing, so this looks more like a giant company finding a loosely-related business that can drive revenue scale.

TD Ameritrade Allows Apple Pay Funding for Brokerage Accounts

What happened: TD Ameritrade announced January 15 that customers now have access to instantaneous funding with Apple Pay. A similar funding method for advisors could also be announced soon. Individual investors can use Apple Business Chat on the Messages app of their Apple device to fund linked TD Ameritrade brokerage accounts via Apple Pay, giving customers instant access to their funds. The Apple Pay funding works with a debit card stored in a customer’s digital wallet and allows transfers of up to $10,000 a day.

Why it matters: It is great to see TD Ameritrade at the forefront of innovation. I think investors are going to really love the convenience, but it’s going to be tough to make this applicable to advisory accounts. Most advisory accounts are funded by an ACAT transfer from an existing brokerage account or a different advisor. I seriously doubt most clients will like sending money $10,000 at a time or having to fund their account from their checking account through a debit card.

RIA in a Box Launches Vendor Due Diligence Tool

What happened: RIA in a Box launched the Vendor Due Diligence Tool as part of the company’s MyRIACompliance software platform. The tool allows vendors to automate documentation sharing and tracking with clients, including documents such as email compliance, data security and cybersecurity policies. Vendors can also digitally connect with an RIA firm before choosing to share due diligence documentation, as well as view and manage which RIA firms have access to the latest due diligence documentation. Current vendors that have joined the initial launch of this new tool include Morningstar, Riskalyze and Orion.

Why it matters: I can’t tell you how many nondisclosure agreements we’ve signed so that we could send our security due diligence reports to firms preparing for cybersecurity audits. If that sounds confusing and time-consuming, that’s because it is. This new platform looks like a big time saver and a great asset for RIA in a Box clients.

Orion Announces Integrations with BizEquity and Experian

What happened: Orion Advisor Services will integrate with business valuation company BizEquity and consumer credit reporting agency Experian in the first half of 2019. Through the BizEquity integration, advisors on the platform can develop business valuations for their business-owner clients. Through the Experian integration, advisors on the Orion platform will be able to monitor their clients’ credit score and assist in the event of identity theft. The firm also said it would roll out a pair of new features on the platform: automatic notifications for communications like portfolio rebalancing updates and ‘Inform,’ a compliance tool for advisory firms that will allow them to monitor employee trades and log data for SEC audits.

Why it matters: This is another great set of integrations from Orion. Business owners are often top clients for financial advisors, and the ability to put a valuation on one of their most important assets, their privately-held company, could make Orion’s balance sheet reporting a lot more interesting. The new notifications are also a fun tool for advisors to engage with their clients—imagine getting a text from your advisor letting you know “you just became a millionaire!”

Blockchain Startup Looking to Cut Credit Bureaus From Loan Process

What happened: Blockchain startup Spring Labs is partnering with 16 lenders and fintech firms to test a system that eliminates centralized entities like credit bureaus from their role in granting loans to individuals and companies. To get away from the current model, Spring Labs and firms including SoFi, OnDeck Capital, Avant, and others will test the new technology Spring Labs has developed that incorporates cryptography, blockchain and privacy enabling technology. It uses a “triple blind” method of information sharing where the identities of neither the lenders nor customers are known, nor does Spring Labs know what information is being shared on its network. Spring Labs believes this new technology could be safer by rooting out fraud that uses fake identities, which makes its way into credit reporting databases and appears legitimate, allowing loans to be granted.

Why it matters: For this to work, vendors have to start reporting credit history to the blockchain instead of the credit reporting bureaus, even though nobody is using the data. They also have to get everyone else to start using it for their credit checks. Getting that two-sided network built is hard enough. Is doing it with really slow blockchain technology that has no proven advantage over the existing credit reporting networks really an improvement? Color me skeptical.

PIEtech Releasing New Versions of MoneyGuidePro

What happened: PIEtech is releasing two new versions of its flagship product.Called MoneyGuideOne and MoneyGuideElite, they are designed to accommodate an array of price points and features for advisors using PIEtech products. “One” is designed as a quick planning tool to give clients a basic financial plan in under five minutes, and is available to all MoneyGuidePro subscribers, and as a stand-alone for advisors interested in exploring financial planning without making the full commitment to the flagship offering. “Elite” gives advisors a “more sophisticated” planning option above and beyond MoneyGuidePro, including annuity and life insurance add-ons.

Why it matters: This is a fascinating strategy from PIEtech. They’re shifting from one flagship product to essentially four: MoneyGuideOne, MoneyGuidePro, MoneyGuideElite, and MoneyGuideLegacy (the new product they invested in from Edmond Walters). What’s clear: there will not be a financial planning need on the planet that MGP won’t be able to satisfy for advisors.

Michael Kitces, Alan Moore Launching AdvicePay Enterprise 

What happened: AdvicePay launched in January 2018 as a compliant tool for fee-based financial planners to bill clients and collect payment through a credit card, bank or brokerage account. Co-founders Alan Moore and Michael Kitces are releasing an enterprise version of their fee-for-service payment processing tool. The new version of the tool has expanded features and functionality built specifically for firms with a large number of advisors, including a dedicated portal for home offices to centrally manage and control billing while allowing for some flexibility at the advisor level.

Why it matters: They raised $2 million in crowdfunding, which is no easy feat, and fee-only advisors at smaller firms have loved AdvicePay for getting paid faster. It’s going to be a challenge to build this part of the business since their competitive advantage is understanding compliance rules for advisors, but if anyone can make that happen, it’s Kitces and Moore. 

Aaron Klein is CEO at Riskalyze.

Editors note: The views expressed in this column are Aaron Klein’s, and do not necessarily reflect the opinions of

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