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Fintech Report Card: June 2018

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

Lincoln and Orion Team Up on Annuities

What happened: Lincoln Financial Group is partnering with Orion Advisor Services on a data platform for advisors who use Lincoln’s suite of variable and fixed annuity solutions. Fee-only advisors using Orion’s platform will receive a dynamic data feed directly from Lincoln, enabling them to include data on Lincoln annuities that clients have as part of their portfolios.

Why it matters: It’s just smart to provide fee-only and hybrid advisors insights into annuity products held by their clients. Empowering a holistic view of a client’s holdings across accounts, including annuities, is a win for everybody.

Stash Slashes Fees for Those 25 and Under

What happened: Stash Invest, the low-cost automated investment service and educational application targeted at millennials, announced that all new and current users under the age of 25 can access retirement accounts with no Stash management fees (still has underlying custodial account and ETF fees). This includes fee-free access to Roth and traditional IRA accounts from Stash. Stash currently has over two million clients and 30 percent of them are under the age of 25 and already qualify for the program.

Why it matters: The micro-investing model is bringing younger investors into the fold, and Stash is definitely playing to their audience. Technology that enables and incentivizes investors to start saving sooner is great, and this makes Stash an even more attractive option for the millennial crowd.

Merrill Adds Features, Including Zelle Payment Service, to App

What happened: Clients can scan and send documents to their Merrill Lynch advisor using their smartphone camera, view activity in their Bank of America banking accounts, use new spending and budgeting tools, and make real-time money transfers using Zelle, a peer-to-peer payment service that is now integrated directly into Merrill’s app. The Zelle integration will not be a way for Merrill’s advisors to collect fees or move money into brokerage accounts.

Why it matters: It’s good to see banks and financial institutions rolling out technology solutions that clients want to engage with. I’d next be interested to see just how engaged consumers are with the spending and budgeting tools Merrill has provided access to. An app that’s easy to use increases the chance clients will actually use it, and the Zelle integration adds another level of convenience.

U.S. Bancorp Launches Robo

What happened: U.S. Bancorp Investments launched Automated Investor, an automated advice platform, so-called robo advisor, developed with FutureAdvisor, an investment advisory firm owned by BlackRock. It set a minimum investment of $10,000 for the service, with an annual fee of 50 basis points on assets in the account.

Why it matters: This robo has a lot of potential to service smaller accounts that traditionally don’t meet wealth manager minimums. The bank robo market is a little crowded (BBVA Compass, Bank of America/Merrill, Citizens Bank, UBS, Wells Fargo…), but we’ll see if BlackRock’s tech makes the difference.

LPL Adds Blockchain Strategy to SMA Platform ¯_(?)_/¯

What happened: In a surprise move, LPL Financial added a blockchain-themed strategy to its separately managed accounts platform. LPL also says it’s not planning to charge advisors a management fee for access to the Research Blockchain Innovators Portfolio. “We believe this new strategy can further help our advisors differentiate their practices in the marketplace,” said Chief Investment Officer Burt White. “At this time, there are very limited investment solutions available for exposure to this opportunity. We are proud to be able to lead the industry by leveraging our scale and expertise to provide low-cost solutions that support our advisors’ ability to meet market demands.” LPL, which works with about 16,100 affiliated advisors, says clients must make a minimum investment of $50,000 to add the blockchain strategy to their portfolios.

Why it matters: Asset flows and returns over time will be the judge of this forward-thinking idea. Will it differentiate itself from other non-SMA investment vehicles in existence that don’t have account minimums and additional (albeit small) management fees?

Pershing Developing New Wealth Management Platform

What happened: BNY Mellon’s Pershing, a custodian for financial advisory firms and broker/dealers, is developing a new wealth management platform to serve brokerage, bank custody and advisory businesses designed to help streamline the investor experience and provide a competitive edge against rival firms and tech startups. The NetX360-Wealth platform represents the next generation version of the firm’s existing NetX360 platform and covers “the full value chain from prospecting, to client onboarding, to investment management,“ according to a press release.

Why it matters: We admire the focus on advisor-client relationships and can appreciate their desire to make as well-rounded a platform as possible. Hopefully, the new platform offers advisors the integration choices and customizations they need to serve their clients effectively.

AssetMark Enhances Its Portfolio Creation Tool ¯_(?)_/¯

What happened: AssetMark announced plans to update PortfolioEngine, its portfolio modeling tool. The hope is that the enhancements will allow advisors to create portfolios that are more in line with clients’ financial goals. The new features also allow advisors to use visual modeling analytics to educate investors about making investment decisions. The tools also allow advisors to model clients’ savings or retirement goals to illustrate how various investments, market scenarios, contributions and distributions may impact their long-term goals.

Why it matters: More and more firms are adding plans to update their technology offerings, but it’s tough to rate plans or intentions. An increasing number of platforms are seeing risk/reward analysis as table stakes for the client decision-making process. I’ll be interested to see if the changes allow for advisor integration to third-party technology or force advisors to operate in a closed ecosystem. Will these planned upgrades improve investor success, home office compliance and practice efficiencies?

Capital One Restricts Third-Party Data, Upsets Customers

What happened: Capital One Financial Corp. is limiting how account data flows to outside apps for managing finances, prompting a backlash from the bank’s customers who say they’ve been locked out of their own information. Plaid, which enables popular apps such as Acorns Advisers LLC, PayPal Holdings Inc.’s Venmo and Robinhood Financial LLC, said a million of their customers were affected. There’s been discord between banks and the fintech companies that want to use their data. Banks want startups to use APIs, which give lenders more control over what data is distributed and how it’s released. Fintechs say the restrictions can hinder them from performing services they promise consumers.

Why it matters: This is a pretty aggressive move that undoubtedly frustrated users of all kinds of technology; more signs that data aggregation technologies are threatening financial institutions. Advisors and consumers are likely to vote with their feet (and wallets) as big financial institutions block technological advancements that make their lives easier. Here’s a thought though: how about consumer rating agencies scoring data/integration friendliness?

Ant Financial Raises $14B in World’s Largest Fundraising

What happened: Ant Financial Services Group, operator of China’s biggest online payment platform, on Friday said it raised around $14 billion in what market watchers called the biggest-ever single fundraising globally by a private company. The cash will boost Ant’s firepower ahead of a widely expected initial public offering in Hong Kong and mainland China as early as next year. Ant will use the funds to speed up globalization plans for its Alipay payment platform and to invest in developing financial technology.

Why it matters: I have to give this a thumbs up, just out of respect for the pure scale. How will this impact fintech fundraising in the future? How will their globalization plans affect the European and even American banks and asset managers? With this kind of money, they can throw a lot of weight around.

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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