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Fintech Report Card: June 2020

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

Orion and Brinker Join Forces

What happened: Orion Advisor Solutions and Brinker Capital announced they are joining forces in a merger expected to close later this year.

Why it matters: This is a blockbuster deal for Eric Clarke and his team, who have been building a competitor to the all-in-one TAMP platforms like Envestnet for some time. One thing I particularly loved was how the deal was announced—far too often, the trade press covers this kind of transaction as a sale, when in fact, the business wasn’t sold but rather recapitalized with a new set of investors.

In this case, TA Associates continues as an investor, but books a solid gain and gives up a good chunk of its future percentage points to Genstar. Meanwhile, Orion uses that fresh capital to bring Brinker under its umbrella. How does all of this merge into the FTJ/CLS/Orion Portfolio Solutions world? It’ll be interesting to watch.

Dynasty and Envestnet Launch Financing Capabilities to Non-Dynasty Firms

What happened: In partnership with Envestnet, Dynasty Financial Partners launched the Advisor Services Exchange, which will allow non-Dynasty RIAs to access debt financing and other business services.

Why it matters: While M&A is all the talk these days, many advisory firms don’t want to sell but do need access to more capital in order to grow the way they want. Importantly, advisors don’t have to give up any ownership rights to take part in the Advisor Services Exchange, so they can invest in growth without selling out a stake. It’s going to be fascinating to see where Shirl Penney and Bill Crager’s new partnership will go.

CFP Board Tightens Code of Ethics

What happened: The CFP Board has committed to enforcing enhanced oversight of CFP certificants, including additional background checks, an annual ethics attestation, and expanding consumer access to BrokerCheck and IAD information about CFP professionals.

Why it matters: In an updated background sweep of its 87,000 professionals, about 1.4% were found to have engaged in some form of misconduct. The CFP Board wants the hard-earned CFP designation to mean something, and I applaud its efforts to put some focus here.

“Robo Advisor” User Base Will Double in Four Years

What happened: new report by BuyShares expects both the number of users and assets to more than double globally for robo advisor firms by 2024.

Why it matters: We’ve got to stop calling these firms robo advisors, because they don’t actually deliver advice. But if you’re wondering how I can give a thumbs-up to this trend, it’s simple—self-directed investing services are like the farm teams in major league baseball.

I’m a big believer that as investors grow to higher levels of sophistication and need when it comes to estate planning and taxes, human financial advisors will be the ultimate benefactor as these clients get “called up” to real advice.

Mastercard Acquires Finicity

What happened: Mastercard purchased Finicity, a financial wellness and data aggregation platform, for $1 billion.

Why it matters: First Visa acquires Plaid, now Mastercard snatches up Finicity. This is certainly validating the vision that the late Jud Bergman articulated when he acquired Yodlee a few years back.

The question is—when do we get to the next level? The holy grail isn’t just better data; it’s also faster money movement. Aggregators can be used to collect information much more quickly than a paper process—meaning faster client onboarding, account setup and a much better client experience. Will this deal help us get there?

FA Match Launches Version 2.0

What happened: FA Match released updates to its advisor firm matching system, including new filtering options to determine compatibility, embedded video conferencing and a new pricing model.

Why it matters: The FA Match update adds some “pandemic proofing” options like embedded videoconferencing, but the most appealing change is the pricing. Matches are now capped at $10,000 for firms using the service, making it much easier to budget for a new team member when firms look for that perfect advisor. Will these new economics and digital-first approaches disrupt advisor recruiting forever? Time will tell, but this update looks exciting.

Disclosure: Ryan Shanks has served on the Riskalyze board of directors since 2014.

Red Oak Compliance Launches Smart Review

What happened: Red Oak Compliance Solutions released Smart Review, a tool that creates a single disclosure management system that can also identify when a particular disclosure should be used on marketing materials.

Why it matters: With the speed at which regulatory changes are being made, it can be hard to keep up with compliance standards. The Red Oak update looks to make it simpler for advisors to manage their marketing content, in particular, by taking some of the guesswork out of deciding when, and which, disclosures to use.

SMArtX Adds Direct Private Investing for Noninstitutional Investors

What happened: SMArtX announced that advisors on its platform can access investment opportunities in late-stage, pre-IPO firms for their clients at a minimum investment of $20,000.

Why it matters: With the advent of Sarbanes-Oxley and Dodd-Frank, the IPO keeps looking less and less attractive for growth companies, and the window for broad public ownership keeps getting further and further back in the value creation cycle. Put another way, because of our desire to protect average investors from fraud (good), we’re keeping them out of ownership of the best growth companies (not so good).

This new move by SMArtX may create a different way to solve this problem, opening up access to pre-IPO companies at a more mature stage when they typically aren’t accepting investments from individuals any longer. Will it work? Or is this just another illiquid investment choice that won’t be a good fit for most clients? Hard to say at this point, but we’ll be watching.

 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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