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Fintech Report Card: June 2017

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

Welcome to the June edition of the Riskalyze Fintech Review, where Riskalyze CEO Aaron Klein gives you the thumbs up or thumbs down on the biggest pieces of news to hit advisor technology in the last month. Failing to read this piece may be the riskiest move of all!

New Ransomware Cyber Attack Strikes 60 Countries

What happened: Another computer virus wreaked havoc on firms around the globe as it spread to more than 60 countries. This latest cyberattack, dubbed GoldenEye or Petya, originated in the Ukraine. The virus encrypted data on machines and, like May’s WannaCry attack, demanded $300 bitcoin in exchange for data recovery. The attack used wiping software, however, so even if someone paid the ransom, the data was lost. It’s estimated that WannaCry resulted in losses close to $8 billion around the world, and damage by Petya could match that figure.

Why it matters: As Yogi Berra put it, “It’s déjà vu all over again.” Cybersecurity firms saw a bump in business in May, and they’ll probably see even more business now. It’s important that client information is stored safely, especially with the level of trust financial advisors are given. When it comes to using fintech, play data conservatively and err on the side of safety. Cloud-based storage and bigger cybersecurity budgets are probably in a lot of firm’s futures, especially if they haven’t yet upped their game.

Cetera Adding Facial Recognition Software to Advisor Tools

What happened: Cetera Financial Group announced the launch of their facial recognition program, Decipher. The software will map the client’s facial muscles and track emotional responses to help advisors see how their emotional responses line up with their financial goals. The tool is also designed to provide more transparency into an advisor’s decision-making process to remain compliant with the DOL’s fiduciary rule. Cetera doesn’t foresee integrating the facial recognition software with the robo advisor it plans to launch later.

Why it matters: I wouldn’t be alone if I was a bit nervous about investing a client according to their facial expressions, right? I don’t think we’re quite ready to determine the visual difference between risk aversion and a splitting headache. That said, this gets a thumbs up because Cetera is clearly making an investment in the future of knowing the client, and to us, no cause could be more important. We’ll be keeping our eye on what comes out of these labs for sure.

Pershing Introduces NetX360 Wealth Client Portal

What happened: Pershing, a popular custodian for financial advisors, announced the NetX360 Wealth client portal as part of its ongoing commitment to new integrations for its customers. The portal will tie together brokerage custody, bank custody and advisory platforms into a single UX and integrate with reporting, aggregation, CRM, portfolio management, and financial planning tools. Pershing developed the portal in partnership with IBM Watson, which includes predictive analytics for working with investors.

Why it matters: Advisors are flocking to custodians that integrate with the other technology pieces they love. Other custodians are finding themselves at a crossroads in this area; advisors are asking for custody services to work better with the tools they use every day and it’s exciting to see Pershing move in this direction.

TIAA Announces Personalized Portfolio Robo Option

What happened: TTIAA, the investment firm historically focused on teachers, announced plans for a personalized robo for a 30 bps fee and $5,000 minimum. TIAA Personal Portfolio will offer passive, active, and socially responsible options with five levels of risk. Customers can establish an account online and receive personalized portfolio recommendations. Portfolios are professionally managed with automatic rebalancing, online reporting, and investors have access to TIAA professionals when they need them.

Why it matters: TIAA’s approach here makes a ton of sense, providing a digital-first solution to a target in which they already have a relationship. Their existing distribution, and the approach of providing investors with access to advisors, is likely to make this a competitive offering.

Fintech App Revolut Raises £50 Million After Reporting £7.1 Million Loss in 2016

What happened: London-based Revolut offers a pre-paid, international currency card, the RevolutCard, with zero spending fees. Cash is pre-loaded to the card through an app, and users can send and request money in over 20 currencies at the actual exchange rate. This latest round of funding will place the company’s value at £300 million. Revolut is on track to have 1 million customers by the end of 2017.

Why it matters: Though some publications are skeptical of Revolut’s “track record of bleeding money,” wise investors know that growth can replace profitability in the early stages of a business, even though the law of gravity will take over eventually. As someone who travels around the world, I can certainly see why simplifying currency hurtles makes the service so popular. Advisors, do you find clients ask you about international currency advice when they travel? If so, this may be an interesting tool for them.

Fintech Spike in Growth Rate After DOL Implementation

What happened: Advisor demand for fintech solutions meeting the new requirements of the DOL fiduciary rule jumped in the three weeks after the retirement advice regulation was implemented. Several fintech firms, including Riskalyze, reported significant growth attributed to the DOL rule’s initial implementation date arriving.

Why it matters: Despite the uncertainty over the fiduciary rule and whether or not the Trump administration will gut it before full implementation, it’s also clear that the “best interests era” has arrived and isn’t going away. Even if DOL rolls back its rule, the SEC would likely implement one. And ultimately, most advisors have already decided that it pays to put your client’s interests first. Implementing a solution to demonstrate alignment between clients, their risk tolerance and their actual portfolio is a key way to prove and document that.

Orion Adds Moody’s Bond Ratings

What happened: Orion integrated with Moody’s Analytics to offer automatically updated Moody’s bond ratings directly in the Orion portal. The bond ratings can be added to Orion fixed income reports so that advisors can show clients the creditworthiness of their securities. “At Orion, our mission has always been increased transparency, and our integration with Moody’s provides advisors and their clients with a clear picture of their portfolios, enabling advisors to make better decisions on behalf of their clients.” said Orion CEO Eric Clarke.

Why it matters: Most advisors have to work with private, independent rating services in order to provide bond ratings to their clients. Orion getting rid of this extra step (and including one of the biggest rating agencies, to boot) is a big value-add to advisors and gives the transparency that makes clients feel secure about their investments.

Plaid Puts Out a ‘Request for Startups’ in Nine Under-Served Fintech Sectors

What happened: Plaid, a resource provider for the fintech developer community, issued a “request for startups” to tackle issues where it believes significant innovation is lacking. As a toolkit that specializes in authenticating bank and credit card info for third-party apps, its pervasiveness within the industry provides it with an overview of where functionality can be improved. Suggestions included better billing solutions and mobile account opening tools.

Why it matters: An important part of developing new and innovative fintech is knowing where the pain points are and fixing those problems. We know there are innovators out there looking for opportunities to make improvements, and love the idea that fintech has so many opportunities to make a difference.

And here’s an honorable mention we’re very excited about, but didn’t publish in due to obvious conflicts of interest…

New Automated Account Platform Brings Prominent Strategists and Research to Advisors

What happened: Strategists and research firms such as BlackRock, Cambria, CLS Investments, First Trust, LikeFolio, Longboard Asset Management, Morningstar Managed Portfolios, SEI Investments, and Swan Global Investments have become a part of Riskalyze’s multi-custodial automated account platform. Riskalyze’s “Autopilot” allows advisors to build model portfolios, assign models to client accounts, and automatically generate trades across multiple custodians to deliver both personalization and scalable automation. One-Click Fiduciary™ technology keeps accounts on track after that, surfacing the right decisions for advisors to make at just the right time.

Why it matters: As Riskalyze’s CEO, I’m more than just a little biased about this news; I’m thrilled about it. Using Riskalyze to make portfolio decisions has always been easy, but implementing them is no longer a “pain in the assets.” Autopilot kills the pen-and-paper calculations and makes the process smooth, intuitive and in some ways, free. This platform is a game-changer and gives advisors the tools to empower fearless investing.

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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