The annual T3 Advisor Conference, which this year was held February 14-17, 2017 at the Hyatt Regency Garden Grove Hotel in Anaheim, CA, is our profession’s answer to the Consumer Electronics Show. More than a few of the 630 registered attendees (some traveling all the way from the UK, Japan and Australia) were much more enthusiastic about walking the T3 exhibit hall than traveling a couple of miles up the road to visit Disneyland.
Everywhere you looked, there were new offerings, upgrades, integrations and even weird things like an Oculus virtual reality (planning-related!) experience, a financial planning software integration with Amazon’s artificial intelligence Alexa device, and a drone hovering above the booths.
Lest you think technology doesn’t make the profession more effective, consider Peak Advisor founder Ron Carson’s off-hand comment that there were 500,000 total advisors in the mid-1990s (give or take a few). That number is now down to around 350,000—with no visible diminution in service and a sizable increase in the total number of clients served. Improved tech tools are the only possible explanation.
In my experience, after having attended every T3 Advisor Conference since inception, this one was the most consequential. Several online account platforms are expanding their suite of services into new territory, while single sign-on integrations let you operate planning and account management software through your CRM—or, increasingly, your custodial interface. And eMoney is redefining the client vault concept.
The pace of change is accelerating, and a number of assumptions are being challenged in dramatic ways. Here’s some of what I learned while walking around.
EXPANDING THE ROBO CONCEPT
The first thing you noticed was that the automated account platform (aka Robo) wars are heating up. At the conference, two contestants moved into the lead for your attention.
One of the biggest T3 announcements told us that AdvisorEngine (formerly Vanare (http://www.advisorengine.com) had purchased Rich Ellinger’s WealthMinder, a goals-based financial planning program (http://www.wealthminder.com).
Meaning? For the first time, a sophisticated financial planning calculation engine will be integrated into the “traditional” suite of robo services (online and automated onboarding, automated tax-aware rebalancing and online access to performance information). It’s not hard to imagine prospects going to your website, comparing their current portfolio’s performance to your models, and then doing some of their own financial planning work on the computer screen—before they ever meet you face-to-face.
A second AdvisorEngine announcement, less widely commented upon but equally important, was an integration with Boston-based FinMason (http://www.finmason.com). FinMason is an institutional quant shop that provides downside risk analysis tools to hedge funds and pension plans. Once the full integration is complete, those same prospects will be able to go to your website and assess the (sometimes scary) downside potential of their existing portfolios in another 2008-9 scenario, compared with your models.
And the AdvisorEngine portal will give you, the advisor, access to the same suite of FinMason tools, with analytical capabilities similar to what RiXtrema (http://www.rixtrema.com/advisor/) provides. You’ll be able to create more sophisticated portfolios. WealthMinder also happens to have a portfolio design tool, whose capabilities will be added to AdvisorEngine’s service menu.
The bottom line is that the institutional automated account platform concept has been expanded into a much broader solution, incorporating planning and portfolio design tools. AdvisorEngine is also transforming the traditional robo concept (we do it all for you) to an approach that advisors prefer (you continue to develop portfolios with increasingly sophisticated tools, and we automate the rebalancing, online reporting and other parts of the portfolio management process that are primarily rote tasks).
Another robo announcement came earlier on the first day: Riskalyze (http://www.riskalyze.com), the risk tolerance assessment provider, introduced a variety of enhancements to its own robo offering, called Autopilot—which leverages the Orion Advisor Services platform (http://www.orionadvisor.com).
The most interesting feature actually moves the Autopilot platform in the opposite direction from AdvisorEngine’s analytical portfolio design tools. Instead of creating their own portfolios, advisors using Autopilot can now “subscribe” to a variety of investment models, created by third party vendors, from the newly-created Autopilot Partner Store. The initial menu will include portfolios offered by Morningstar Managed Portfolios, SEI Investments, State Street Global Advisors, CLS Investments, Cambria, First Trust, Longboard Asset Management, AlphaDroid, Stadion Money Management and Swan Global Investments. The Partner Store will make it possible to completely outsource your portfolio management duties to third parties.
Another announcement: with Riskalyze Premier, an enhancement to the risk tolerance tool, it will be easier for advisors to track their clients’ risk scores all in one place. This will be especially helpful for advisors who are helping participants of small business 401(k) plans identify their best options from the plan menu.
Orion, meanwhile, announced an enhancement to its service offering. The updated platform, called Eclipse, answers one of the persistent complaints you hear from advisors: that they can only do their rebalancing on individual accounts. What they want, of course, is the ability to rebalance globally across all the accounts, sleeves, tax-deferred and taxable portfolios associated with each client household. Orion now allows its users to create individualized tax loss harvesting and rebalancing alerts, not only around individual accounts, but more flexibly around the total holdings of a client household. And at the same time, you can do global “search and replace” trading on model portfolios and “sleeves” (model portfolios used in combination). Another part of the announcement: a deeper integration with custodians now lets advisors use their Orion desktop to make trades directly through their custodial platform.
DUELING INTEGRATION HUBS
Another ancient complaint among advisors is that the components of their software stack either won’t talk to each other, or, if they do, they simply allow you to import information from one program to other. That means you or your staff either has to do redundant keyboarding or go through the additional steps involved with completing an import. Whenever you need the complete client picture, you have to have multiple programs (the CRM, financial planning and account management programs) open on your screen at the same time.
At T3, it was clear that this awkward era of disintegrated software is over—and the integration solutions are being provided, interestingly, by two different classes of vendor.
Separate demos showed how Redtail’s (http://corporate.redtailtechnology.com/) and Junxure’s (http://www.junxure.com/) CRM programs have created bilateral integrations to a level that would have been unthinkable four or five years ago. Today, you can sign into your CRM, select a client and gain access to all the client’s basic information. Want to work on the client’s plan? Click on a button to call up eMoney (http://emoneyadvisor.com/) or MoneyGuidePro (http://www.moneyguidepro.com/ifa/) and that same client’s full financial plan appears right there in the CRM screen. You can make changes and update the plan without leaving the CRM.
Need that client’s portfolio information? Click on another button and go into the Orion or PortfolioCenter systems, and it’s as if you were in those programs, with access to the asset class pie charts, individual holdings and tax basis information—all right there within the CRM. Basically, you can do everything relating to client data, no matter which program it’s in, through one central hub, and these deep single sign-on integrations were not just with the leading programs, but extended to most of the T3 exhibit hall.
Fidelity Institutional Asset Management (https://fiws.fidelity.com) and TD Ameritrade Institutional (http://www.tdainstitutional.com/) have accomplished basically the same thing, except here the custodial platform serves as the hub that lets you pull everything in from other programs. Both announced enhancements to their WealthScape and Veo One platforms, respectively.
But the two couldn’t be more different in they way they approach integration implementation. Fidelity has concentrated its efforts on what it regards as the (limited) “best of breed” circle of programs that advisors would have to choose from if they want the full gamut of integration benefits. With TD Ameritrade’s Veo One Open Access, on the other hand, advisors are able to choose whatever software they prefer in all categories from a much wider (100 and growing) array of integration partners, although in this early stage, the deep seamless integrations are confined to account opening programs DocuSign (https://go.docusign.com) and LaserApp (http://www.laserapp.com/); document management program Laserfiche (https://www.laserfiche.com/); CRM providers Junxure, Redtail and Salesforce XLR8 (http://www.concenterservices.com/crm_xlr8.html); financial planning programs eMoney, FinanceLogix (http://www.financelogix.com/) and MoneyGuidePro; TD Ameritrade’s iRebal for rebalancing; and portfolio management platforms Orion Advisor Services, Advent/Black Diamond (http://blackdiamond.advent.com/) and Morningstar (http://corporate.morningstar.com/).
Interestingly, TD Ameritrade also announced, at the TD LINC meeting two weeks before, that the Riskalyze Partner Store was unveiled, its own marketplace of model portfolio providers, called the iRebal Model Market Center. Advisors pay a subscription fee to access investment models created and managed by separate account managers—which means that the separate account managers will provide information about the current portfolio holdings and inform you of any trades they make whenever they make adjustments to the asset mix.
Eventually, virtually anyone—including astute in-house asset management departments at larger advisory firms—will be able to provide their own model portfolios on the platform, so advisors will be able to compare notes on how others are building portfolios using ETFs or, in the future, funds and individual equities. The advisor, meanwhile, can provide a tax overlay on the information, so if a particular recommended trade would trigger a sizable taxable gain for a particular client, the advisor could decide to make an offsetting transaction for a loss and buy a similar security.
You’re looking at the dawn of a new age in professional portfolio management. What to call it? Subscription-based asset management? Subscription mutual funds?
While we’re on the subject of asset management, a company called Robust Wealth (http://www.robustwealth.com) has created an online wealth management platform (another robo) with the usual array of services: expedited account opening, automated rebalancing, custom portfolios and intelligent allocation around existing holdings. But the firm has added an interesting feature that others may try to copy: Robust Wealth will provide a lifecycle overlay on any model portfolios you create for clients.
How does it work? You input the age of the client, and the software will create a glidepath for the client’s investment account, reducing exposure to equities either as the client approaches retirement or as the client ages toward life expectancy. You, the advisor, determine how that glidepath will work for each individual client. (If you follow the Kitces/Pfau research, you might decide to use Robust Wealth’s glidepath technology to increase equity exposure as clients age; their research suggests that this provides a sturdier path to an affordable retirement.) Once you set up your preferences, RobustWealth will even do the trades for you—automatically.
Meanwhile, Fidelity announced that a new portfolio performance reporting tool will be announced in a couple of months, which will be developed in-house. This will put the custodian in competition with some of the service platforms that the company has tight integrations with (Orion, Envestnet/Tamarac’s Xi platform (http://www.tamaracinc.com/Advisor.aspx) and Advent/Black Diamond).
Some interesting sidenotes on the asset management side: we saw a presentation describing Orion’s new enhancements, and the AssetBook (https://www.assetbook.com/) booth seemed to be attracting a lot of interest, with its ModestSpark integration that lets you set up your own client portals for performance reports plus a tight integration with TradeWarrior’s (https://www.tradewarriorsoftware.com/) trading and rebalancing solution. Black Diamond’s presentation made it clear that the company is expanding its services to become not only a performance reporting outsource option, but also an integration engine.
But market leader, Schwab PortfolioCenter (http://www.schwabpt.com/), provided no enhancement announcements. Why? Schwab has quietly moved into the pilot phase of a next generation portfolio management platform that will replace PortfolioCenter—but apparently the new offering is not far enough along for the company to start making announcements or showing off features.
Another interesting contrast was the different collaborative planning implementations of eMoney Advisor vs. MoneyGuidePro, the two market leaders (by far) in financial planning software. Both have recognized the trend toward putting clients in the driver’s seat during the plan creation process, with the planning professional moving from the authority figure to a thinking partner role.
But the two are facilitating this transition very differently in their software applications.
eMoney provides an online questionnaire for clients to fill out, that is designed to capture basic information like name, address, birth and expected retirement dates, along with income and assets (pulled in through an in-house account aggregation engine), and goals. Depending on preference, the client can fill in this information before the first meeting or (more likely) the advisor and client will sit down together and go through the questions.
MoneyGuidePro facilitates collaboration via MyMoneyGuide, where prospects go to your website and click through to a white-labeled site where they can answer similar questions, and then have access to the tools that allow them to create a financial plan on the screen before they ever visit your office. They can reach out to a call center for guidance, or follow tutorial videos on how to navigate the program effectively.
In his presentation at T3, Kevin Knull, president of MoneyGuidePro, talked about the results of a biometric research project where clients went through financial plans online, compared with doing the planning in the offices of a financial planner. The results suggest that clients experience less stress if they can go through the plan together at home than they do if they have to financially undress and negotiate their future in the live presence of a professional.
WealthMinder, now part of AdvisorEngine, also collects client information online before the first sit-down meeting. Before long, AdvisorEngine could also be defining collaborative planning.
At the same time, eMoney is busily rewriting all the assumptions about the client vault concept. In the past (as in: last year), we assumed that clients mostly wanted online access to their up-to-date portfolio performance. When the markets went down 15% they could see the extent of the damage to their own net worth.
But eMoney is betting that clients want more: they want their portal to organize their entire financial lives. eMoney’s planning program is built around a total financial organizer, showing not just their managed and held-away assets, but their home mortgage and car loans, their insurance policies, their credit card and bank accounts to track spending and cash flow, their documents like wills, powers of attorney, plus information about their kids and grandkids and anything else (“family recipes” were tracked in the preconference demo I attended).
This data comes alive when clients upload pictures of the children (click on the picture and you get a look at the education planning data), or the family or vacation home (which you click on to get the most recent mortgage information and appraisal, plus the home equity line of credit and homeowner’s insurance policy).
Another T3 vendor, FutureVault (http://www.advisorvault.com), provides almost exactly the same functionality, but they’re not yet integrated with any financial planning programs. It’s not hard to envision an integration between MoneyGuidePro and FutureVault, which would replicate the eMoney total financial picture vault experience. And both eMoney and MoneyGuidePro are reportedly working on providing online access to each client’s re-calculated financial plan as of end of market trading day, so clients can see a big market decline, click on their client vault and get the answer they really want. The market was down 15% today. Am I still all right? Or not?
All of the programs I looked at make the client data routinely available on mobile devices, but even that may be trumped by more convenient access. The eMoney presentation featured a demonstration where a hypothetical client would ask the Amazon Alexa cylinder thing whether she’s on track to meet her retirement goals. Alexa, when prompted, answered in the affirmative and provided details. Welcome to the future.
Advisors saw an additional glimpse of the future at the eMoney booth when they put on the goggles and received a somewhat jarring, eerily realistic Occulus virtual reality introduction to the future of creating financial plans.
What else? A number of tech providers are enhancing their value proposition beyond operational efficiency. They’re looking for ways to solve the profession’s acquisition challenges while also helping you manage your practice.
Prospective clients can take the Riskalyze risk tolerance quiz via a link on your website and then you compare the risk score to the score of their portfolio, looking for discrepancies that will discredit their current advisor. You can have clients go through the MyMoneyGuide process and they’ll eventually come into your office to get a full financial plan. Give prospects access to the eMoney financial organizer and have your name white labeled on the screen, with your contact information visible whenever they go in to add something new or check on something they input a month or two ago.
For many advisors, the most important tech announcement (actually introduced at the TD LINC conference two weeks before, but re-announced at T3) may have been the new benchmarking tool that has emerged from TD Ameritrade Institutional’s purchase of FA Insight and its database of detailed advisory firm operating metrics. The goal is to allow firms to benchmark their ratios, growth and profitability against peers who are the same size and follow the same business model, and perhaps also look at the financial trajectories of similar firms at different stages of their evolution.
A related feature will provide a report on how well the firm is using the workflows embedded in Veo One, again helping to improve operational efficiency and leading you toward those aforementioned single-sign-on integrations.
Riskalyze’s Autopilot, meanwhile, will soon be providing a new suite of analytical tools that will help advisors track relevant metrics in their businesses. Everybody is calling this “big data,” but the trend seems to be to help advisors better understand and monitor the health of their small businesses.
GEEKY TO FUN
I’m not sure when T3 went from being totally geeky to a fun event to attend, but the threshold was clearly passed last year, with the after-party featuring fire dancers and a presentation by Jay Jay French of the Twisted Sister rock band. This year’s meeting featured an ‘80s-themed party, and the closing event included several helicopters taking attendees up into the air for views of the Disneyland section of Anaheim.
Nevertheless, the real fun is seeing what’s new, better and potentially more efficient—and what will allow an even smaller cadre of future advisors to serve an even larger number of clients. The 2018 T3 Advisor Conference will be held February 6-9 in sunny Ft. Lauderdale, and the T3 Enterprise Conference for broker/dealer executives and large RIA firms, banks and insurance companies will return to Las Vegas, October 30-November 1. It will be interesting to see everything on display at these two industry-leading events.
[Editor’s note: Bob Veres is also co-promoter of the Insider’s Forum conference, September 6-8, 2017 at the Omni Nashville Hotel in Nashville, TN. Members of the T3 community get $75 off the registration fee with the T3VIP coupon code if they register here: http://www.insidersforum.com.]