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A year ago, I asked which company could become the Amazon of financial advice? I speculated about who among the industry’s powerhouses had the savvy and agility to become the leader in creating an easy and elegant customer experience combined with better financial outcomes for investors.
Judging from the number of readers (large) and discussions that ensued (many), it struck a chord.
I could have named the obvious firms: Fidelity, Schwab and Vanguard. After all, they’re so far ahead in assets and growth that others—with the exception of Morgan Stanley—can barely smell their trail.
But I didn’t.
Instead, I named Morgan Stanley, Franklin Templeton, Empower and Edward Jones based on the evidence of each investing in technology, consumer insight, and pulling all the pieces together to deliver what investors want—comprehensive guidance to maximize their financial health.
Looking back, these firms—and others—continue to assemble the tech stacks and advisor training and development that will evolve into the human+digital platforms of the future. But to earn the “Amazon” moniker, all firms have one big problem: interoperability.
Interoperability Means Breaking With The Past
When systems are interoperable, they work with other systems to exchange and use information broadly without restrictions imposed by data sources, coding languages, system age and origin and other constraints. Application programming interfaces (APIs) are the technical keys to unlocking interoperability.
I define interoperability in financial services as the ability to integrate and coordinate all—not some—all of the functions of a comprehensive advice platform. Morgan Stanley is the furthest along, charging ahead with plans for a fully coordinated ecosystem encompassing both workplace and wealth management—capable of using the full keychain of ways to improve outcomes at the household level:
• Get the cost/value equation right
• Manage risk
• Conquer tax drag
• Maximize retirement income, including Social Security
Firms must cast aside their hidebound practices of building proprietary technology to achieve interoperability. It takes too long, costs too much money, things change too quickly, and it too often misses the target for what investors value—and will pay to get.
Companies To Watch
As host of the WealthTech on Deck podcast, I talk to those who observe and analyze trends and patterns in B2B and B2C behavior in financial services. I also visit with C-suite leaders and the architects of platforms that sit at the confluence of digital and human advice.
Several guests this year stood out for their clarity, boldness and speed. They are assembling technology that:
• Is built to integrate and coordinate with other technology, proprietary and third party, so that firms can customize their clients’ experience.
• Increases advisors’ availability and responsiveness to clients by automating tasks, like data management and reporting, that used to take hours every day.
• Elevates the workplace savings-and-investment experience to generate more clients for other services, such as wealth and asset management.
Vestwell
Vestwell is a cloud-based, modern recordkeeping platform for workplace savings programs for small employers. It has stood up a number of tax-advantaged accounts and plans: 401(k) and 403(b), individual retirement accounts (IRAs), ABLE accounts for families with a disabled member, and 529 college savings plans.
It’s also prepared itself for future growth from pooled employer plans encouraged with employer incentives in the SECURE acts.
Vestwell founder and CEO Aaron Schumm outlined his ambitious plans on my podcast: integrate Gradifi, the student loans benefit provider and financial wellness platform it acquired from Morgan Stanley this year; build an emergency savings program; and add health savings accounts (HSAs).
Large firms aren’t looking at Vestwell as a competitor to be quashed but as a strategic ally in their own plans for workplace expansion. Morgan Stanley is an investor and a partner. J.P. Morgan Asset Management selected Vestwell’s platform for its small business 401(k) services earlier this year.
Apex Fintech Solutions
Credit the rise of the robo in part to Apex Fintech Solutions.
It’s the back-office platform of choice for direct-to-consumer platforms like SoFi and Webull. Apex technology and guidance have helped customers leverage relatively recent opportunities like fractional-share trading, robo-investing and real-time account opening that attract young investors.
In a podcast interview to be aired soon, Apex CEO Bill Capuzzi reflected on the state of wealth technology, saying the systems most firms have today are “old, crappy tech.”
Further, Capuzzi said the expense of maintaining aged technology constrains many firms from advising clients with less than $1 million in assets. And the technology in place today is still highly manual.
Capuzzi won’t settle for that. His company is prepared to help RIAs and institutions take advantage of the opportunity presented by young and old investors worldwide.
(If you’d like to hear my chat with Capuzzi, sign up to be notified when it airs.)
Wells Fargo
Of course, Wells Fargo isn’t a tech start-up. But it has the heart of one.
The fourth largest U.S. bank added LifeSync to its mobile app this year, first to its wealth and investment management clients and then to all consumer banking customers, expanding the universe of potential users to almost 70 million people.
LifeSync allows customers to personalize and customize their relationships with Wells Fargo bankers and financial advisors by:
• Creating their financial goals and annotating them with information—and even photos
• Viewing their financial “vitals,” including estimated net worth, FICO score, portfolio performance, credit card rewards and more
• Reading curated news and content that addresses their needs, goals and interests
There are already 1.6 million customers using LifeSync, with hundreds of thousands of goals articulated in the mobile app, said Michael Liersch, now head of advice and planning for all of Wells Fargo.
I wrote about LifeSync this past spring and had an engaging conversation on my podcast with Liersch, who has a doctorate in cognitive psychology and whose experience includes stints at JP Morgan Chase, Merrill and Barclays.
He sees a future where customers pick their channel—digital, in-person or some combination—and work fluidly with financial advisors to set goals and create pathways to reach them.
Summit Wealth
Reed Colley rocked the industry when he founded (and coded) the successful Black Diamond performance reporting system, now part of SS&C Advent, 20 years ago. Today, he’s training his energy into the Summit Wealth platform.
Colley spent much time talking with advisors, who shared their profound frustration with the multiple tools they had to juggle. Their “tech stack looks like a tech spread,” he said.
Summit Wealth’s portfolio management system aims to dissolve the boundaries among those tools and let them work in the background so advisors have time to service clients and win new ones.
“The real power” of the Summit platform and client mobile app is to “unlock conversations with clients that (advisors) weren’t having, Colley said on my podcast.
Recognizing the critical factor of tax efficiency, Summit Wealth recently partnered with LifeYield to add multi-account portfolio rebalancing to their platform.
Importantly, Colley said that Summit Wealth is forward-looking, not relying on code written 20 years ago, unifying data, and “humanizing” financial services.
Don’t Look Back: Look Ahead
In my 40-year career, I’ve watched year after year as one “breakthrough” product replaced another. Advisors were incentivized to sell, establish an account and move along. Maybe they created a financial plan first. Maybe—but not usually—they looked at it after the sale.
Consequently, investors own “a jumble of stuff” bought through multiple advisors or acquired from workplace benefits programs. Advisors tend to focus on the assets they manage for a client, not the big picture.
Even for those who want to do better, the lack of interoperability has hamstrung their ability to optimize outcomes through household management focused on costs, risk and taxes.
Measure our response as an industry, and I’m afraid it’s lackluster. But hail the disruptors and innovators like Vestwell, Apex FinTech Solutions, Morgan Stanley, Wells Fargo and Summit Wealth.
They give me hope that we’re on the cusp of something big.
Related: Why Are Fidelity, Schwab, Morgan Stanley and Vanguard So Far Ahead in New AUM?